Praj Industries Ltd
NSE:PRAJIND
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
451.2
814.5
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Praj Industries Ltd
You don't have any saved screeners yet
Good day, ladies and gentlemen, and a very warm welcome to the Praj Industries Limited Q1 FY '23 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you, and over to you, Anuj.
Thank you, Ali. Good afternoon, everyone, and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations for Praj Industries Limited.
On behalf of the company, I'd like to thank you all for participating in the company's earnings conference call for the first quarter of financial year 2023. 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 clearly 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 first we have with us Mr. Shishir Joshipura, CEO and Managing Director; and we also have Mr. Sachin Raole, Chief Financial Officer and Director of Resources.
Now without any further delay, I request Mr. Joshipura to start with his opening remarks. Thank you, and over to you, sir.
Thank you, Anuj. Good afternoon, everyone. I welcome you to the Praj Industries Earnings Call for Q1 FY '23. Thus, all of you had opportunity to go through our results presentation for the quarter ended 30 June '22. It is once again a pleasure to connect with all of you. Let me now briefly take you all through the quarterly business highlights and industry developments.
Following which Sachin will take you through the financials. We closed the first quarter of FY '23 on a strong note with a healthy growth in order book and delivery volumes. Despite challenges around volatile commodity prices, impact of ore in Europe and rising global inflation. This quarter was the confirmation of our ability to scale up delivery capabilities, managing the uncertainties in supply chain while striking a fine balance between building in-house capabilities and outsourcing.
With stabilizing commodity prices and supply chains and increasing focus on sustainable energy transition, business environment is expected to be less volatile and more predictive going forward. Uncertainties in global energy market attributable to the war has brought to for -- dire need for energy security. Record high temperatures and heat waves across Europe and North America have come in as a start remainder of climate change as if we needed one, redrawing focus on sustainable trended action in the form of energy transition.
In response, nations and corporates around the world are taking definitive steps in harnessing renewable energy sources in their pursuit of carbon intensity reduction. There is increasing demand for low-carbon energy sources and biofuels are gaining increasing acceptance as one of the most promising solutions. Globally accepted mechanism of carbon trading is poised for introduction in India, which augers very well for the biofuels industry.
Capacity addition for production of ethanol in India at the back of advancement of 820 target to '25, '26 continue this momentum. The ethanol bending in petrol in India has crossed 10% mark in this quarter, 5 months ahead of the plan.
Indian automotive manufacturers are gearing up to adapt their products to E20, and subsequently to flexible option. As for the existing vehicles, test and trials are underway to analyze comparability of materials to adapt to E20. Our Bio-Energy business continued its strong performance with a healthy order book of INR 845 crores in this quarter. Around 70% of these orders are for ethanol based on starchy feedstock.
Unlike in the past, execution activities are in the top year in the very first quarter of this fiscal at multiple project sites in different geographies. On international front, our efforts in providing solutions for low carbon and low energy intensity ethanol are opening newer options and inquiries have started to build up. We have announced our reach in Europe, South and North American markets to address this emerging need.
Our first project in Brazil is scheduled for commissioning at the end of this year. We have successfully demonstrated the effective impact of our process enhancer solution in Brazil. Both these events will definitely help improve our position as we move forward. On the 2G front, commissioning of IOCL project is in the final stage and startup of commissioning, and we expect it to start operations by end of this year. Although we continue to be in dialogue with potential developers of 2G projects in Europe, uncertainties owing to the prolonged war have added nearly 2 to 3 quarters to the decision cycle time.
In the mid to long term, with several nations pursuing energy security based on captive resources advanced biofuels are expected to find good traction. In Europe, passing of Grade 3 proposal will provide further boost the demand for 2G SMO. Sustainable aviation fuel or SAF space is building up for a certain time in the near future on the back of rising environment awareness and climate actions by aviation players.
Recently, Praj joined Mission Possible partnership, NPP, International Alliance to pursue net 0 aviation. Praj is working closely with NPP in helping formulate an energy transition strategy aimed at cleanest sky. Praj is actively contributed to the formation of a landmark report making net 0 aviation possible and [indiscernible] at 1.5 degree centigrade line transition strategy.
On the CBG front, revised CBG prices and better rates for organic manual will help improve the attractiveness of the projects. Although a little slower than expected, buildup of ecosystem across the valuation is now taking shape. Major corporates have announced plans for significant investment in the CBG space. This quarter, we commissioned the CBG plant based on industrial equivalent as a feedstock. With this, we now have CBG products operating on different feedstocks in the [indiscernible] and industrial effluent in North, South and West India with a rise straw-based system expected commission in the next quarter.
With our unique capabilities and learning from these initial projects, we are in a good position to cater to these emerging opportunities. As for engineering and future business, we continue to see momentum value of healthy order book and improving inquiry basket. The CPES front, energy transition needs of global customers are creating significant opportunity for this business. Energy giants are investing heavily in blue and green hydrogen projects to address the growing demand of the 0 carbon figure. This is creating a significant opportunity for CPES business.
Our capabilities to conceptualize design and manufacture complex modules required for these production facilities is finding increasing acceptance from leading customers across the globe. Modernization is emerging as a growth engine for business with significant growth in inquiry base. We have made operational additional capacity in Kandla to cater to this growing demand and further capacity enhancement is being planned.
On the brewery front, the beer consumption levels across the country are back to pre-pandemic levels and are even crossing it. The new capacity formation is expected to follow from next season. On the PHS business front, as Indian pharma industries transits to global size capacity build in biopharma space, fermentation technologies are set to acquire central stage. Leveraging the parent capabilities in fermentation space, we have made a few initial breakthroughs in this application space for high capacity fermenters, and this will further grow.
RCM program at Praj Matrix is accelerated due to then on identified single-use plastic items from 1 July '22 by the administrative environment, Forest and climate exchange. India's per capita waste generated from single-use plastic is 4 kg per annum per capita. This then will now lead to a significant change in demand for compostable plastics as it mitigates pollution caused by littered single-use plastics.
Continuous focus on developing innovative technology and ring-fencing name with production has resulted in international and domestic [indiscernible] now crossing a formidable 400 mark for Praj. Before I end, I would have to share with you a couple of awards that we won. Last month, Praj was bestowed with a prestigious Golden Peacock Award in the innovative products and service category for our groundbreaking product, biosyrup. Praj was also rated as top company and conferred with Fortune India's the next 500 in the engineering sector. This award is a recognition of the remarkable growth and niche performance among the most promising listed companies in India.
With this, I will now hand over to Sachin for his comments on the financial performance.
Thank you, Shishir, and good morning all. The consolidated income from operations grew by 89% and stood at INR 729 crores in quarter 1 of FY '23 as compared to INR 386 crores in quarter 1 of FY '22. PBT for the quarter stood at INR 64.23 crore as compared to INR 29.8 crores in the corresponding period of the last year, growth of 82%. Profit after tax stood at INR 41.26 crores in Q1 of FY '23 as compared to INR 22.20 crores in Q1 of FY '22. Export revenues accounted for 16% for Q1 of FY '23. Of the total revenue, 77% is from Bio-Energy, 17.3% from engineering and 5.7% is from PHS business.
The order intake during the quarter was INR 1,094 crores with 81% from domestic market. Of the total order intake, 77.2% came from Bio-Energy, 17.3% from engineering and balanced 5.5% from PHS business. The order backlog as of 30 June '22 is at INR 3,242 crores, comprising of 84.5% of domestic orders and balanced export orders.
Cash in hand as on June 30, 2022, is INR 652 crores.
I now conclude my remarks, and I would like to thank you all for joining us on this call. We are happy to discuss any questions or comments or suggestions you may have. Thank you.
[Operator Instructions] The first question is from the line of Dhanaraj Bagrodia from ASK Investment Advisors.
I wanted to ask you, what is the IRR someone would expect to...
Dhanaraj Bagrodia from ASK Investment Advisors.
Can you hear me? Can you hear me?
As there is no response. We will take the next from the line of Saurabh from East Lane Capital.
I have three questions. The first one is on the 1G opportunity. The total capacity needed for 20% blending was 1,500 crores liter when we started off, like, say, in FY '20 that time the existing capacity was about 700 liter and the incremental capacity needed was 800 crores liter. So based on last 2-year annual reports, about 700 crore liter has already happened. So the remaining capacity to be ordered is 100 crores liter. Is this math correct, sir? And could you just clarify on the 1G opportunity which you see in India right now?
That's my first question.
Thank you for the question. As you correctly said, we had estimated that roughly 1,000 crore liters of additional capacity needed to be created in the country then the program was announced and then further escalated to 2025 for the EBP 20 goals to be met, right? And we expect another up quarter 400 crores to 500 crores liter capacity to be further built to be able to meet the EBP 20 targets by 2025.
Okay. Okay. Got it. Got it. So 1,500 crores liter was the total required and 700 crores liter was the existing capacity. So the incremental is only 800 crores liter, right, sir? And your annual reports of last 2 years is mentioning 700 crores liter has already happened. And last year itself, 580 crores happened. So where is the incremental 400 crores, 500 crores liter, if you could elaborate, sir, please?
So what happens is that the capacity of the plant because the -- some of the they have a seasonal factor. They don't run 365 lays a year. So the operating -- the installed capacity may be a little different than the operating capacity. So typically, we have seen that something in the range of 70% to 75% of the installed capacity that come into play. There could be some other because this is based on green feedstocks, plant operating issues. So typically at about 70% of the installed capacity is what you get the output for. Then if you do that math, we are looking at something like another 500-odd crores capacity to be created in the country as we move forward.
Okay. Over the next couple of years, probably, right, sir? A couple of years or 3 years?
2025. That is for meeting the EBP 20 goals, right? Now let us say as we move forward and another set of measures, let's say, for example, our flex-fuel policy comes into play, right?
If that comes into place, and that is an additional demand that will get created because then from against 20% of blending, we will go to some position of 85% ethanol as the fuel, right? So depending on how the overall -- the numbers that you have talked about are only as they relate to meeting the goals of the EBP 20 program.
Got it. Got it, sir. Got it. And sir, also, could you highlight the opportunity for ones in Brazil and Latin America?
Yes. So Brazil, as you know, is predominantly a sugarcane-based ethanol producing country, but they have also taken a decision to -- because of the vast geography and what I'd call it the large-scale movement that got involved in transferring the sugar-based ethanol from one end of the country to the other.
So in -- especially in the Northeast, sorry, northwest of the country, the central parts of the country, where corn is available in abundant quantity. The government policy has now shifted to also create corn-based ethanol. And that is what is creating the 1G corn-based ethanol opportunity in that market as of now. We -- then the -- and coupled with that, Brazil also launched the renewable bio program, which is aimed at lowering the carbon intensity and making the country independent over a period of time from any imports of profit fields.
So if you look at the combined effect of this, Brazil should create capacity equal to almost 500 crore liter based on corn as feedstock over the next 4 to 5 years. And that is where this significant opportunity is being created right now on corn based. And as I had mentioned in my opening remarks, we have already shipped, the plant is arrived. It is under installation for -- our corn-based plant in the country.
In the rest of the Latin America, different countries have different blending mandates and based on those blending mandates we are expecting some movement -- positive movement there as well. We are building a very significant scale plant in Paraguay already, and that is under execution right now. So depending on how -- and as I was mentioning, in general, the trend is to move to higher energy security and therefore, higher biofuels in the mix of -- any country's energy mix. And we continue to need traction being built around the -- in Latin America.
In North America, the situation is slightly different. In North America, the demand -- because of some very efficient market mechanism, the carbon trading LCFS program in California, for example, the need and demand for low carbon intensity ethanol is high. And that is something that is building up now at the back of also a fact that U.S. is also seeing a lot of traction being built around creating such capacity for SaaS, where ethanol becomes in the technology -- one of the technological pathway that are available using ethanol as a feedstock for end product offsets.
Given this inter-mixing of having the mechanisms, carbon trading mechanisms, carbon pricing mechanisms, 1G ethanol already in place, there is a market that is now opening up for creating low carbon intensity ethanol. And all the existing plants actually are a candidate for creating that through integration intervention as well as the defining some different set of energy solutions for them, and that is what we see as a clearly emerging opportunity in the United States.
[Operator Instructions] The next question is from the line of Levin Shah from ValueQuest Investment Advisors.
Congratulations, for a good set of numbers. My question is on order inflows for this quarter. So if you look at the bio energy order inflow, there has been a dip versus last quarter of around 15%, an absolute number is close to INR 840 crores versus INR 1,000 crores last quarter. So has that been this is on account of lower orders that we booked on the 1G side?
No. You said 50% drop.
15%.
So we don't see any dip in the order book or opportunity as they are doing now as we follow pretty strict rule of what gets supported to the order book what we are seeing. So it's fairly at the same level. The overall order book is at INR 1,094 crores this time. I think what was there in the last first quarter -- sorry, the last quarter order book that we have reported, there's a large export order that was also booked under the Bio-Energy segment there.
In this quarter, we do not have that, but as we move forward through the year, you'll see them happening as well. Also, there is a seasonality, especially for the sugar-based ethanol front, right? So there's -- it's not at our -- in the volumes that we are now reporting. All the projects have shifted to starch-based projects. So about 70-odd percent is now starch-based, but 30% is still sugar-based. And since there is a seasonality factor there, there may be minor variation on a March quarter to the June quarter, but nothing as to lead in there.
Understood. So since we had in the base quarter, our exports order, if we exclude that, then we would have probably done a similar amount or better.
Yes, that is correct.
Sir, and on the engineering side also, we have seen good order inflow during this quarter as compared to what we have seen last 2 years. So was there any exports orders or any large orders that is -- that we have got under the engineering business?
Yes. So as I was mentioning, for our CPES business, the energy transition phenomena is creating significant opportunities, especially with green and the blue hydrogen space as well as all the activity that is now taking place around the LNG and the CNG space, especially in Europe and America.
So very positive traction. And as I've also mentioning, our capability to conceptualize and design and manufacture a modular system for these plants, it's something that is standing us in good deed and you actually see that being reflected in the growth of the engaging order book in the quarter. And all these contracts for CPES are meant for export.
Right. So this number that we have reported this quarter is of around INR 186 crores engineering. So this should improve from here as we get more export order on the CPES side.
Yes, more or less, you are right, Levin.
Sir, and last question on the other expenses. So this quarter, what we have seen is that Y-o-Y, the other expenses have almost doubled. So is there a component which is related to the execution and that has resulted in this kind of jump? Or is there any fixed costs which have gone up?
There is nothing extraordinary sitting in the other expenses. It is the direct function of the execution, which we are doing. So if you look at the top line has also gone up by 2x. So it is basically the variable expenses related to the project execution. There might be some element of extra transportation or freight cost, but that's very minimal. It's nothing extraordinary.
Understood. And this trend should continue. I mean with the execution, our other expenses should follow the trend.
That's right.
The next question is from the line of Dhananjai Bagrodia from ASK Investment Advisors.
Can you hear me now?
Yes.
So I wanted to ask for the CBG plant, what is the IRR, the asset owners are getting now?
So I will not be able to put a number to you directly because there are so many variables, right? What's the cost of feedstock? What's the availability of utilities? At what cost they are available? Are they co-located versus independently located? So I would not -- it would be hazardous to get a single number for them. But let's just say that now the CBG projects are in decent two-digit IRR range where it is possible for them to be commercially attractive to be funded by banks.
Okay. But is there -- because for our next leg of growth, CBG would be an important phase. Is there any like particular IRR asset owners are targeting? Because right now the only OMCs have taken the lead for private to growth, they also to see some decent IRRs, right?
No. So actually the plant that we have set up is for the private sector only. The public to plant is still under to be commissioned. So all the 3 plants that I mentioned to you are in private sector. And depending on the cost of capital, their access to funds, how their funding sector is, I think everyone has their own internal hurdle rate that needs to be overcome.
And obviously, as we see it moving forward with these changes, which are positively impacting the IRR of the project. The one should be in a position to see more number of corporates making their hurdle rates and therefore, setting up into this arena.
Sure. And would it be fair to sum that all of these players taken need would be someone who is using this is an ancillary segment vis-a-vis putting a new plant as a new asset, right?
Sorry, I've not understood your question, please.
So we must be doing all these 3 plants are right now must be players who are already in ancillary business who are using that as a raw material to put up these projects, right?
That is correct.
The next question is from the line of Naushad Chaudhary from Aditya Birla Asset Management.
Just a clarification on the margin side. You have been indicating that the pain will be there until the 1Q of '23. Should we -- the current quarter, should be look at as a bottom? And should there be an improvement sequentially on the margin side? That's the first question. Or is there any pain still left which should come in 2Q?
Rather since last 2 quarters, we are maintaining that we'll be seeing some kind of a pressure. Rather this pressure got a little bit beat-up during the first quarter when we saw a very erratic trend of a movement in the commodity prices happening in the month of February and March. The impact we think that will continue for not only this quarter to some extent to the next quarter. So the H1, we will have some kind of a pressure, but H2 should improve as compared to H1.
That assumes that there will be no further, of course, negative movements on the [indiscernible].
Of course.
Okay. But shouldn't be as bad as this quarter was in terms of gross margin? Should there be a sequential in business?
Sequentially, we should see some improvement. Because this quarter, we had very low component of exports revenues getting booked also, which will get covered in the next quarter. So we will see some kind of a relief on that account. But the pressure on the margin side because of the commodity price movement will continue at least for the next one quarter.
And on a 2 years' time frame, what is the number one should look at in terms of your EBITDA margin?
No, sorry, we will not be able to give you that kind of guidance per se, but we will definitely see an improvement because all these orders now are basically getting executed and new orders are coming with the new pricing in any case. And of course, the stability which we are seeing right now in the commodity prices should not disturb the margin side going forward. That's what I can tell you.
Okay. Lastly, on your high-purity segment, what is the demand outlook here? And what kind of growth you expect from this year?
So as I was mentioning, that we see pierce movement around creating fermentation-based capacity and the manufacturing side of the drugs. And that it should well for the business. The other capacity creation, of course, we'll continue to serve the businesses as far as our water and process-side systems are concerned. But now with advent of this, we do expect that the sales start to move even more positively in favor of the business.
So that we are able to leverage the competency that the parent company has on fermentation and then use that as a knowledge base to combine that with the capability of the PHS business as they understand the pharmaceutical business very, very well. So we will be able to then combine their understanding of markets and customers and the parents capability around fermentation and leverage it to good effect.
Actually, I just wanted to understand the scalability case of this segment. So do you think on -- so last year, we did around INR 200 crores is of business on this segment. Is it really scalable? Can we see a doubling of this segment in a couple of years? Or will it be near to INR 200 crores to INR 250 crores odd numbers?
So one of the features of this business is that it serves a single segment, right? so that in that sense, makes it what I would call as a slave to how the growth in that industry takes is. But what is important is within the same industry growth space, now we see a space being created for fermentation technologies.
And that as I was mentioning, which definitely expand the market. In Italy is yet, so I may not be able to put a number out, as you are saying, but definitely in the positive direction.
The next question is from the line of Haresh Hindocha from SVS Securities.
Congratulation management on a very good set of numbers. Sir, I have 2 questions. First is on last week or maybe this week only. There's an article in the paper about Adani and Ambani entering into a CBG, your take on this.
So as I mentioned in my remarks as well that this augurs well that when some very significant players in the energy segment decided to build this also as part of their business portfolio. It fundamentally means that the markets are becoming attractive and that there's a definitive commitment as we move forward. I think this is a very important development for the overall growth and health of the market.
No. But is it true? I mean, just...
Well, I cannot sit on judgment on a news around [indiscernible].
No, no, I'm just saying because you are in the industry, right?
No, that I'm saying it's a good news is what I said.
We know that there is a dialogue that we have with both of them. And it's a good and positive development.
Okay. And just last question. Sir, there is this sugarcane -- there will be an excess this year in India and et cetera, et cetera. Previously, there is always some argument between fuel and food -- fuel versus food. So is this means that there is a very good for the industry of ours, which has no issue as far as the fixed stock is concerned. And why the sugar can -- they are saying there will be an excess, is it not directing more to the ethanol?
So I think this is an argument that will always have to be taken into consideration. And as you rightly said, feedstock will be a very major issue that in a constructive fashion, right?
So that's the fact. Now given this background, I think what we have to see is that what are the different feedstocks. So as we were also mentioning earlier that we are clearly seeing a shift away. So earlier 3 years ago, everything was on sugar -- sugarcane-based feedstock, right? And now we think 70% of the order book that we have booked in this quarter is now moved to starchy feedstock. So that's already 1 transition that is taking place.
And I was mentioning about lignocellulosic or straw-based ethanol plant being commissioned towards the end of this year. So that's a completely untapped source of feedstocks that will come into play. So up to another 20%, 25% kind of capacity maybe starchy feedstock will play out. But then the further growth will happen based on the 2G or the lignocellulosic feedstock, as we call it, the straws, et cetera, that will come into play. So different as we travel through the journey of fuels and different mixes and demand in the economy, I'm sure that we will start to see a changing mix of feedstocks as we go forward.
But isn't it good for us being excess sugarcane availability?
Yes. I will come to the other parts. And then you mentioned that why is restricted sugar and why that is not getting done.
Yes. Yes. Yes.
Yes. You are correct. So there is a sugar price dynamic also at play because the other big producers of sugar in the world may have a different cycle. There may be doubt there, there may be less production or excessive production as the case may be. So depending on that, obviously, the world sugar market prices will also fluctuate. So the producers in India will have to think in terms of what is the product mix ideally that they would like to have to strike a balance for their own balance sheets and demands and needs of their company to be able to address the demand of sugar as well as of ethanol.
From all calculations, it is very clear that even if all the India sugar demand is met by the sugar mills we'll still be left with excessive sugar, which needs to be addressed. So one party that you go and export the sugar. And second is that rather than producing the super you convert it to energy, which is ethanol. And there has been several indicators, several initiatives from the government side to ask sugars mills to actually push that sugar to -- for production of ethanol, which is what the country needs today. And I think it also enhances our energy security et cetera. So I'm sure as we move forward, we will see a good balance [indiscernible].
Isn't it very good for company to just save the juice with your new technology. Last year, you introduced. So is it beneficial for them to export sugar or to save it as a juice and then use it for the ethanol manufacturing -- production.
As I was mentioned to you, it depends on the price dynamics of sugar in the global market, right? So what happens to the other sugar producers. As I was mentioning, if there's a drought in Brazil, it's a very different dynamic for the sugar prices in the world as compared to Brazil having normal sugar season. So we'll have to see how that plays out. But you are right. And as I said, everybody will finally try and see what is the most optimal order mix for them and they will act accordingly.
The next question is from the line of Levin Shah from ValueQuest Investment Advisors.
Sir, a follow-up on CBG. So have you received any fresh orders on the CBG front?
Sorry, I couldn't follow the question, please.
So have we received any new order on the biogas front during this quarter?
No. Within this quarter, we haven't received any new order.
Okay. Sir, and how are you seeing in your dialogues with your customers or people who are interested in putting up this CBG plan for this price revision. Has there been a renewed interest? And do we see some kind of pipeline which can materialize maybe over next 2, 3 quarters?
Yes, we are seeing an increased interest and the activity levels have gone up. As you see in earlier meeting, somebody also asking what happens with these 2 big players enter the business with the intention setup capacity. So I think those are clear positive signs. Some more clarity required on how the overall dynamics play out. As you know, that the price increase has come into play only over the last 4 to 6 weeks. So we'll still have to see impact of that.
But overall, we clearly see an increased level of activity in the market.
Right. And sir, lastly, on the CBG front, so what we understand is that there are a lot of other suppliers as well in the market. So how do you see the competition panning out? Will we have dominant share when the orders start coming in or this will be different kind of business dynamics versus what we have in 1G.
So Levin, I always believe that if there's competition, there's a good sign because then that shows that there's a good potential that is developing, right?
That is why people are wanting to jump into the frame. So that's a good sign to as far as -- because these are mixed markets. We'll have to see how the market shares play out and probably we'll have to give at least 3, 4 years kind of time frame for one to arrive at a market share position.
But obviously, everybody will try and push their own solutions and technology. And unless things are proven on the ground. I think once that whole cycle is gone through, then one will know which technology fruits best. We strongly believe, given our pedigree that we have the solutions because a major question on this will also be the feedstock that was being asked in a different context earlier by one of the participants. What happens to that, the understanding on those feedstocks, these are several questions that are still to be answered, and only time will tell as to what actually work out. So market shares are still difficult to predict right now. But definitely, the activity levels are improving.
[Operator Instructions] The next question is from the line of Divyanshu Sachdeva from White Oak.
Am I audible?
Yes.
Just one thing, like in your high-purity business, like you mentioned that there has been a new optionality in terms of fermentation and currently you are also [indiscernible] our market. So just wanted to understand can you also assume the new optionality in terms of semiconductors and [indiscernible] companies as well because given they're also a requirement of huge or high purity water, so can we take that as an optionality going ahead?
Yes, Divyanshu, that's a very good observation. You are correct. The water that semiconductor industry will need is very close to what pharmaceutical industry needs. So having capability in that space will obviously put us in a pole position to address the needs of the emerging semiconductor industry as well.
Okay. And just one last one. So in the last con call, you mentioned a couple of new words like clean-tech or green-tech as well as carbon capture and also today, you mentioned of hydrogen also. I just wanted to understand from a longer-term perspective, like how do you see Praj panning out in these segments as well?
So as I was mentioning to you, there are different solutions on the offer. So right now, the -- so let's take hydrogen as an example. Globally, the movement is to use the electrolyzer technology for production of hydrogen, green hydrogen and also in several locations, people are producing blue hydrogen which will fundamentally capture the carbon and separate it out and not let it go to atmosphere.
That itself is creating a huge opportunity because we are able to conceptualize and design and manufacture a plant on modules or modules, which can then go in very quickly, help start up these plants and not take long time of construction at times. So that one clear opportunity that is emerging. The second win -- I was mentioning about the overall -- at a broad level, the low carbon intensity solutions that are required, whether in form of low carbon ethanol, or we talk of CBG, which is also a low carbon intensity solution as far as CNG is concerned. So different product markets out there. There also, as you know, we have a significant play in technology and experience to bring to the table and offer.
Our deep understanding on the feedstocks will help us to address these needs in a good way. As and when, as I was mentioning, U.S. already has a pretty advanced carbon pricing market, we don't have that yet. But as and when that comes, even that will open up several new opportunities. We already have a business offering, which will -- which offers to customer capture of CO2 -- the biogenic CO2 out of our processes which is considered to be superior there.
So there are several solutions that are available in our basket, and we are all -- they're all on the offer to our customers depending on which segment needs one.
The next question is from the line of Kunal from B&K.
Sir, I just wanted to get some sense. So out of the total capacity required to meet the 20% blending target, how much would have been already ordered out, sir?
As I was mentioning, we -- when we started out this accelerated program, about 1,000 crore liters was to be created. And as we mentioned earlier, around 500 crore liter still needs to get ordered out. [indiscernible].
Okay. So basically, 50% we have reached.
In terms of order, yes. these are not build capacities yet.
Yes. Yes. And sir, you mentioned, if I'm not wrong that out of this, about 70 into starching is what you mentioned?
I said that in this quarter that went by, we saw that 70% of the order analysis were on the starchy feedstock and 30% on the sugary feedstock.
So this 500 crores that has been ordered. So what would be the -- your sense on how much would be sugar and how much would be starchy?
That's the touch one to say, but we clearly see, as I mentioned, that the shift is in favor of starchy feedstocks right now in India because that's obviously the feedstock in terms of availability and volumes that are now available. Sugary feedstocks are very largely -- already captured in the ecosystem in terms of sugar mills and then it gets processed from there onwards. So sugary feedstock -- sugary feedstock-based may have a different dimension as compared to starchy feedstock.
Sure. And sir, lastly, within the starchy feedstock, any specific feeds from where you're seeing more traction or more inquiries than others in terms of -- because of the better availability or it's more region specific?
So Kunal, starchy feedstock, I mean, for example, if you go to United States is a corn and nothing else. In India, that's not the case where we have [indiscernible], there's another feedstock that is available. We can also get maze or corn in parts of India. So that's a very local geographical solution. The key issue is that we are in a position to provide a solution irrespective of the feedstock.
The next question is from the line of Bharat Sheth from Quest Investment Advisors.
Shishir and Sachin, congratulations on good set of number. And expect with good order book.
Sir, my question is related to this flex fuel, what we are talking for a next leg of the growth for our company in 1G ethanol. So, is that correct understanding that beyond 15%, there has to be a change in the engine as well as the dispensing center by the OMC and -- or it is at up to 20%, this is workable.
Bharat, as our understanding goes right now, the first stage that needs to be overcome is the EBP 20 compatibility for the vehicle. As I mentioned, that some tests and trials are underway to understand what needs to change in the existing vehicles. I was -- I won't name, but I was talking to one of the largest automotive companies in India. And they mentioned to us that their vehicles are default EBP 20 just that they have not mentioned about it.
So it depends on what the technology deployed by different OEMs when they manufacture their vehicle. So some of them, which are large multinationals, they told me that our vehicles are already suited at the EBP 20. Some may not be and especially the very old vehicles may not be in a sort of condition to immediately accepted. And there also, we know that some of the fuel train components will have to change in terms of the gaskets and the material rubber that is used, et cetera.
But no major changes. In terms of flex fuel, it's a different part or different vehicles. So flex-fuel vehicles will have to be -- so we can't take the current vehicle and just use that as a completely flex-fuel vehicle. That is a slightly different technology such in the way the compression is controlled, the compression ratios that are required to be brought into the engine, et cetera, et cetera. So those will have to be designed from, as I would call [indiscernible]. So already in a big way they exist in the same brands and same cars in Brazil. So in that sense, it's the technology already proven on the road.
Okay. Great. So how OMC will be affected because if some of the vehicles, which are -- if they go for 20%, some of the vehicle will not be really able to take that 20%. So do they have to set up a separate dispensing machine? And second thing to make them more, I mean, what our government is doing to incentivize OMC to have separate dispensing because currently, it's my -- if you can throw more light on it. Ethanol is under GST, whereas older -- I mean, gasoline is under say, old regime. So how do you really -- what about 20% or beyond that also if they go blending. So whether they have to -- I mean, their rates, I mean, taxes will be on the blending rate or 20% or 20% will be at the GST.
So how -- otherwise, the government is making the whole money. So are we like what we did in playing as a facilitator role to, I mean, bring those kind of change in the system?
Bharat, as you rightly said, these are some of the issues to be resolved where, obviously, a number of ministries will get involved, OMCs themselves, and those are the Asia. And I think this issue is also being taken up by industry associations with the government.
So it's a very involved dialogue. But obviously, these questions will have to be answered as we start to move and I'm sure that we will be able to find an answer. Sitting down and finding a logical answer to it is not rocket science. So we'll be able to -- I'm sure that they'll be able to do it.
The next question is from the line of Sagar Kapadia from Anvil Share & Stock Broking.
Sir, I just wanted to ask you, the technology solution we have come up with this biosyrup. So suppose if the plant is 100 KLPD sugar plant, and this is working for 7 months. Now it wants to what for the entire year. Sir, how much CapEx will the client have to incur for this? And this CapEx with the client enter will be the revenue for Praj? And another thing on this, any recurring revenue Praj will get by supplying enzymes, et cetera, for this technology?
Yes. So if an existing plant wants to run for full year, and therefore, they would like to treat this syrup and store it and then use it for production of ethanol. They will need the biosyrup technology, which will entail a onetime plant modification and installation of a set of equipment as well as recurring expenses that may be required to be incurred on the, what I would call, the enzymes and some of the other performance enhancers, et cetera, so that both will be required as far as the operations of a biosyrup-based plant is concerned.
Okay. And sir, what will be the value or onetime CapEx?
Well, that depends on...
Say, example, just 100 KLPD [indiscernible].
I am not going to answer that on the phone because we are engineers right? So we'll ask you 55 questions on what is the scope and what's the battery limit and what's the existing infrastructure, and what's the existing facility, how much capacity you've got. So there are many questions to be answered. So a tough call for me to answer on this and all my [indiscernible] if I give you a number.
So let's say with this. But yes, it's not something -- it's not something that it cannot be considered for economic viability is a big issue. And I think I keep on saying this to many customers. One is, of course, the fact that you will expand your asset utilization from 6, 7 months or to round the year.
The bigger one, in my opinion, is the fact that you dropped the afferent generation volumes by extra 4% to 5% depending on where the current process is. So that is the critical part. I think that's very, very important to understand that this process also dropped F1 generation itself by a factor of 4 to 5. And that is a big positive for the customers when they consider -- and then what happens is that by going through this route, we are also in a manner of speaking providing a flexibility for use of raw materials as to what they would like for the production of ethanol -- you can -- biosyrup itself becomes a feedstock candidate.
And sir, another question. I just want to hear, you said you also in dialogue with Reliance and Adani for the CBG projects?
I said in my opening remarks that we are seeing big corporates now announcing plans, which was there in the newspapers. And then somebody said, are you talking to them? And I said, yes.
Okay. So you are also in talk with them. So hope, sir, the rainfall, which is coming for ethanol plant starts coming in the CBG plans also in order improvement.
the next question is from the line of Pankaj Kumar from Kotak Securities.
Congratulations for a good set of numbers. Sir, my question is more related to the previous participant's question related to implementation of EBP 20, there might be some challenges going forward because of the OEMs need to do some modification or even the old vehicles need some modification. So do you see any risk of further CapEx or new CapEx, the balance CapEx that we have delayed by some year or something? Any comment on that.
Sorry, is the question that are the likelihood of some of the CapEx is getting delayed? And what is the cause you said?
Cause maybe because of the implementation of EBP, we still need to do something because our petrol pump -- is maybe the fuel dispensing machines might be different for EBP 20 or abnormal fuel or maybe some other technical issue related to the vehicles -- old vehicles and all.
So I think what we have to -- this is exactly what some of the issues that need to -- because to 10%, maybe some of these issues didn't exist. But as we move forward, we'll have to address them comprehensively, not only for EBP 20, but also if you have to go beyond to say flex fuel vehicle, et cetera.
So CRM, CAI, [indiscernible], all this industry associations of different stakeholders are currently in dialogue with the ministry -- concerned ministries and officials. And I'm sure that we will see a comprehensive and a conducive policy being rolled out. Otherwise, if we don't have the enabling mechanism, it will not work.
Okay. And sir, my second question is regarding -- of course, we are creating such a huge capacity on the ethanol side. So how do you see services as an opportunity for us in this, right? Are we looking back at an opportunity?
Yes, that's a great question. I think a very, very good question. We recognized the need for bringing our technology and knowledge to our customers even as we start to operate the plant and not just at the stage of commissioning. So there's a big, focused effort right now underway, where we believe that we can bring a host of solutions to our customers as they start operating their plants and that could come in the form of -- on one end could be CO2 biogenic CO2 capture. At one end, it could be O&M services for the plant. It could be performance enhancing -- enhancers that we have a whole host of solutions enzymes. We'll have [indiscernible].
So all of these where we have enough knowledge of what happens to different feedstocks and how can we best combine them together. This is expected to -- the universe already exists. The good news is that there's a big market, which is where we have great relationships with our customers. And now our ability to bring all of this in combined traction will obviously be -- we will be able to create decent inroads on the OpEx side of customer as well.
And just to extend to this question. So what is the current portion of the services business in our revenue mix?
I would say about maybe about 5 to 10.
And what could be the potential assuming this EBP 20 gets over. So by that time, what could be the potential in our mix, assuming all other...
So the market is very nascent on both counts. And maybe we will be in a position to go 10% and another -- our aim is to start growing pretty rapidly in that space because we believe there's a lot of headroom for growth. And that is the plan that we are rolling out right now to see as to how that business can start growing at a fairly good view.
The next question is from the line of Naysar Parikh from [ Native ] Capital.
Mr. Shishir and Mr. Sachin, congratulations. So the first question is, if you could give a breakup between 1G, 2G, and [indiscernible].
I said from our, what I can say presentation point of view or the monitoring point of view, we generally consider Bio-Energy as one segment. We have not yet started segregating this segment into 3 or 4 buckets, the way which you are asking for. And that's the reason why we basically give a number for the Bio-Energy segment all put together.
Understood. The reason -- if you can give some -- even if you can give some directional context because...
Directional context, we -- I mean, we always maintain that, the way needs the -- because these 2 segments, basically, CBG and 2G are still in a way nascent stage, we said that they will be graduating over a period of time. And once they get into a little what I can say consistency kind of a mode then we will be in a position to talk about them in a separate way. Otherwise there is no point in talking for one quarter and in the next quarter, nothing. I mean it still -- it has not reached to that kind of a maturity level, we can start giving you the different numbers for this segment. So wait for some time, the market is definitely developing, seeing the development of CBG and the 2G both. Please wait for some time and at the opportune time, we will start talking about separately.
Got it. So around 18 -- is it safe to assume of the order intake, 80%, 90% still would be 1G only, roughly?
So unfortunately, on a quarter-on-quarter, it keeps on changing. Yes, right now, there is a huge influx of order on the 1G side. As for the earlier participant, Shishir was making a mention that there is no CBG order in this quarter. So yes, from a quarter-on-quarter, the numbers might look very different. And yes, currently, 1G is the one which is dominating this year.
[Operator Instructions] The next question is from the line of Saket Kapoor from Kapoor & Company.
Sir, firstly, when we look at your consolidated numbers, the increase in revenue -- with the increase in revenue, there is a dip in margin. So if you could explain what goes into the consolidation in the region for lower margins when we look at the stand-alone numbers.
Mr. Saket, sorry, can you please just little bit elaborate your question? I didn't get your question.
Yes, sir, I will repeat it. Sir, when we look at the stand-alone numbers, the revenue stands at INR 657 crores and PBT at INR 53 crores, wherein for the console number, the revenue is at 740 -- INR 730 crores and PBT is INR 54 crores. So would like to...
This quarter, we have not seen major contribution coming up from our subsidiaries. And that's the reason why you are not seeing any kind of a difference between stand-alone and consolidated numbers.
So revenues have increased. There is a 10% increase in revenue, but I think that the costs are higher. That is the reason. That is the only reason.
Yes. that's right because in the subsidiary, this time, we are only having the execution activity going on and not the supply portion which has played a role, especially into PHS segment. And that is what has contributed, it's not having the corresponding margin coming in.
Okay. So going forward, you can even outside because the costs have been built in this quarter.
That's right. That's right.
Okay. Sir, and you earlier explained about the higher raw material costs, especially on the stainless steel front affecting the margins and the pass-through was not easy. So now with this correction and the prices remaining lower though we see an incremental increase in margin on the Engineering segment, especially in terms of the stainless steel prices respond a good percent of our raw material.
Yes, we expect that this softening of the commodity prices, which have now started happening, will have an impact. But in our kind of a business, you please need to understand that there will be some kind of a lag effect. So all this downfall, which is happening in the commodity prices, will definitely seen -- earlier also we said that in H2, we will see this impact coming in, when the old orders, which were at the high -- getting executed at the high commodity prices will come down. And the new orders will start kicking in from the execution side.
[Operator Instructions] The next question is from the line of Ayush Shah from [indiscernible].
Am I audible?
Yes. Yes. You are.
First, I wanted to ask what's the development on the diesel blending front with [indiscernible]?
Sorry, sorry, could you -- what was the question, please?
What blending, you mentioned.
Diesel blending. So about what is the update on the diesel blending from the [indiscernible]?
Are you saying what's the update on diesel blending? Have I understood the question correctly?
Yes, sir. Yes, sir.
Okay, so -- and there's nothing new that has happened in 2 months, but you will see there is a thinking now going on to see because that itself when we started to dive deeper into this. There are very different segments and different standards that are prevalent for diesel engines. For example, [indiscernible] engines have a different norm, railway engines have a different norm, automotive engine, telecom towers engines have a different norm. So we'll have to -- as we started drive these but this is something on which work is continuing, and we will see that I mentioned last time also that, that is something which is about 18-odd months kind of time cycle.
And so that would probably take you towards the end of calendar year, that's when we should start doing this.
Overall, I'm saying there will be actions in between, but overall, you will see that [indiscernible].
Okay, sir. The next question is based on the SAF front, sustainable aviation fuel. So I wanted to know if -- is there any traction we are looking from at that front [indiscernible].
Sorry, could you repeat please your question?
My question is on the sustainable aviation fuel, is there any update from -- on that front from the business point of view? I mean is there any traction we are looking at?
So as I was mentioning, sustainable aviation fuel is something that is beginning to attract a lot of attention globally. That business has a little different business process and model compared to the ethanol. So there, the first stage has to be an offtake agreement signing from the airline, that's [indiscernible] because they are only consumers for this fuel.
And then apart from the fact that there are tenders and norms to be followed, et cetera, et cetera. But having said that. So a few pathways have been now approved internationally, and pathways are the technology processes that we use. [indiscernible] is a prominent one among them, where 50% of the blending is allowed. Right now that's the next [indiscernible].
In the United States, we are seeing traction building up because some of the U.S. airlines have actually signed up for offtake agreement. But all these offtakes are not now, they are in '25 onwards, not right now. Of course, the CapEx, it will also take time to build. So we will see activities -- this activity space actually coming to -- although right now, there was being around team size and policy environment, and initial airline signature. The volumes are very large. Several questions will have to be answered in terms of what we talk, which capacity, what norms, how much blending, what are the clean sign-offs that will come into play at what moment in time. So there are different dimensions. The whole policy environment, which will regulate or enforce use of blending -- blended fuels. As we go forward, you'll hear more and more about it.
And one clear indicator there is that since the purpose is to reduce the carbon footprint, any fuel, which has got a lower carbon footprint will have a higher acceptance and that is where we were mentioning that the second generation ethanol, low-carbon ethanol, they will become the preferred feedstock as we move forward.
Okay. Sir, on the CBG side, can you just comment on what is the cumulative order with a branch we have completed or is under execution till date?
It is not audible.
[indiscernible] so we are not able to hear you very well. Could you be a little slowdown and tell us we couldn't hear a question at all.
Am I audible sir?
You are audible, but sometimes there's a lot of what should I say, vibration in the voice.
Okay. Sir, I wanted to know that on CBG front, what is the order book that Praj might have executed or is under the execution till date?
I had earlier mentioned that we are not giving this breakup between the Bio-Energy number as of now. We will start giving at the opportune time. 3 orders are already executed. That's what we mentioned to you. 1 order is under execution. That's what we can tell you, but not in terms of the rupee numbers.
The next question is from the line of [ Chandramouli ] an Individual Investor.
Normally, I see whatever your Q2 -- I mean, Q1 end of the order backlog number will be able to achieve that as a trade from the rest of the financial year. Now at this point of a time, Q2 backlog order is above INR 3,200-plus-crores. Is this my fair assumption? Can we expect the same this financial year also?
Sir, the INR 3,200 crores number is correct because that's the fact. We will have to repeat our performance as you rightly said, that is the aim that we also have. And the thing is that we need to execute these jobs and order book in line with what customers expect us to do, where their project finances are, the way their project schedules are, the way their overall site preparedness is. So there are many factors that walk in. But in general, we have -- right now, we don't see any reason to think otherwise.
Okay. And just normally, if I could see your Q1 2020, Q1 2021, whatever the backlog that you have, approximately, you could be able to achieve it. So that is [indiscernible] things we are heading towards the top line of approximately close to INR 4,000 crores this year?
Chandramouli, the thing as I was mentioning there are also some other changes that are taking place. And I'll mention, for example, in our PHS business that now we see a traction building on the fermentation side. Now just to share with you while the water treatment plant order, if it comes, I'll execute it on an average in 12 weeks or even less. Ferment order on the other hand could be 12-month contract.
So it's a wide array of technologies that are in display. I think some of that changes will also have to be factored in. And we will have to see how we end the year. I am not in a position to tell you exactly the number right now because that's not the way we sort of provide guidance, et cetera. But a good healthy order book is the first thing that we need. I also mentioned that in the opening remarks that this was a quarter that actually proved to us that our execution cycle, our capabilities and capacities are robust to take us forward in the year in a very constructive sort of passion. And because that was the first requirement. If we build the base, then we can obviously build the building, and that is our attempt.
I totally understand, sir. Sir, again, maybe I'm repeating, at least do you have the capacity to execute all these orders?
Yes.
The next question is from the line of Mahek Talati from Yellow Jersey Investment Advisors.
So as the transport minister had made a huge statement of running all the large number of vehicles -- ethanol-based vehicles...
We can't hear you, Mr. Talati.
Yes. Can you hear now?
No, Yes, maybe a little better, but I just couldn't understand anything that you said, sorry for that. But you're very...
Can you hear now?
Yes.
So the transport minister has made a huge statement of running a lot of huge amount of vehicle -- ethanol-based vehicles in the country by 2025. So are we making any CapEx or taking any steps to capitalize the opportunity?
Mr. Talati, I was mentioning to Mr. Chandramouli's question as well, that we saw this quarter as a proof of the fact that we are in a position to execute improved and large volumes at short notice. And that is what -- relatively short notice. And that is something that has not happened because we just acted in 6 months, we have been acting in direction with what development take place in market and because you and I know [indiscernible] capacity creation takes time, both in terms of getting the right people and knowledge on board. But also the fact that I have to then create an executing infrastructure that can do both the manufacturing part, but as well as the project execution commitment.
So right now, we have put in place a mechanism that allows us to -- and if we see further improvement in the market, we will also -- as I was mentioning earlier, we expect better traction going forward even in the export job. We will continue to -- so we now understand the model that we need to follow internally to augment our capacity and capabilities, and we'll continue to do so.
The next question is from the line of Tanvi Bhandari from HEM Securities Limited -- sorry, [indiscernible] Securities Limited.
Sir, congratulations on good set of numbers. Sir, just first of all, I wanted to know about the government plans and how we are in line with the [indiscernible] the engineering business [indiscernible].
Sorry to interrupt, but we are not able to hear you very well, Tanvi.
Yes. Sir, one thing, so I wanted to ask that you already mentioned that as per the capacity, there was 5,000 -- the target for CBG was 5000 [indiscernible] 2023 to '24. So is this now possible? And second, again, on the ethanol blending program. I just wanted to know what is the current update in terms of what is the opportunity that we anticipate with the existing ethanol blending target up to the 20% by 2025.
So on the [indiscernible] plant, the plant that government had, obviously -- we are not a country that is using gas as a significant source of energy in our overall energy pie. We have been a very liquid and solid source energy focus usage country. So introducing gas itself is a challenge and that is what was recognized.
So I think -- and it's the first program of this kind anywhere in the world. So there were many firsts that got associated with it. And obviously, that has delayed the program a little bit. So I don't think '23 will have 5,000 plants, that's a difficult one to achieve.
However, what is important that I was mentioning earlier as well, that there have been very active dialogue with all the industry stakeholders. And that has allowed the government to also introduce necessary changes and amendments to the policies that were already announced as well as supporting programs around the policy. Now with the stepping in of the large corporate, we see a good ecosystem building. There has been what I would call a demonstration projects that have already been done at commercial scale.
So these are the elements of the ecosystem that are all now falling in place, and therefore we should see a good pattern build as we move forward, whether it be 5000 in '23, that's a little tough point. Because I think we may not have capacity to build 5,000 plants in a year's time frame. But obviously, this is a positive movement forward. So maybe 2, 3 years delayed but is definitely going forward. On the ethanol front, I think the capacity that is getting built and I mentioned earlier, around 500-odd crore liters will still have to be built to meet the EBP 20 target.
The next question is from the line of Keshav from Rexon Investors.
Sir, I just have one broad question. The Bio-Energy and material space SCC is growing rapidly, which will grow for a pretty long time. But there are also a lot of positive disruptions happening on the technology side. For instance, respirated algae for better [indiscernible] leased for pretreatment chemical resistance. So to exploit our competencies of process and systems engineering. Are we working on some of these real estate projects, let's say, planning to work with the biotech companies that develop these cell lines, build a system together with them and then out-license these systems going forward.
So maybe I'll also attend to broad answer as this is a pretty broad-based question. So we understand that there are areas where we will need to partner with external companies, organizations external to branch, and we are very open to that, and that is a dialogue that is constantly on. We are already working with several companies who -- with whom we can co-develop if I can use this word or add value to what they've already done take that and add it to the next step and bring it to commercialize stage.
What capabilities and capacities we use depends on what's the value proposition that needs to get refined. And that's an area that we are working on. But I won't be able to tell you names because our agreements with them do not permit as we say so. Wherever it is possible, you will clearly hear about it. For example, when we introduce the cellulose-lignin technology, which takes care of softwood and forest weight to ethanol conversion. And we work with Sekab that was -- at some stage, it was allowed for us to speak about it, and we are going to saying that that's a new offering from our end along with Sekab. So as and when a development takes it, we'll keep you informed. But yes, that is also a part of the way of life at Praj.
We will take the last question from the line of [indiscernible] from B&K.
Sir, I just wanted to know regarding the ecosystem that are actually using in [indiscernible].
We can't hear you.
Can you hear me now?
Yes. But let's try -- but we couldn't hear anything at all what you said earlier.
Sir, is it better now?
Yes, better, and go ahead.
I just had 1 question regarding the [indiscernible] around [indiscernible].
Sorry, you are breaking up. I can't hear you at all.
Yes, one second. Can you hear me now?
Yes.
So I just had 1 question regarding starchy-based feedstock ecosystem because we are seeing more proaction in the quarters and almost 60% to 70% to 70% to 80% of our order inflow is coming from a starchy-based feedstock. So I just want to understand the availability -- or the supply side basically supply side of these starchy-based feedstock.
So right now, we don't see that to be challenged. We are -- I think the country is sufficiently provided for the starchy feedstock. And to meet the goals that are set out in EBP 20, we don't see a problem at all.
That was the last question. I now hand the conference over to the management of Praj Industries Limited for closing comments.
Thank you, everyone, for your time today. In case you have any more questions, feel free to write up at info@praj.net. Thanks, again for your time, and have a nice day.
Thank you. On behalf of Praj Industries Limited, that concludes this conference call for today. Thank you for joining us, and you may now disconnect your lines.