Q1 21/22

Aug 12, 2021

Ladies and gentlemen, good day and welcome to the Q1 FY 'twenty two Earnings Conference Call of Praj Industries Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Parthakamkar from Praj Industries. Thank you, and over to you, sir. Good day, everyone. We welcome you to this conference call organized to discuss Praj Industries' operating performance and financial results for Q1 FY 'twenty two, which were announced yesterday. I have with me Mr. Sashiv Joshipura, CEO and MD and Mr. Satin Rauve, CFO and Director, Finance and Commercial on this call. Before we begin, I would like to mention that some of the statements made in today's discussion may be forward looking in nature and may involve certain risks and uncertainties. Documents relating to our financial performance were emailed to you. These documents, along with our quarterly results presentation, have also been posted on our corporate website. I would like to hand over the floor to Mr. Sisil Joshipura for his opening remarks. Good morning, ladies and gentlemen. I welcome you to Praj Industries' earnings call for Q1 FY 'twenty two. Thus, all of you had the opportunity to go through our results presentation for the quarter ended 30 June, 2021. It is once again a pleasure to connect with all of you. I hope that you and your families are keeping safe and healthy, and I do hope that most of you have already secured both doses of vaccine. Let me now briefly take you all through the quarterly business highlights and industry developments following which Sachin will take you through the financials. At the outset, I would like to draw attention to the important development concerning environment. The Intergovernmental Panel for Climate Change released 6 assessment report earlier this week. Report reveals that climate change strategy submitted by nations during Paris Summit are not adequate to contain global temperature rise within 2 degrees limit and that we have failed to even reach anywhere near our committed carbon emissions. The life as usual scenario is foretelling a completely compromised future before the end of the century. The report precipitates urgency to decarbonize the environment by deploying technology in our daily lives that reduces the carbon intensity of our actions across all spectrums of human activity. The 0 carbon future demands an immediate action from all of us. We all know that biofuels have an important role to play in decarbonizing of transport sector. Let me now walk you through the business updates. On the bioenergy front, advancement of 20 percent EBP program to 2025 signals India's commitment to a long term sustainable decarbonization agenda by driving transition to a renewable and cleaner energy source. In the ethanol supply year 2021, our national target is to improve ethanol blending to nearly 8.5%. This represents an increase by nearly 150 crore liters in ethanol volume over the last year. The sugar rich state will exceed 10% blending in ESY 2021. State governments too have realized the potential of ethanol and have announced several measures to attract investments in setting up ethanol capacities. The path to EBP20 clearly demands a 2.5x additional volume for blending over the next 4 to 5 years. This will call for creation of capacities for ethanol production. Based on current production capacity, this means we have to create additional capacity of 1,000 crooliter per year of ethanol. Several systemic changes in the ecosystem are in the offing. Entry of flexible vehicles, E100 vehicles, differentiated blends at the pumps to name a few, all positive for driving demand for ethanol and a sustainable carbon free future. Pilot project of E100 ethanol dispensing station at 3 locations in city of Pune was recently launched for the production and distribution of ethanol. On the business front, the Q1 posed its own challenge in terms of a strong second wave of infection, under vaccinated population and availability of labor force. As the saying goes, when things get tough, the tough get going. We have delivered positive and encouraging results in this period. This is a reflection of transformation of our promise to performance. On the operational front, adhering to all safety norms at our sites, factories and R and D facilities are which are now fully functional even as work from home becomes part of the norm for office based employees. We continue to witness healthy traction in inquiries for the bioenergy, pharma and engineering segments during the quarter with the sole exception of jewelry segment. Our Bioenergy business has delivered a strong performance with a healthy order book. We are seeing development of robust inquiries and leads across different restocks in the domestic market. Strong demand in the market can be gauged from the fact that this quarter alone saw ordering of about 135 crore liters of ethanol capacity, which is more than 90% of the ordered capacity in the whole of FY 2021. We also decided to be prudent in opportunity selection given an exponential rise in number of inquiries, giving due consideration to complexity, completion timelines and cost to serve. Praj continues to maintain its strong leadership position with market share of more than 6%. On the international front, the business is now showing signs of recovery post the pandemic demand slump. We have started receiving orders from different geographies and more opportunities are under discussion. Americas market, specifically Canada, is showing a lot of promise on the back of the positive ethanol lending policy development. Brazil is also showing sign of returning to normalcy over the next 6 months. The ethanol market is likely to pick up with the second half of FY 'twenty two. And with the help of our local partner, Dedimi, we expect to make inroads into important Brazilian market. On the 2 gs front, execution of the first three plants in the country is on course and we expect to start commissioning of the first plant in Q3 of the calendar year 'twenty two. On the CBG front, on the occasion of the World Biofluid's Day earlier this week, honorable Chief Minister of UP inaugurated the CVG plant of Nessus Indian Potash Limited. The plant has been commissioned and is now being scaled up. This is the 1st plant in the country that will process 200 tons per day of fresh mud to produce compressed biogas. This plant is part of nation's first of its kind integrated bioenergy complex, which when fully commissioned will produce ethanol, biogas, biofertilizer and other byproducts. As for engineering and PHS businesses, we are witnessing healthy trends in business opportunity development and expect this momentum to strengthen in the quarters ahead. On the 0 liquid discharge business, we are on course with execution of the IOCL project in Duma, Gujarat. With rising awareness about minimizing water footprints coupled with stringent statutory norms for effluent treatment, we are receiving increasing number of inquiries for our ZLE solutions. On the CPES front, our strategy of F-fifteen focus is beginning to pay dividends. I'm pleased to share that we are building an isobutanol to sustainably aviation fuel module for the demo plant of our partner GEO for the USA market. EVO has already announced setting up a very large scale commercial plant in United States, and we are in discussion with them to offer our scaling up services for the same. We are currently working with U. S.-based customers to build modular system for 1 of the largest hydrogen plants in the world. We continue to focus on strengthening our relationship with cleantech and greantech companies for delivering modular plant solutions. On the brewery front, although there has been some improvement a marginal improvement on the demand side, outlook continues to be weak as the market will still take some time to reach to pre COVID levels of demand cycles. Across the PHS business, we delivered strong performance in the entire complex injectables and vaccine space. We are partnering with leading Indian pharma companies for fermentation based solutions. This quarter, we won a significant order from 1 of the multinationals in United States for their molecular cell technology plant coming up in India. Overall, there is robust inquiry pipeline that is resulting in sustained momentum in order wins and our order book is continually building positively providing sustainability and visibility to our business. As we look ahead, we are seeing thirst coming in both from domestic and international markets: Increasing vaccination coverage, improving economic indicators, and supporting macros such as good monsoons and better agri indicators will provide further relief to the recovery. We have geared up to meet challenge of increased volume and customer expectations. We are investing in modernization of our shop floors, increasing resources for engineering and technology development and enhancing site support infrastructure and while increasing our vendor base. Having said this, the business environment is not devoid of any challenges. Continuously rising commodity prices are a matter of great concern as it impacts overall business performance. Interest to travel restrictions combined with uncertainties in supply chain and resource availability will pose a strong test for the business. I'm extremely pleased and proud to share that our Chairman, Doctor. Mohit Chaudhry, has been inducted on the advisory board of the Europe Headquarter World Bioeconomy Forum. This is the first time India has declared such position, signaling her rising progress in global bioeconomy. Before I end, I'm delighted to share that AsiaOne Magazine has announced that Taj Industrial Limited has world's greatest brand for 2021 and Doctor. Pramod Chaudhary is conferred as the Global Indian of the Year 2021. We remain confident that our customer centric approach combined with our technological progress and robust execution capabilities will help us further capitalize growth opportunities. With this, I now hand over to Sachin for his comments on the financial performance. Thank you. Thank you, Seshish. The consolidated income from operations stood at INR386.26 crores in Q1 FY 'twenty two as compared to INR 129.55 crores in Q1 FY 'twenty one. PBT for the quarter stood at INR 29.8 crores as compared to loss of INR 14.52 crores in the corresponding period of the last year. And profit after tax stood at INR 22.2 crores in Q1 FY 'twenty two as compared to loss of INR 10.5 crores in Q1 of FY 'twenty one. Export revenues accounted for 25% of Q1 FY 'twenty two. Of the total revenue, 72% is from Bioenergy, 17% is from Engineering and 12% is from PHS Business. The order intake during the quarter was INR 6.61 crores with 75% from domestic market. Of the total order intake, 77.5 percent came from Bioenergy, 12% came from Engineering and balanced 10.6 percent from PHS Business. The order backlog as of 30th June 2021 is at INR2023 crores comprising of 83 percent of domestic orders. Cash in hand as on June 21 is INR525 crores. Yesterday in the AGM, members of the company have approved the dividend of INR2.16 per share. Some comments on the components of the profit and loss account. The contribution margin shows a drop of 7.6% as compared to Q1 of FY 'twenty. The revenue has a mix of sale of equipment and project activities. The expenses related to project activities are forming part of other expenses. And in comparison to Q1 FY 'twenty, there is a saving of 10%. The unprecedented increase in the commodity prices has impacted the contribution margin to the extent of 2% of the revenue. As regard to employee costs, as compared to Q1 of FY 2021, absolute employee cost has gone up by INR8 crores. The reason being, last year, there was salary reduction in the 1st 3 quarters. And in quarter 4 of FY 'twenty one, salary was restored and provision for various variable pay for all employees was provided. The impact of entire year's variable pay was taken in Q4 of last year. In Q1 FY 'twenty two, we have provided for variable pay for the current year and the impact of salary revision is not there as the cycle for salary revision is July to June. Major component of other expenses is the cost related to project sites. And during this quarter, there was heightened activity on the projects, and that's the reason for increase in absolute terms in other expenses. Before I conclude, I would like to clarify one of the issues regarding the promoter shareholding in the company. We noticed that on some social platform, it has been repeatedly mentioned that promoters have decreased their shareholding in June quarter. Let me clarify. As a part of talent management program, the company has robust ESOP system. Over a period of last 5 years, because of the ESOP exercised by the employees, the overall capital base has moved from 17.74 crores shares to 18.35 crores shares. This has resulted into, percentage wise, relative reduction of promoter shareholding from 33.98% to 32.86%. Their shareholding in number of shares has remained unchanged at 6.03 crores shares, and the promoters have not diluted their shareholding. Let me repeat that promoters' holding is unchanged, and they have not reduced their holding in the company. I now conclude my remarks, and I would like to thank you all for joining us on this call. If you have any questions or comments or suggestions, please you can forward that to us. Thank you very much. Thank you very much. We will now begin the question and answer session. The first question is from the line of Pratamesh Sawant from Axis Securities. Please go ahead. So my question is regarding execution, sir. So in the CVG business, the Ministry of Petroleum and Natural Gas has initiated the SA TAT initiative. So they have signed like 1500 MOUs and which are worth like INR 30,000 crores. So assuming at least 30% of these things coming to Praj, which is a very conservative assumption given our technological progress, so that accounts for roughly 9,000 crore of business for the next 3 to 4 years. And clubbing it with the 8,000 to 9,000 crore of ethanol business over the next 3 to 4 years, I want to understand how is our company ready to handle this kind of a monumental demand? As in what kind of capacities do we have to handle this kind of demand in the near future of like 3 to 4 years? Are we doing any CapEx or planning our employee increase or something like that? So, Pratnish, that's a great question and thank you for that. So, yes, Satap is a very, very ambitious program, first of its kind in the world. And the first requirement, as you know, that India is not a gas based economy. We are a liquid fuel based economy. And there is a very conscious effort to improve the share of gas in our oil or energy mix at the country level. So that initiative is part of that program. Now here, what therefore, what needs to happen is that we need to understand that the whole ecosystem and that will start from feedstock all the way to distribution and metering and monitoring gas and in between production will have to be established as a model first. And once the model is established and tested, then one can start replicating that model. You would have probably noticed that yesterday on the World Biofuels Day on 10th, the UP's Honorable Chief Minister of Yutta Pradesh actually inaugurated the first pressmer to CBG plant which has been set up by us at Indian Potash Limited in Muzaffarnagar. The plant has been commissioned by us and it is under scaling up status just now. As I speak with you, so we so there has to be a gas dispensing station that gets organized around it, the vehicles have to be there. So the whole ecosystem is gradually developing. And this was also used as a test case to understand where all there could be possible hindrances and how we can overcome them in the overall ecosystem. I think the lessons that have been learnt in IPL and many of them have been implemented already will help to define the future ecosystem component development in rest of the country. We are also building another plant in South of India, which will get commissioned somewhere in October and then one more in February for Hindustan Petroleum, which is based on rice straw. So now we would have and then towards the end of the year, we'll also commission 1 more plant near Pune, which will be based on spent wash. So, fresh mud, spent wash and rice straw are the 3 key feedstocks on which we expect 90% of this potential that you mentioned to be established. We have led the market by actually establishing the first plant, starting production there and helping establish the ecosystem. As we move through the year, we will see strengthening of this ecosystem. And as we go forward, we will be in a position to move the market to its natural potential, as I would put it. In terms of preparedness to our end, we have as you rightly put it, we have an absolute state of the art technology, which is significantly better than anything else that is available in the market and we expect will help us make deeper inroads into the share of business as business starts to unfold. So we are very positive and as things stand now, as the whole ecosystem starts to develop, we are and you've seen some policies around that as well where CTD networks are now being asked to blend the gas inside their pipeline systems, the LOI system of the 3 OMCs, the OMCs themselves taking lead in setting up the plant. So these are initial steps for a very nascent and new system, which is nowhere in the world. But I'm very sure that as we go through the next 24 months, we'll start to see a very different market open up for CVG and we are very well prepared for it. Okay. But, sir, do we have like the capacity to handle like 400 to 500 projects in like span of 3 to 4 years? Yes. That is not a problem for us. We will make sure that we build our capacities and capabilities both in line with the market as it unfolds. Okay, sir. Thank you. And so my second question is regarding our margin profile across these 3 business verticals, as in bioenergy, engineering and high purity? So generally, we don't give the margins for the businesses independently. Okay. Thank you. The next question is from the line of Ankit Gupta from Alkemi Capital. Please go ahead. Hi, sir. Sir, my question is regarding gross margin. You explained that there was a product mix change at higher equipment and projects. Can you explain that part of it more? And secondly, I also want to note that both of our projects are fixed price in nature or are there the process of passing on the raw material inflation? Okay. So let me take your second question first. Most of our contracts are fixed price contracts. So there is no technically a passing on mechanism in the contracts. But what we are doing right now to take care of the pressure which is coming up because of the commodity prices, we are narrowing the window from the inquiry cycle to the order finalization cycle, which is anyway getting narrowed down in any case. And we are keeping the prices open for a very specific period of time with a provision for the escalation if there is any delay in the order finalization. So the first level of movement in the raw material prices is getting covered in that process. So we are taking care of by managing the inquiry cycle to the order booking cycle. Post order booking, we are taking measures based on the requirement of the raw material, some advanced procurement program, the different mechanism of aggregation of the raw materials. So we are working on multiple fronts to see to it that the impact of the increasing raw material prices gets reduced on our margin. To give an explanation to your first question, the revenue, what is getting reported as per this AB format, it has the revenue component of all. I mean, in the sense, the equipments which we are supplying the project activity which we are doing. But in the cost of material, you only see the cost of raw material which is getting captured. And the project related activity cost is getting captured in the other expenses, which is basically price expenses, labor cost and all. So if you combine this together and look at the price, which will be the right way of looking at it, then there will be an impact of almost 1.5% to 2% kind of an impact on our gross margin, and which is mainly coming up in this 1st quarter on account of raw material prices, which are moved completely against us and mainly on the carry forward order book, which we are having of the earlier orders maybe of last September order book or the December order book. Got it. So for the current order book of around INR 2,000 crores, how much will be these legacy orders, which will have some impact in the future also? We started this year with about INR1748 crores of order book. Yes. Yes. So it will have some component of last year's earlier quarter's order book, which might be sitting in this. But we have tried to take care of the moment of prices till at least December at this point of time. Okay. And last question from my end. Our order inflow was around INR 60 crores, which is very good in this quarter. Can you give some color in like in out of which field? How much are the orders, which areas? Some understanding to just understand what are the order intake? So basically you're asking the order intake in the form of bioenergy and engineering kind of a thing? Yes, yes, yes. Around INR 500 crores is from the bioenergy, INR 100 crores is from the engineering business and INR 61 crores is from the high purity business. And sir, out of bioenergy, can you give us detail of grain based and sugar based plants? I will have to get back to you. Maybe you can write me and I will answer that question maybe because right now I'm not hearing that handy information. No issues. Thank you so much, sir. Thank you. The next question is from the line of Amish Kanani from GM Financial. Please go ahead. Sir, congrats on a very good quarter. Very strong in Puna. So the question is, as we prepare for a 2 gs technology, my question is we are leader in 2 gs versus 1 gs. So if you can give us some sense of as a leader, how are what are we doing to convert the market from 1 gs to 2 gs, if at all? And what are the premiums that a customer has to pay to buy a 2 gs technology versus 1 gs and whether there is a traction given the premium and what are the kind of IRRs that a customer is making when he's choosing the 2 gs technology? Okay. So, Amish, let me start by saying that we are leaders in both 1 gs and 2 gs and not in only 2 gs. Gs? Sorry, the idea was the competition is less in 2 gs. Sorry, sir, that was the reference. Yes, it's different. There's competition is different kind. Also 2 gs, it's not that we expect our 1 gs customers to convert to 2 gs. It is not like it is a very different feedstock that we use for 2nd generation ethanol. And 2nd generation ethanol is increasingly going to find more and more space, especially at the back office, if you recall, my comments that I made at the beginning of my initial opening remarks where I said that we have to do something for the climate change. Continuing as usual is not an option. And that fundamentally means that we have to keep moving towards low carbon intensity, low GHG footprint technologies. And that's where 2 gs scores above 1 gs. That's one area where 2 gs definitely scores above 1 gs because of the fact that it uses the agriculture residue as a feedstock, right? So from that perspective, 2 gs is going to find a lot more favor. 2 gs, we are also going to see a traction buildup and that's where we have 2 platforms, 1 for the agriculture residues and second is for the forest residues part of it. Because there are parts in the world which are not agrarian economies, but which are very rich in forest. So we have both the technology platforms available, which we will take forward in time to come. And we are working very closely. There are regulation related issues. There are regulatory environment changes that are required. Europe is an example. For example, we clearly see a move happening towards moving to 2nd generation ethanol as we move forward in the future. The 3 plants that we are commissioning in India already And also because people are because this is so new, globally this is a new thing and therefore there's a lot of attention that the world is focusing on saying let us see one plant commissioned at commercial scale and then probably we'll start to think of scaling up. So different set of challenges to overcome in 2 gs, but we are working continuously at it in terms of enhancing the viability of the 2 gs technology, development of co products, which could further add value to the customer, both in terms of improving the project viability, but also in terms of improving return on the capital that they employ. We have tied up with a company called CCAB in Sweden to address and actually develop the technology that they had initially developed and develop at the commercial level for the forest residue part of the market. So, it's a whole host of actions right now underway, which we believe will help us to establish 2 gs as we move into mid term future. And second question is, we have seen significant improvement in the ranking in last 4 to 6 quarters. In general, Biofuel Digest, this quarter we have Isha 1 Magazine. We have worldwide program which is facilitating and adapting our promoter and advisory board. The question, sir, is what all that we have done in last, say, maybe 1.5, 2 years, which is resulting in this kind of accolades, is it coming mainly from the new technology initiatives that we are just doing, which is at an R and D pilot stage? Or it's something different in the sense and how much of that is macro top down India's initiative that we are taking at a global stage versus how much is Praj, which of course would have been the major contribution in terms of reaching this stage? And is it resulting in a significant pipeline of inquiries on the export market? Thanks. So, Amish, 1st and foremost, it's not an outcome of 2 years of work. I can very easily tell you that this is a work of lots of people, a vision that has endeared test of time, the resilience of the company over the last 37 years. We have, we have sort of got baked in the sun, if I can use that word, over different periods of time and come to this stage. The vision that and the commitment and the passion of the founders, the real commitment of people, the focus on technology development. I think lot of these elements, nothing of this happens in 2 years, nothing. This is this takes decades to build. Okay. And I think that's what is now and of course, as one fine day, it does have to come out and show itself on the worst stage and that's probably what you're seeing now. There's also much more heightened, what I would call as awareness today in the world about the need to use cleaner form of energy where ethanol has a very big role to play, where Prajis progress is absolutely undisputed. All the work that we've been doing over the years and decades is what is now coming to fruition. Of course, our foray into the 2nd generation technology, the 3 plants that we have built, by the way, from my understanding, today, Praj is the only company that is building 3 plants for 2nd generation technology for somebody else. A lot of our competition is building plant for themselves, but we are doing it for somebody else. And that's a huge, you know, plus in our favor because other others have trusted us to build the plant for them. So look at 2nd generation technology, look at the whole metrics, our R and D setup that we have and the kind of technology development work which happens in that day in and day out and over the last 10 years, 12 years on that. So I think it's an amalgamation of several, several factors that are leading to this kind of thing. And of course, the world is also now much more conscious about the green energy and we have been saying that for a long time. So you say something for a long time and now somebody says, oh, you've been saying this for a long time, so maybe we needed to wake up earlier kind of a situation. So we that is what is leading to this and what is really helping us and people have recognized that some of the solutions that we put out in the field are absolutely best in class. We compete with the best in the world. And in fact, in several markets, we are as good as anybody in the world, maybe benchmark also in some areas. 8%, nearly 8% of the world ethanol production happens from our technology. So I think all of this has happened over a period of time and that is what is getting recognized. Also the fact that, Doctor. Chaudhry, who's our founder has really, really put his entire being into making this into a cause and not only a business. And I think that is where things started to change because when he speaks, he speaks from immense amount of knowledge, understanding and vision and that not many people can do that. And I think that all is coming to get recognized now. So, sir, that's, any numbers in terms of export pipeline of inquiries, is it changed or will it change or some flavor of funds there? Yes. So as I was mentioning that, we have seen the markets that we serve, especially South America, Southeast Asia, Africa, Africa not to the same extent as other 2, have taken a slightly longer time than say India has to emerge from the shadows and impacts of the pandemic. So we are beginning to see that now as mentioning that we expect Brazil to be normalized over the next 6 months. We are seeing Canada moving in the policy of a blending program, Europe moving in the policy direction to notify 2nd generation ethanol over the next 10 years. So there are several different regions have different policies that are being brought about. And I think those are critical to driving growth in those markets. And we are very much tuned to those developments. We are very close our year is very close to the ground in terms of what is required to be done and we are taking those steps. So overall, plus that is on the ethanol side of the business. There are other businesses of ours also which are very focused on export. I have mentioned CPS business where we're building the plant of DEVO That is almost entirely export focused. And they are also building inroads with companies that are wanting to put up this cleantech, windech plants, but don't have the wherewithal. So they have the wherewithal to design and engineer it and manufacture it for them. So they are doing that. So there are our P A test business is going to serve markets where there is a new found, shall I say, consciousness across the world on local production for critical drugs. So I think that is what is leading to capacity formation in several markets, which hitherto was not very effective but are becoming effective. So different drivers for different businesses. But we are very sure that as we move forward through time, we will see a healthy development on the export size of the business as well. Sure. Thanks a lot and all the way, sir. Thank you. Thank you. The next question is from the line of Navin Shah from ValueQuest. Congratulations, sir, firstly for a good set of performance during this tough quarter. So my question pertains to order book. So like what you said in your opening remark as well that this Q1, we have seen around like 1.40 to 1.50 crores liters of capacities, which have been announced. Now, if you look at the kind of order inflow that we have received, it is much lower than the kind of actual CapEx that is announced. So where is the disconnect? If you can help in explaining that? Well, no, there's no discount. 1st of all, 145 crores is the number for the entire year last year. 134 crores is the number for this quarter. So just clarifying the numbers. There's a now The capacity can come in different ways, right? Somebody can define a greenfield project and you can also define a brownfield project. And both will have different levels of investments per liter of ethanol capacity that gets added, right? Also within the setup, what is it that is considered in the cost for some, maybe land cost gets a very, what I would call as a definitive dimensions to add to the cost, whereas if lease is different cup of tea, so the capital cost of the project construct can be very different. In terms of market share, as I mentioned, we continue to be at about 60% and thereabouts. So there is no change on that. Although we have decided to be prudent in anticipating and accepting orders where we do take into consideration the complexity, the cost to serve, our ability to confirm the timeline that customers may want. So different dimensions that go into decision making, but otherwise there is no change at all. Okay. So sir, when I do a rough cut calculation that shows that around INR 1500 crores worth of opportunity of the target size for us from these orders is what the target market should be, whereas we have received orders worth INR 500 crores during this quarter. Yes. But we don't necessarily do the whole thing for a customer, right? I mean, there are very few customers who say, I've got a piece of land, please do everything. That kind of Exide doesn't exist and existing company is expanding. They already have the wherewithal. They understand what is required to be done. It could be common wall expansion. There are different dimensions. So they may not go ahead and order everything on board. They said, no, I know what cooling tower to buy. You don't need to buy from me, right? And there are some new customers who do not have who are putting it for the first time, would probably expect more from us. Those who are putting it on a repetitive basis, they probably have a lot more in now. So the scope of work that gets awarded gets changed. Also, this is depending on brownfield versus greenfield. There are many dimensions that come into play. So there is no I don't think we can read it directly saying there is no Bakikar. The Bakikar is not the plant itself, it's something else. Got it. Got it. Okay. But sir, is there any so during this quarter because of the second wave, have we seen some spillover or postponement that may happen in the quarter going forward or that's not the case for order bookings? Sorry, what's your question? Could you just please repeat it for me? Sir, so I was just asking that whether due to this second wave of COVID, which hit during this quarter, will we see some spillover of orders in the next quarter per se? Yes. As I said, we expect to continue to for this momentum to be continuing for quite some time now and right through the year. And so we do not foresee a slowing down of order book at all. The COVID related impacts are there in terms of, a, we do hope that sooner than later the interest to trial gets restored because that is limiting our ability to reach out to our In terms of execution, yes, it does pose its talent, supply chain may get disrupted, etcetera. And this time, we all know that the second wave was very strong and much closer to most of us. So from those perspectives, I think, yes, it does have an impact. But in terms of order book, we don't foresee a problem at all. Okay. Got it. And sir, my second question is on the margins. So, firstly, I would just like to congratulate that even in this tough times, we have been able to do good margin. Now, if you see going forward, like what Sachin sir also explained that the way to look at the margins is that even taking into account the other expenses portion. So currently we are at around 19%, 20%. Where do we see this number for full year and maybe going forward? Any ballpark indication where this number should be? I would love to give the answer to this question. But generally, we don't give any forecast. I can only tell you that our endeavor is going to keep on improving on the margins and take the advantage of leverage, which is available on the basis of volume growth, which is happening. Yes, despite the challenges, which we have mentioned by Shishir earlier, our endeavor is naturally going to keep on improving our margins. That's what I can tell you. Okay. Sir, and on this, so if you see this other expenses as a percentage of sales, definitely we have come down much lower than where we were historically. So, is this improvement going to continue with the increased sales that we may have in the following quarters? So, it has component of both cost. Let me clarify. 1 is the fixed cost and another one is variable. For example, our traveling is sitting in other expenses. Now the domestic traveling has already started to a great extent, but naturally international travel is not at all factored there. So going forward, as Shashi was mentioning in H2, we will see movement happening in international side also. Then some of the expenses will start getting triggered, but not necessarily all. So we will definitely and that's what I was mentioning about the leveraging, which is possible, where on the some kind of a curtail kind of expenses, we will be in a position to have higher turnover. Understood. Understood. Thank you. And then we have always maintained that our resources, we have to build anticipating the growth in our business and that's been the strategy of the company because there is no one like us in India and therefore, we can't just go and put some resources from somewhere. We have to develop and retain our resources over a period of time of different business cycles. And I think that strategy of that we have continuously kept these resources engaged gainfully as well as develop them is coming handy now because now as the volume starts to grow up, we will be able to leverage what we have built already. So I think that also should help you to understand the context of Sachin's answer. Understood, sir. Understood. Thank you and all the best, sir. Thank you. Thank you. The next question is from the line of Saket Kapoor from Kapoor Company. Please go ahead. Yes, you must start, sir. And thank you for the opportunity. Hello. Adi, good morning. Yes, sir. Good morning, sir. Good morning. Sir, firstly, sir, what are the key risks to our execution to the business we are catering to? What are the key risks that are there? And what steps are we taking for mitigating the sales? Yes. Saket, that's a great question. Very clearly, we have to ensure that our and since you asked question around execution, and I'm taking the execution means the order that we already have in hand. If we look at the cycle from orders that we already have very clearly, A, it's the management of resources in a very efficient manner, right? So we may have to induct some resources, we have to train resources, we have to automate our processes, we have to look at our capacities within our own boundaries, create them outside or inside, decide that decision. So I think those are the set of decisions that we have to take. And therefore, any risk that could associated with any of those actions is very clearly visible and that is something that we have to mitigate. The supply chain disruptions on account of an unforeseen event, say for example, touch wood, I don't think that should happen, but touch wood is a third way. It could we don't we cannot predict right now what kind of disruption will happen. We can anticipate and then build ourselves to say, all right, I will write out a 1 or 2 month disruption and I'll prepare myself whether it's on the raw material side, whether it's on the vendor side. So we're doing several steps. We are diversifying our vendor base. We are taking closer to our customers. We have tied up on long term contracts. I think Sachin mentioned about aggregation of buying as against project based buying, using modern tools of reverse auction, e bidding, new vendor enlistment. So there are different steps that we are taking on the supply chain side to make it more robust and less risky, if I can use that word. Okay. So that's one dimension. Fortunately, we do not foresee a risk at all on the side of cash because we are a well managed company from the so our balance sheet is very healthy and we do not have a problem on the cash side. On the people side, I'm very happy to share with you that we launched a very focused program to vaccinate all our people, including all blue collar workers that walk into our factories and R and D center every day. And I'm very happy to share with you that today 91% of our population is vaccinated. So, and, and I'm sure that other 9 will also come in. They are not there for different reasons, but they will all walk in as well. So very focused program on vaccination. So we are taking every possible step to ensure a, our work is not disrupted. If there is a disruption, we are prepared for it and it is kept to a minimum and look at every single element in its entirety and define the mitigation measures there. Having said, there are things that I can't control. For example, if there's and we were just talking earlier about it, the runaway rise in commodity costs, that's the risk that is external to us. We can only define a response to that, but we can't control the risk itself because that will happen on its own, right? So commodity price rise is one dimension. Right now, even the availability of steel is becoming an issue, but we have managed that through long term contracts and association that we have with our suppliers. But there is a problem, the steel supply that used to be in 6 weeks is now gone to almost 4 months. So we are looking at an extended cycle of availability from on components. So we have to take care of that. Availability of labor at site has become a problem because if because of the pandemic related migration that took place, there is an imbalance in the workforce at site, how do we manage that? For that also, we have empaneled a whole host of new vendors and contractors with whom we are working now. We are training them to address the issues at site. So on-site, within our premises, outside our premises, our supply chain, our delivery chain, we are looking at every single dimension to define a risk plan and find a mitigation plan as well. When you say that 8% of the global market share of ethanol business is from Praj, so who are the other players globally, sir, which whom we can benchmark and understand the valuation part there? So what I said was that 8% of the global ethanol production is today done using Prajis technology. That's the word that I used, okay? Okay. Of course, in each market, there are competition for us. If you go to United States, there are competition there. You go to Europe, there's a different set of companies. Even go to Southeast Asia, there's a different set of companies. When you go to South America, there's a different set of companies. Because each market has evolved to its own model of doing business. Brazil is very different, for example, than North America. It's very different from Southeast Asia. But at the same time, we have also established ourselves into those markets over a period of time. We have created references, which are absolutely global class. There are countries in which we have 100 percent share of business. For example, every single plant is built by, for example, Colombia. So we have used our own position, our own strategic steps to ensure that we are able to stand and compete. And please appreciate the fact that today and when I say this, the only market that excludes from this where we have no idea about it is China. So we don't know much about that market. We know that there are 2 state government owned companies, state owned corporations, which actually do most of the production there. But that's a different story. But other than that, Brazil, we are about to enter, as I was mentioning earlier as well. So there are different steps for different markets. We compete with absolutely global class companies and we win against them. And we are able to stand on our own feet because of the fact that we have our own technology, our own R and D, our own progress, our own experience with which we can go to customer and presence. So that's what is helping us. The last point I have is regarding you spoke about 90% of what the annual requirement was for the ethanol plant had come up in the Q1. So where are the geographies and who are the key players who are interested in setting up these facilities there? If you could give some basic understanding where are these capacities coming up and there must be the alcohols and liquor players that are now coming up with grains as you have earlier told that maximum 2 third would be from it will be grain based on this? So as I was mentioning, the grain movement we expect to start now more or less. I mean there are some orders from the grain that also we have received, but more or less the grain movement is beginning now. The money lot of capacities that I talked about is still being built around sugar. Yes. So and there are some big names in sugar who are our customers now, who are expanding their capacities both at greenfield level and brownfield level. Can you give the breakup for this 90% which you spoke, the 1200 liters become? No, what I said was that if you take the last financial year, in the whole financial year, 145 crore liters worth of capacity was contracted for. Okay. Now in 1 quarter of this year, 90% of that got contracted additionally. About 133 crores that got contracted for in the Q1 of this year. A lot of it is about is based on sugary feedstock, some grain as well, but we expect the grain movement to pick up as we move forward. Can you give the break up of 133, the sugar belt, how much is from the northern part and there was outpaced where companies have also participated. If you could give some color Very roughly 60%, 65% on sugar and the balance on green. And but further granular from the sugar part, how much is North India and other part of the country? So, I don't have that. I mean, we have that information inside us, but right now, I don't have in front of me. So, I'll send it to you separately if you like yours. Okay. I'll come in the queue for that question. Thank you, sir. And all the best, sir. We hope for a new landscape altogether So my question, I think I'm fair to ask you the same question again and again, which so many people have asked. But again, it comes back to margins because I think no one is concerned about your growth trajectory, everyone knows that you're on a strong growth path. I think this is the best macro in the last 25 years. I started tracking your company in 1999 when I first met Mr. Chaudhry. So my point is that at one point of time, you used to have operating margins of 20%. In the Q1, like, let's say, extended fees and everything was there, but still we are below 10%. So do you think that you have an expiration at some stage to going back there because there was also a program where the company many years back hired external consultant to improve margins, etcetera. So when the orders are so much and you can actually pick and choose, the margin profile actually should be increasing substantially at least because shareholders' returns will be made on profits not turnover? Sandeep, what you're saying is very valid observation. I think we have as I said that we have become pretty prudent in saying in deciding some credit assets for accepting a job, whether in terms of complexity of job, our ability to finish it in the timeline that is required, the cost to serve the customer, many of those dimensions we are bringing in, which probably were not there so much in the earlier days when the opportunity was limited. That's not the case now. So we are providing some of those filters. There's also a fact that, as I was mentioning earlier, that the international part of our business is something which is right now not at the same pace that we would like it to be. It's picking up pace, but not at the same pace that we want it to be for the simple fact that there are too many restrictions right now in the international travel and to be our ability to be in front of customers. We have found some solutions, but obviously they are not exactly what we want them to be. So that's the second part. In terms of moving the margins, I think over a period of time, the markets also have changed substantially. So it's not only my ability to get the margin, which is of course very important. And as you know, we have always believed that we should leverage technological developments for creating higher value for our customers. And then I am sure that customers do not mind sharing part of that value with us. And that is how our value gets created for our shareholders. Having said that, I think there are also other forces in terms of what's the intensity of competition, what's the size of opportunity, what's the other dynamics that are driving the market space, the existing relationships, the existing references, several and several dimensions come into play. And I think all of what you see is a mix of all of that the commodity prices that have really has run away last 6 to 9 months, which we all know. But we do hope that probably we will not see a similar level of hikes again on the commodity price. That's the hope that we have and the dialogue that we've been having. So we have to see how the overall ecosystem develops, which will help us to. Obviously, management is also very focused on ensuring that all stakeholders' aspirations and expectations are met in the most balanced fashion. Sure. Thank you very much. Thank you. The next question is from the line of Manish Jain from Money Life Advisory. Sir, which stream of business seems most promising to you and looks to offer long term growth? Sorry, could you please repeat your question? Yes. So a big stream of business seems most promising to you currently and seems to offer long term growth for the company? As you know that we have always maintained that yes, bioenergy is core of our offerings. And right now, we all know that there's an absolute boost to the program in the domestic market for creation of ethanol capacity and we've talked enough about it. But we strongly believe that Praj is built of Praj is a string that's built of pearls. And each of these pearls has its own story to play out the 0 liquid discharge business that I talked about, the high purity business that we discussed. In time to come and we have to invest into these businesses, some of these are developmental phase, some of these are at maturity phase. So it's not fair for me to compare saying, okay, let me start a startup business of sorts, like the CBG and I compare that to our 1 gs ethanol business. That's not fair comparison. But what we are doing is we are systematically and strategically investing into businesses so that as we move through the timeline, we are also able to grow our businesses to different phases of the economic curve so that we are able to drive overall growth of the company. I would not say right now the only business around which as I had already mentioned because of externalities in the situation, the brewery business is only business of ours where I am not able to give you a prediction saying, okay, except to say that, okay, we don't see too much of opportunities arising in that business over the next 12 months. Other than that, for every other business of ours, we are very confident that we are in the right spot and we're moving in the right direction. And the second question is, were there competitors under the high purity segment and are we looking to increase the revenue contributions from this segment going forward in the tailwinds from the injectable and vaccine space? So, again, there, it's a highly specialized segment. So depending on the solution form that we so there are it's a simple water treatment, then there are companies who compete with them. But then as we said that we are also moving to fermentation based solutions where we'll also be competing with several multinationals. So we are very confident that our deep understanding of fermentation and processes within the parent organization will help them to actually move forward. So we are very confident that combination of ultra high purity water combined with our fermentation and the process system knowledge will be able to create a unique proposition to our customers. We're already beginning to see some acceptance of this idea from customers because they can see value coming to them. And as we move forward, we see that developing very positively. Okay. Thank you. Can you name any peers or competitors? So there is there is, there is quite a few on the water side. We can answer it to you. We can send it to you the names. That's not a problem at all. We will be able to send it across to you. There's Cry, there's Adam, there are many. The next question is from the line of Deepesh Agarwal from UTI Mutual Fund. Please go ahead. Good morning, gentlemen, and congratulations to the team for a consistent improvement in the performance. My first question is, have you taken a decision on the business model in RCM? Would you be transitioning to a chemical manufacturer yourself or would be just telling a process know how? And how far are we from the commercialization of most of these products in RCM? So, Deepesh, thank you very much. RCM is still a program under development. So we've not reached a stage where we need to take the decision. You're right, it is one of the options that we'll have to consider. But we are still not at the stage where we need to take that decision. We are still in the development phase of the RCM. Okay. How far we can expect such decision? Well, I'm not able to put an exact timeline on that because as you know that a new development of a technology can take, although of course we do have internal timelines for that, but we are not yet ready to come out with those to say, okay, on x date this will start to we're still far away from being exact date on that. We have a period of time in our mind to which our team is working. Okay. Okay. On the hydrogen, so draft hydrogen policy of Government of India advocates some 10% hydrogen procurement through biomass route by FI or CY30. Also, what is the opportunity for Praj in a biomass based hydrogen? Well, I think as the from what we can foresee right now, there is a clear space for bio hydrogen. And I will take you back to a discussion I was in yesterday where there was a professor from Brazil who was also my co panelist and he has this beautiful model of ethanol molecule that he was showing. And he said, look here, look at the number of hydrogen molecule on this, hydrodynam atom on this molecule, model that I'm showing you. And therefore, ethanol becomes a great carrier for hydrogen. So that's one dimension that he mentioned. Of course, we all know ethanol comes from the biomass route. So that's one dimension. There's also another dimension of the technology where we were discussing in a little different reference was around the CBT form. So what happened that also is CH4, right? Largely, so there are 4 molecules out there. So we'll have to see what route gets developed, but you're very correct that biomass will have a very interesting role to play and we are very focused on making that happen because we are very, very, what should I say, working on leadership position for both the liquid as well as the gaseous route of the feedstock. Understood. Understood. And lastly, what are the commercialization time line for the biodiesel or bio marine fuel or bio aviation fuel? In fact, for aviation, I guess, U. S. Government has proposed some tax credit for bio jet fuel for commercial airlines. So how this impacts us? Yes. So overall, if you look at it, we have talked about the concept of biomobility. So on 3 modes of transport, surface, air and marine. On surface, we are obviously ethanol and CBG have a role to play and biodiesel as well and we have talked about that. And obviously, the others are the SAP is now nearest to the commercialization and I mentioned and you're probably aware we had mentioned it a few calls ago as well that we have entered an agreement with a company called Jivo in United States, which is the leader in the IBA to SF route. In fact, I had also mentioned in my opening remarks today that we are actually building a plant for them to be which is a demonstration plant for them in United States. But they have also announced a large commercial scale project where also we are in discussion with them to say how to scale that up. So that's on the engineering side of the business. But on the process side of the business, yes, we have also been, as I had mentioned in my last call, we have also been part of this Clean Skies for Tomorrow initiative, which was launched by World Economic Forum for India. Raj has been one of the contributing authors to the report that was submitted to the ministry by World Economic Forum and McKinsey and Company. And we will see how the whole ecosystem develops. But very clearly, we understand that as we move forward, because one of the purpose for SAF to grow is the fact that that has to lead to reduction in the greenhouse gas emission and the CO2 footprint. And very clearly, the 2 gs sugars will have a very important role to play there as we move forward on the safe path. The next question is from the line of Rajamun Vaikuntha Raman, an individual investor. Please go ahead. Yes. Thank you for the opportunity. And congratulations on the business developments as well as the robust order intake. First, wanted to understand on the incremental 1,000 crore liters of ethanol capacity for achieving the 20% blend, you have indicated to about 3.50 crore liters from molasses and INR 650 crores from carbohydrates, starch based 2 gs ethanol. There are reports of the financial and viability of the 2 gs ethanol plants with some figures quoting one plant costs INR 1,000 crores versus INR 100 crores INR 200 crores for a 1 gs and a gas based plant. I want to understand whether it is true and has it seriously deterred investments? So, Mr. Ajman, thank you for the question. That's a great question. Yes, 2 gs technology is very new. It is extremely new. There is no commercial scale plant in operation as of now. So obviously, it is on a different point on the development curve as compared to 1st generation ethanol, which is based on grain or sugar feedstock, which is obviously has been there for many years, so has the technology has matured there. The challenges are very different. The feedstock costs are very different by the way because there at one place you will use a feedstock which is agriculture, residue and waste. So the feedstock costs could be OpEx can be different. Yes, today the 2 gs plants are much higher in capital outlay compared to 1 gs plant, no question about it. But as I was mentioning, the focus that we have on the technical development side is to see. But at the same time, because we use a very different feedstock, we're also able to create very different set of value propositions for a 2 gs plant. So we are very focused on creating competitive byproduct streams or co product streams out of a 2 gs plant, which will enable us to enhance the viability of the system. I think what this is early days for 2 gs, but there are different points to be considered. And the first and foremost is the fact that a 2 gs plant has a 90% reduction in GHG footprint compared to a conventional, let us say, crude oil based system. And that is the biggest plus point in favor of 2 gs that we are thinking. I was earlier mentioning about SAS taking a route through 2 gs and in time to come, the European regulations that are now expected around 2 gs. So 2 gs is going to be a very different set of governing parameters that will take it forward. Early days, right now, yes, you are correct that the expenses are more so no private sector is currently rushing into putting up their capacities. But we are also living in a world today, at least, I don't know for how long, but today, at least, we are paying no carbon tax, right? So if you want to pay carbon tax, the things things could suddenly change very differently in favor of 2 gs. So we'll have to see how the whole ecosystem develops. I think the new IPCC report will force a definitive thinking and actions from all dimensions of the value chain. And we'll have to see how that develops. But overall, you're right, the 2 gs technology will have a definitive role to play as we move forward. So overall, on a, say, 2, 3 year basis, holistic basis, you feel the cost benefit would tilt significantly towards 2 gs and with incremental private participation in it in a serious way for the next say 2, 3 years? I would not put 2 years as a time frame for 2 gs to change. There are many changes and things can change. I mean, I was just talking to somebody yesterday and I said, okay, so let's say 3 years ago, I would have told you that we'll sit on a 1,000 crore capacity expansion for ethanol in India and you would have laughed at me saying what are you talking about. And that we've seen come to reality now. So things could change. As I was mentioning, there's a whole host of elements that have to align themselves, the new IPCC report, what governmental actions, the proposed COP conference that is coming up in this winter. I think we'll have to see how the various commitments that have been made. I think we will have to see how the overall ecosystem develops for 2 years. But 2 years is probably a short period of time that it's maybe longer than that. Understand, understand. Coming to CBG, you have indicated to the entire ecosystem needing serious development and you'll be starting the process in Uttar Pradesh. You've also indicated to it being 1,070 crore opportunity in its entirety. By about, say, 20, 25, 26, when the ethanol 20% blending gets accomplished, how much of this gas opportunity can seriously get generated on the ground? Out of this, 1 lakh 75,000 crore opportunity? All right. So the 1 lakh 75,000 crore number came because if we have to set up 5,000 plants, that's the number that we have to incur, maybe more but not less as very important. So that's very clear. Will 5,000 plants come in what kind of timeframe? And so in terms of feedstock availability, etcetera, yes, it's a tick that, yes, it's possible for us to put up 5,000 plants because there's enough and more of feedstock. It also addresses some of the other problems, for example, the winter smoke and smoke problem in Delhi and other parts of India, Delhi, of course, the capitals would get focused, but there are other parts of India which have equal or for the world for that matter, which have equal problem. So very clearly, we'll have to see how the whole CBG system develops. But as I said, maybe earlier that maybe 24 months is the kind of timeline that we should see for this thing to kick up and start moving. We are as I said, we're just the first plant has just got commissioned and it's not yet fully scaled up yet, but it's commissioned. It's producing. The gas is being sold right now. If you drive down from Delhi to Dehradun near Muzaffarnagar, you will actually be able to buy CPG and fill your tank with it. And people are doing it. They're finding it very beneficial because of its very, very high quality compared to even CNG. So there are positive factors, but I think we'll have to see, this is just the first step. So if the baby is born, it's taken the first step, it's time for it to run to Olympics, it's still a couple of years away. Understand. Next, coming to the operating profit margin, you touched on it, but needed slightly more granularity in terms of say, from around 7.9% in the last abnormal quarter in terms of material cost increase. Based on pricing revisions, which come with a lag, by when would you head back to say double digit operating margins? And would it assume its leverage capability of yearly increase operating leverage capability, I mean, of yearly increase of say 200 basis points on an annualized basis, assuming under the assumption that material costs remain in a range. Okay. So on the operating margin, definitely, as I mentioned earlier also, the efforts are on to see how best we can use the entire leveraging mechanism apart from other measures, which we are trying to take to contain the impact of raw material prices, which is happening. And there are multiple measures. I mean, a couple of them I already mentioned, but there are far more measures which we are right now taking. Couple of things which we also need to understand that currently because of the growth in the domestic market, the component of domestic business is going to be little on a higher side. Moment our international revenue starts kicking in, we will see some kind of ease on the margin side coming up, 1. And second thing, the once the sizes of projects, which are expected to go up in any case, because the shift from the sugary sugary fixed stock to starchy fixed stock, the component of the order book or the order size is also going to change. And we will see a shift happening because of those measures on the margin in any case. As I said, there are multiple, multiple measures which we are working on, maybe it be standardization, maybe it be digitalization, maybe it be the composite aggregation policy for the procurement, the vendor based management. So there are multiple steps which you are right now taking. So broadly, there will be an operating leverage at play, though I understand the overall dynamics. Yes, yes, it will be. But please also try to understand what Seshir was mentioning in his earlier comment. We generally prepare for future. For example, today we are ready for taking care of the order book size of whatever is coming right now, 20 23 crores, we are already preparing ourselves for the sustained growth in this order book going forward also. So we are preparing ourselves on the manufacturing side, on the people side, on the project side kind of a thing. So there is some kind of a preparation also going up. Okay. One final question on diesel. So sorry to interrupt, but for any follow-up, maybe request you to give us a call. Sure. Sure. Sure. We can connect subsequently, so no issues, Mr. Hadamal. Thank you. We will take the next question. A reminder to the participants, please limit your questions to 2 per participant. Should you have any follow-up, may be requested to rejoin the queue. The next question is from the line of Aditya from APSK Advisors. Please go ahead. Yes. Hi. Just wanted to know that this order book that you have, it's not grown at all quarter on quarter with the entire ethanol pull up a loop that's happening. And so how is it on the ground? And how are you going to increase the order book manifold? So that was the only question that I had. Thanks. So there is a positive movement as is visible. And we are as I was saying, we are very focused. The focus is not only on garnering every single order that's available because we also have to be choosy about the complexity of the contract, our ability to serve the customer, the cost to serve and with different dimensions that come into our decision making. What we are very conscious about is also to ensure that, a, we are able to manage and maintain our market share and the leadership position, which is very important. At the same time, we also want to make sure that we don't I mean, I can always run a rat race, which is not what we want to do. We are very clear about improving the value for the customer, helping them understand this transition and the addition to the complete industry structure where as Satin was mentioning, the grain as a feedstock, the sugar syrup as a feedstock, these are new feedstocks that are walking in, How do we manage them? What are the issues around those? How do we bring our experience to leverage for our customers' well-being? Because I think those are what will be solid foundations because nothing less is expected from us by our customers. If they give it to us, they say, yes, please take care of all this. I know that you guys will do this. So we'll have to make sure that we do this and do this in a very good and structured fashion and not and as I also said that the capacity creation will happen in line with the market demand. There's also market dynamics for small demand, right? We don't need 1,000 crore liter today. That is not possible because the infrastructure doesn't exist to take care of that. I need you to think in terms of the blending volume, the depots, the logistics, distribution, vehicle population, there are many dimensions to it. So as the demand starts to grow and the capacity buildup starts to grow, we will be very actively playing part in it to ensure that we retain the share that we design our share to be. Sir, actually, you see from quarter 3 FY 'twenty one, right, INR 605 crores in your investor presentation. And now we are on quarter 1 FY 'twenty two, it's just gone by INR 55 crores here. So I mean, it's from it's been what so just 55 crores. I mean, considering all the what the government pushes, etcetera, etcetera. So that's the only kind of thing that I had in my mind. Just why is it No, no. But I think 1 quarter is there are dimensions to setting a project. Right? If somebody has to put up, they need to get an environmental clearances that takes its own time. And without an EC, there's no point in finalizing a contract because what can you do with it? You cannot do you cannot even start digging a bit. So customers have to get the easy clearances first. As we are mentioning, the grain story is now beginning to be understood and it's really expanded the base. There are states that are coming up with policies of how to permit setting up a grain base at some of our plants. Several states have taken lead, Madhya Pradesh, Bihar, Sathisgarh, to name a few. They have complete state law policies to attract investments on grain based plants. So there are different dimensions to this. It's not so simple as saying, all right, let's put a Southern Corolliter tomorrow in one place and you'll be sold. It won't be. And let's understand the order intake in this quarter was 6.61 and the order backlog is more than 2,000 crores. 2,000 crores is not the order intake for this quarter. All right. Got it. Got it, sir. No problem. That's it. That someone else Yes. No, every quarter, yes, while there will be of course, there's a big push right now for the technology. There are other businesses also which are project in nature. So sometimes, for example, in the last quarter of the Q4 of the last year, we also had other businesses contributing much more heavily this year. This quarter, we have seen a much heavier contribution from the ethanol business. That probably will change again, in the sense that while the ethanol will remain, some other businesses will walk in with their order book as well. So we'll have to see how in December quarter, there's a large order that we booked from IOCL for ZLD system that was a very large WILI contract. But those don't happen every quarter. They may happen once in 2, 3 quarters. So we'll have to see how that mix also changes at our end. No worries, Mohan. Thanks a lot. Thank you. Thank you. The next question is from the line of Yash Chaudhry from Param Capital. Please go ahead. Mr. Chaudhry, your line is in top of mind. Can you please repeat the significant orders from pharma that you were mentioning during the commentary and also the pilot project that you mentioned? Sorry, could you please repeat your question? I couldn't get it. Sir, you were mentioning about the significant orders that you have received from pharma company. So can you please throw some light on it? And also the pilot projects that you were talking about on in your commentary? So I was mentioning that we have received a very large order from a U. S. Multinational who are setting up a plant in India for a cellular molecular cell process. And that's a good one for us because once we set that up, it will open up doors for us to do similar facilities for others as well. So that was about the pharma business. And the demonstration plant, I was mentioning that we are building a demonstration plant for our collaborator, Gevo, which will be set up in United States. Yes, yes, yes, got that. For sustainability fuel. Yes. Yes. Thank you. Thank you. Thank you. The next question is from the line of Faisal Hawa from H. G. Hawaii and Company. Please go ahead. Yes. So how much is the contribution to our revenue in this FY from products which were researched and developed only 3 years back or in the particular 3 years? That's one. And going forward like 3 years hence, what would be the revenue which will be coming from the products? And my second question is on management. Have you done any kind of hiring on upper level basis where we can then facilitate the increasing execution that's coming into our company? So are you saying that have we hired senior resources for enabling execution? Is that the question? Yes, very senior result. We have hired because one of course is to grow people from within, but with the very quick expansion of the volume, we have to wherever We have some examples of 2 or 3 people that we have hired and from where we have hired them? That I won't be able to tell you from where we have hired them. That's not fair on my part, but we do have a our HR does follow a very structured process of recruiting people. They can go, and there are different media, as you know, through social media recruitment, through websites, through consultants, through head and toes. That depends on what the situation is. But for example, we have hired people on the technology side. We have hired people for project execution. We have hired people for engineering. So we hired across the board. So no one function where you said, okay, this is only one where I will hire North India. That's not the case. We have hired wherever it's necessary, whether it's for business development in India or it's business development outside, whether it is project large project execution skills in India, public sector. There are many, many dimensions that we have got people working with us. And about the products, new products which have contributed to revenue products which are So much product. Which are only 3 years ago. Yeah. So just to it's not so much a product sale for us because it is more project and process engineering that we do. So of course there are several process engineering solutions that we are doing. Just to give you an idea in one of our businesses, we would say that almost 30% of our sale is coming from these new processes and solutions that we introduced over the last 3 years. Okay. That's what I'm trying to Yes. And we have no plans to let me have any let up on that. Okay. Thank you so much, sir. Thank you. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for their closing comments. Over to you, sir. Thank you, everyone, for your time today. In case you have any more questions, please feel free to write us at infopraj.net, and we will get back to you with answers. Thanks again for your time, and have a nice day. Thank you. Ladies and gentlemen, on behalf of Praj Industries Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your