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
Ladies and gentlemen, good day, and welcome to the Praj Industries Limited Q4 and FY '24 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you, and over to you, sir.
Thank you. Good morning, everyone, and a very warm welcome to you all. Sorry, it's 12:00, so good afternoon, everyone. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of Praj Industries Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the fourth quarter and financial year ended 2024.
Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions.
The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review.
Now let me introduce you to the management participating with us in today's earnings call and hand it over to them for opening remarks. We firstly have with us Mr. Shishir Joshipura, CEO and Managing Director; and Mr. Sachin Raole, CFO and Director of Resources.
Without any further delay, I request Mr. Shishir Joshipura to start with his opening remarks. Thank you, and over to you, sir.
Thank you, Anuj. Good day, everyone. I welcome you to Praj Industries Earnings Call for Q4 and FY '24. I trust all of you had the opportunity to go through our results for the quarter ended 31st March 2024.
I would like to start today with 2 exciting developments in the quarter. First, Praj is ranked global #1 in hottest top 50 companies in Advanced Bioeconomy by the U.S.-based Biofuel Digest. This makes Praj the first Asian Indian company to bag this honor.
From a global rank of 34 in 2018 to a global rank #18 in 2019; and finally, global rank #1 in '24 is being a very eventful and exciting journey.
Secondly, we are very, very proud to announce successful commissioning of commercial scale CBG plants based on press-mud and dry straw as also achieving benchmark results for yield. These plants deploy Praj's state-of-the-art proprietary [indiscernible] biosolutions to achieve reliable performance.
With this, Praj now has proven commercial scale CBG projects, operating on 3 key feedstocks, namely spent wash, press-mud and rice straw. This establishes Praj's RenGas technology as a definitive solution for complex agriculture feedstocks.
Now coming to the business performance. Our performance for the quarter and whole year reflects the business development across different dimensions of our portfolio and our ability to create, deliver and capture value to an increasing base of diverse customers.
We are on a path to transform our business with increasing focus on emerging segments of CBG, SAF and ETCA in near to midterm future, while expanding the share of international business in the overall platform.
Our domestic Bio-Energy business for the quarter continuing to see development of starch-based ethanol plants in the country with over 90% of our domestic order book coming from starch-based plants. The mandated realignment of sugarcane-based feedstock on product mix slowed down, order execution and finalization for ethanol projects based on sugary feedstocks.
We are in discussion with several customers on converting this -- their existing single feedstock plants to multi-feedstock. With favorable revised estimates on sugar production in the country, we are confident that the delayed project will soon get back on the track.
On international front, as you all know, Brazil is the sugar and the ethanol capital of the world. And so far, the ethanol production in the country has been from sugar feedstock and of late, they started to produce ethanol from starchy feedstock.
Brazil is now moving rapidly on ethanol production based on starchy feedstock. I'm happy to share that we have successfully handed over our first grain-based ethanol project in Brazil. We have already signed up for 1 more contract for grain to ethanol plant with BE8 our global renewable energy company in Brazil.
And the engineering activity for this plant will commence in this quarter followed by construction activities in next quarter. I'm happy to share that a French group has awarded us a contract to set up a 60 KLPD greenfield ENA plant in Ivory Coast Africa.
This is the second project from the same group. We are in the process of completing the first project that is being set up in Congo. The low-carbon ethanol opportunity in the United States is expected to get momentum post notification of 45Z under IRA Act. We have initiated dialogue with several countries who have become part of Global Biofuel Alliance.
On the services business, that saw healthy 2x growth in FY '24, we are having significant growth in both domestic as well as international market in FY '25. Biogenic CO2 capture is increasingly gaining traction at the back of sequestration activity picking up, and we have started to provide solutions for capture of biogenic CO2.
Our solutions for enhancing sugar yield and quality is gaining traction in the Brazil market. On 2G front, IOCL Plant 3 commissioning is underway. I'm happy to share that plant has produced over 1 million liters of ethanol till date. Being first of its kind plant, there are unique situations that need resolution across the ecosystem and the project.
We are working very closely with IOCL team to resolve these and ramp up production in gradual manner.
As for CBG, I have already shared the most important development. We are further working on establishing fool-proof solutions for other feedstocks. The enquiry pipeline for CBG plant is developing in a healthy way, and we're expected to transfer in the firm business as we progress in the year.
Our modularization solutions offering is finding strong traction in international market and has witnessed nearly 2x growth in order book over the previous year.
Praj is chosen to build state-of-the-art models for one of the largest blue hydrogen projects in Europe. We have also booked and executed engineering projects for modularization of ATJ projects, ATJ is the alcohol project pathway for SAF in the United States.
We have commenced commercial production for our new GenX facility in Mangalore in February. All customer already held for approval of this facility are successfully completed.
Our PHS business has delivered strong growth over last year with healthy order book and has seen increasing traction for our high-capacity fermented offerings. We completed 3 state-of-the-art blood plasma projects in this fiscal year. And with 1 major customer achieving 100% capacity planned blood plasma products.
Zero liquid discharge, our modularized solutions are finding increasing acceptance from our customers. We are leveraging our core competence in industrial biotechnology and microbiology to develop specialized microbes for processing difficult-to-treat [indiscernible]. The brewery and beverages business inquiry is now building up on the back of normalcy in the market demand. We are expecting CapEx investments in the coming financial year.
Overall, the business outlook continues to be positive for our business. With this, I will now hand over to Sachin for his comments on the financial performance.
Thank you, Shishir. The consolidated income from operations stood at INR 10,185 million in quarter 4 of '24 as compared to INR 10,039 million in quarter 4 of the last year.
PBT for the quarter stood at INR 1,230 million as compared to INR 1,128 million in the corresponding period last year. Profit after tax at INR 91.96 crores as compared to INR 88 crores of last year's quarter 4. For the full year ended March 31, 2024, income from operations stood at INR 34,662 million as against INR 35,280 million.
PBT stood at INR 3,774 million in FY '24 as against INR 3,187 million. PAT for FY '24 came in at INR 2,833 million as against INR 2,398 million in FY '23.
Export revenues accounted for 20% for FY '24. Of the total revenue, 74% is from Bio-Energy, 18% is from engineering and 8% from PHS business. The order intake during the quarter was INR 9,240 million, with 61% from domestic market.
Of the total order intake, 65% came from Bio-Energy, 30% from Engineering and balance 5% from PHS business. The order backlog as of March 2024 is at INR 38,550 million, comprising 71% of domestic order with 76% from Bio-Energy, 19% from Engineering and balance 5% from PHS business.
Cash on hand as of March 31, '24 is INR 700 million. The Board of Directors proposed a final dividend of INR 3 per equity share at the rate of 300% of the face value of INR 2 per equity share -- final dividend, sorry -- 300% at the rate of INR 6 per share of the face value of INR 2 per equity share for the financial year ended 31st March 2024. It is subject to the approval of shareholders at the forthcoming Annual General Meeting.
With this, I will conclude my remarks. Thank you all for joining. We would now be happy to discuss any questions, comments or suggestions you may have.
[Operator Instructions] The first question is from the line of Mohit Kumar from ICICI Securities Limited.
Congratulations on a very good quarter and a good fiscal. My first question is the order inflow, while we have done exceptionally on the revenue and margin front...
Mohit, we are not able to hear you very clearly.
Can you hear me now, sir? Is it better now?
Yes. It's sort of up and down voice level.
So my first question is on the order inflow. So you've done very well on the revenue and margin front, but the order inflow has been subdued, especially if you look at last couple of H2. We haven't seen the bump-up from ethanol or any other project. How do you think about the order inflow for FY '25?
So thank you, Mohit, as you have pointed out, and correctly surmise the government's notification around alternate use of feedstocks, which as you are aware that there was a realignment required for the feedstocks from -- on the sugary side especially, where the notification came, which said that syrup and molasses cannot be used for production of ethanol. And that meant that there was a clear halt of course, on sugar side as well as on the order bookings side from this particular sector. And this is a very important part of our overall customer segmentation. So from that perspective, that was one.
Two, as you have seen that we have also built different business lines over a period of time because EBP 20 is a definite positive win in our sales, but that has a definitive benchmark, and we need to then see how do we move forward from there. So therefore, a lot of effort has gone into creating alternative business revenues.
And as you also saw, that starchy made feedstock has started to pick up in a big way with nearly 90% order book coming from starchy feedstock. We have also seen CBG build very positively in the last half of the year. We are seeing STCA opportunity building in a very positive and constructive way, as I mentioned in my opening remarks as well.
So these are the vectors, which are now also started to contribute in a very, very positive way. And that is why although the sugary part of the business came to a virtual halt. It still did not impact the overall order book, and we are still able to meet nearly the same numbers in last 2 halves -- last 2 quarters of the year.
If I understood it correctly, sir, you think FY '25 were far better compared to FY '24. Is it right to say, sir?
Sorry, Mohit, we can't hear you.
Sir, how do you think about FY '25? I understood that your issue with the order inflow for FY '24, how do you think about FY '25 order inflow?
Exactly. So as I said, there is strong traction on CBG. There is strong traction on modularization. We also expect that at the back of the strong sugar season that the country has witnessed, we will see restoration of feedstocks permission for using sugary feedstock for ethanol production.
So we see that the canvas will start to change -- it's already been seen in a couple of businesses and in the sugary feedstock as well as we move forward to the year, so that will augur positively for our business as we move through the year.
Understood. My second question is on the execution in the current CBG order book. How is the traction and also, the related question is that we are hearing a number of CBG tenders are out from larger industry players. Do you expect a number of...
So right now, if you really look at it, there are 2 or 3 vectors I was mentioning to you, CBG in India, ETCA on the international business, especially, I mentioned about the blue hydrogen project and that's just an indicator. We have talked about Brazil as a very important market for us where we clearly begin to see buildup of a very good traction.
So the LCE opportunity in the United States. So we are beginning to see what we have been talking about as an opportunity to be developed coming now potentially getting translated to order book. And we have -- we believe that this will continue to be so as we go through the year.
The next question is from the line of Shailesh Lakhani (sic) [ Shailesh Kanani ] from Centrum Broking.
Congratulations, sir, for a good performance given the challenging environment. I have a few questions. First, on the Engineering side. So when I see the order inflow for FY '24, we have doubled, but on the revenue booking front, it has been separate. So can you give some color on what is happening over there?
So all I can say is that there is a cycle that we need to go through, our order execution cycle, so what you see now getting displayed as order book will obviously start translating itself to revenue as we go through the year right.
So just to put it other way around, in my modeling and I'm getting a huge bump up in FY '24 for Engineering division, say, more than 50%, 60% given the tenure of your order book. So is it a fair assumption, sir?
Sorry, Shailesh, can you please repeat your question? There was a disturbance.
Yes, yes. So I am saying, so just to put it the other way around, given the order book traction what we have seen in FY '24, Engineering division is expected to do a very good performance in FY '25, say more than 50%, 60% in terms of revenue booking. Is it a fair sale assumption, sir?
Yes, fair assumption. ETCA, you'll see a major change happening on the order booking because our new facility, as Shishir was mentioning is already approved by the customer. We will first see buildup of OB happening in that Engineering segment in the next 2 quarters and then the revenue will start flowing in because the facility is now up and running.
Yes, only thing is that given the way the order books will move, so as Sachin mentioned, it will -- an order book that will get built up over the next 6 months and then the execution cycle will take it.
Okay. Fair enough. Sir, another point is on gross margins. We have been extremely well in FY '24 on gross margins term. So -- and coupled with that, this is, I think after nearly 5 years, we are having an order backlog where nearly 30% is going to come from international markets. So how do we see the gross margin shaping in FY '25 and '26?
Two, 3 things. One, the domestic and international ratio, what we always said that is going to change over a period of time, which has already started showing first to some extent in the revenue going forward in the order book, that is definitely going to help us on building up our margin.
The other elements, which actually created some kind of issue mainly on the commodity prices in the last couple of years, has also smoothened. So we believe that, that is also going to help us on the gross margin going forward. Our first target was to achieve the 2-digit kind of a margin on the EBITDA side on the buildup of the higher gross margin, which has already started showing the results since last 2 quarters.
We think that this momentum is going to continue with what that number is going to be, unfortunately, I will not be able to give that kind of a number as a guidance. But yes, our efforts on building up on the improvement on gross margin on the EBITDA is anyway going to continue.
That's very helpful. Sir, if I can squeeze one more question. So I wanted to understand on the order inflow mix, going ahead, there has been a drop in the Bio-Energy space, right? And for obvious reasons beyond our control. So how do we see shaping, say, in FY '25-'26 on order inflow mix?
So when you say Bio-Energy then we will have to see it from a different perspective because there is -- the molecule is changing, number one. Number two, the segments may change in terms of geographically, whether it's India or outside India, I mentioned Brazil, I mentioned the United States. We also mentioned 2 big orders from African region. What's going to happen at the back of the year. So maybe the construction of the Bio-Energy order book will change because of change in molecules, because of change in geography, change in applications.
But overall, we expect this to grow. We are not expecting this to stay status quo or shrink, not at all, we're actually expecting it to grow.
Also, we expect the Engineering order business to grow as we already answered to you. So we expect both our business -- major business segments to actually continue to grow from where they are. Maybe with a different element -- at element level, different construction, but overall, the book will continue to grow.
And Shailesh, just to add, we had mentioned that our 2030 target is 3x of revenue. And in that buildup of revenue, all the businesses are going to equally contribute. So even in the Bio-Energy piece, if you look at maybe within Bio-Energy, we will see some kind of shifts happening between [indiscernible] biofuel, but all these things are going to contribute in the overall picture of our 3x of revenue going forward.
The next question is from the line of Manish Goyal from Thinqwise Wealth Managers LLP.
Yes. Please, bear with me, I have a few questions. First, on the services business, if you can probably provide more insights on different kind of services we offer and what are the revenue potentials? Probably one is performance enhancers, which is probably like a consumable and then you had earlier spoke about opportunities in the U.S. for low carbon intensity refurbishments of plants. So that is first question on services, and how much does it currently contribute in terms of overall revenue? That was one.
And second, sir, if you can also give us a perspective, like you just mentioned on gross margins. So one is definitely, you mentioned international revenue share improving. But any other change in revenue mix with, say, Engineering share improving or HiPurity improving. So does that also supports your gross margin improvement. That was second question?
Third question is on any update on U.S. front in terms of Inflation Reduction Act -- incentives under IRS, if you can provide that? Maybe if you allow, I'll probably have a couple of more later on.
I think all the questions you have asked in one bit, so let's first try to answer those questions, and then we will see.
So okay, so on the IRA front, the 45Z notification is still awaited. So we do not have that. But as I mentioned to you, we are already -- some of the customers are already beginning to move in direction because the fact remains that if SAF has to come through an ATJ pathway, and that is the most -- considered to be the most viable pathway right now outside [ ASR ]. The low carbon ethanol has to become a reality, and we expect that, that will happen.
So the first project is already under construction now by us. So we'll see how that develops, and we are expecting 45Z to be clarified soon.
In terms of margin that you said that was going to the order mix or mix of businesses. Let me tell you that we are very clear in our strategy in what we see in front of us, also future unfolding. Each and every one of our businesses will grow from here onwards. So we're not expecting any business to shrink. There may be slightly different construction at the elementary level, but other than that, we do not expect any other change.
And all of these are favorable, if I can use that word or on the margin side of the story. So that's what we expect will happen as we go forward. Each and every business of ours will grow. Some of the new stuff we already talked about, CBG, ETCA and in time to come SAF will also start to grow very, very constructively as we move forward through the years.
Sure, sir. And sir, like we have seen a really strong traction in international order inflows in the current year, and that is across the segments. So like how is the pipeline? And do we see this momentum continuing going forward? And sir, probably I missed on my first question on the services business.
Yes. So you asked too many questions and we don't...
Okay. So sorry, so maybe you can answer on services, I'll come back on the...
On the services, actually low carbon ethanol opportunity in United States that you mentioned, it's not a service offering, it's a full-fledged technology offering from our end. So that's not part of the services, but the performance channels -- I mentioned about a new traction we are finding in one of the products that we introduced on the sugar side of the industry, not ethanol.
This actually helps into sugar's qualities and color, et cetera. So they're finding very good traction. So -- and services then other stuff through utilization what we offer to our customers for managing their plants remotely, for first -- part services, O&M services. So these are all different package of services that we offer to our customers.
They obviously need set of enzymes and performance enhancers and yeast, et cetera. So that gets sort of bundled together and move forward. So services is a different construction of business that moves forward, okay? Anything else that I left out answering?
No. So how much -- sir, like what could be the current contribution of services roughly and how do you see it growing?
So the contribution from services business currently is in the range of 4% to 5% and we expect that price to go up going forward because on a continuous basis, we are increasing our offering on the services umbrella. Just to give you an example, today, when the CBG plants are coming up now, for the maintenance or for the -- maintaining the quality of the feedstock, there is a biological solution, which we are providing under our services umbrella.
So that is supposedly, it also contribute in a big way. we have introduced providing our solutions in the Brazilian market in a big way now, it have also start picking up now. So the services pie supposedly to go up going forward.
There is another important element to the service business that I mentioned is about capture of biogenic CO2 and that's going to find -- that's increasingly finding a big traction because CO2 capture is becoming a significant activity for several of our customers and organizations across the world, and that's where we are beginning to offer our services and solutions for capturing of the CO2 as it is generated. So that will become -- that's also part of our Services portfolio.
And the best part is our captive customer base is also increasing. It is also going to contribute in a big way for our services business.
And all fermentation processes will create biogenic fuel so that becomes almost a captive customer for us.
Right, sir. I'll just squeeze in one more question on HiPurity, sir. Again, this segment has seen a very strong order inflow as well as execution front. So are we also started getting inquiries for -- from semiconductor and electronic plants, which are being set up in India? And can it be a large opportunity for us?
So we -- if the semiconductor chip manufacturing needs water, which is of the same level of quality and purity that is required from pharma application. And so from that perspective, from a capability perspective, we already have the capability as and when the projects are announced and these are large outlay projects, obviously, this will take some time to get off the ground.
But as and when they come up, you'll surely be hearing about it and we'll speak to you. As of today, we do not see any projects actually going to a stage of ordering out equipments and discussing and all that. So I think we are still a little away from that.
[Operator Instructions] The next question is from the line of Sagar Kapadia from Prabhudas Lilladher.
First of all, congratulations to the Praj team that even in such a tough time, you have come out with an excellent set of numbers as well as the excellent order intake.
Thank you, Sagar, go ahead. Your voice is cracking in between.
Okay. I'll speak a little bit louder. Sir, I just wanted a split. In the Bio-Energy, you have said there is an order intake in the fourth quarter was around INR 600 crores. So what is the split between the CBG and the ethanol orders?
So Sagar, we have not yet started splitting our segments into what I can say, many segments right now. But yes, there is an order book built up happening on the CBG side and on the ethanol starchy feedstock, which Shishir had mentioned earlier, but we have not started getting this further...
Last quarter, you had given that information, you had received certain -- 4 orders from CBG worth INR 400 crores or INR 300 crores. You have given that information in the conference call.
We had mentioned because that was the beginning of CBG order picking up, but we have not started giving the split of all the verticals.
Okay. So you are still not giving that split between the CBG. But can you give me a split probably like out of this INR 600 crores, how much is for the exports?
That's possible. Just give me a minute, if you are having a second question, you can put that second question, and I will give you a split of INR 600 crore.
No, I don't have any other question. This is the one only. How much is attributed by the..
So out of that almost INR 150 crores will be exports and INR 450 crores will be domestic.
The next question is from the line of Nihal Shah from Prudent Broking.
So my question was on the Engineering front as we are seeing a lot of traction there in the terms of order book, and in this quarter, our revenues also 20% of them came from the Engineering segment, so how do we see our margin going ahead?
Sorry to interrupt you sir, we have lost the management line connection. Please stay connected, while we reconnect them.
[Operator Instructions] We have the management line back on call. Nihal, please continue with your question.
Congratulations for the great set of numbers. So my question was on the line of Engineering segment as we are seeing good traction coming from there. About 20% of our revenues also came from that segment and order book also looks strong. So going ahead, how do we see our margins improving from around 11% to 13%, 15% in the next 2 to 3 years?
I will not be able to exactly give you how the percentages are going to move. As I mentioned in my earlier comment that our endeavor is to first endeavor was to get into double-digit margin and then build on that margin. Then to keep in mind a couple of things because we are talking about expanding the business offering in the form of, let's say, we believe supposedly to catch up now, Services business is supposed to go up, PHS business has start kicking in.
But at the same time, there is a lot which is happening on the developmental side also for preparing ourselves for the next wave of growth. So we are investing in R&D in a big way. Our PLA plant is supposedly to start its operation from this year. The second quarter, we will start the operation of our PLA. We will get into more R&D-related activity.
For CBG, we are working on multiple feedstock testing in our demo plant. So there is a lot which is happening on the developmental side also. And whatever happens in our research side, it gets actually debited to P&L. So we don't capitalize our research expenses. So depending on how these activities are going to get built up, the margins are supposedly to move. But as I said, our efforts are to build upon what already has been achieved in the margins side.
Okay. And another question was on the front of the sustainable aviation fuel. So are we seeing orders starting to come up from that segment? Because I guess there was a 1% target that the government had said till 2025. So how is that segment moving?
So Nihal, SAF, what we did was we demonstrated last year that is possible to make set in India on global feedstock that was the proof. There is no legislation in place as yet. The only agreement that is in place globally is something to being -- it makes mandatory for airlines to brand 1% starting first of January 2027. It's still early days for SAF. But as we go through the year, maybe towards the end of the year, we'll start to see some announcements around SAF capacities being set up, et cetera. So we'll see how that develops in terms of what mandates come, what the new policy that comes in for the domestic aircraft. International part of the business, as I said, is already in 1st January '27.
Okay. I'm sorry, just a follow-up on the previous question. Like is the execution cycle on the Engineering front lower than that in the Bio-Energy front or it's around -- it takes around the same time?
No, it's actually, in some cases, it is even longer than the Bio-Energy side depending on the complexity of the project.
[Operator Instructions] The next question is from the line of Vikram Vilas Suryavanshi from PhillipCapital (India) Pvt. Ltd.
Good numbers given the challenging environment. Initially, I just missed a few comments. So pardon me in case I'm repeating this question. In the case of a bioplastic a demo plant will be ready. So how you will be -- how is there any inquiry pipeline or how we plan to monetize it? That is my first question. .
And second on Brazil opportunity, you highlighted to some extent already, but would it be possible to give what would be the scope of our services there and any business development strategy over at Brazil. And I think, I guess, it will be mostly on maize side. So if you can answer these 2 questions?
So let me take the second question first, Vikram, thank you. So in Brazil, as we have known, Brazil is obviously known for sugar-based ethanol production, but as the country is going to enhance the use of ethanol, they're also are finding very similar challenges to what we did that sugarcane is not present in all the part of the country, so they need to transport ethanol long distance, which is not a good thing, not a positive thing from environmental, et cetera. So they have also started to look for alternative feedstock and starchy feedstock is a natural candidate in line for that. That's number one.
So they are beginning to look at alternative feedstocks in terms of what kind of starchy feedstock in different parts of Brazil that can be put to use. We commissioned our first project based on corn. The second project that I mentioned to you about is based on wheat, so different feedstock in different part of the country that will be put to use. And we -- from our inquiry pipeline from dialogues that we are having with customers, we clearly see this could be the new growth area as far as Brazil is concerned in terms of capacity that will come up as it travels through the year. They're already significant amount of activity increase in that space as far as it is concerned.
On the PLA, we obviously need to first -- it is a demonstration plant that we are now building, and it will start commissioning in this quarter. And once that is commissioned and the process established, obviously, we have to invite the interested customers to -- the plant for them to witness the process and its efficacy and then only we'll be able to build it. So we are not building any PLA-based revenue or book in this year's estimate of ours. But as we probably travel through the future, we will be able to see that build.
Just a related extension of what you've said about -- if you look at the Brazil is very competitive in sugar side. So is there any government support for this grain-based or starch-based feedback, which is picking up now because we have seen very strong growth in grain side of story in terms of production for Brazil. So just in case of competitiveness or equipment just to give, share your experience from that front?
So what we are seeing is 2 or 3 things, Vikram. One that our technology is absolutely able to deliver a benchmark performance on different dimensions that are important to an owner of a ethanol facility based on starchy feedstock. That's number one.
Two, we have a very, very extensive experience globally on -- so for example, I mentioned about the wheat project. We built a wheat-based project as the largest project in U.K. almost a decade ago. So that -- when they came and saw that we have that kind of experience available on our side, they, obviously, were impressed that we have been running that size and that kind in a very advanced nation for a very long period of time.
So that comes in handy as well. There are incentives that the government is making available in Brazil at a local level. And I'm sure that -- but that must work that's more to the producers or the promoters of the project.
So in terms of what necessary incentives are required. State governments are getting very active because they clearly see some of the states in Brazil see this as a clear activity to drive employment and create more opportunities for the local population. So obviously, that's another one that's going up. And we will see -- we are seeing positive traction develop all across.
The next question is from the line of [ Arnab Dev ], an individual investor.
Sir, I had 2 questions. One is that I heard that by like FY '30, we want to make the contributions from all the 3 segments equal if you look at the CAGR of last 2 years, order book still Bio-Energy dominate. And the growth of all the order book segments have been broadly in line with the overall growth. So like if we want to, let's say, increase the share of the other 2 segments, like Engineering and HiPurity, we have to make substantial your increase in the order book numbers. So sir, any thought on like going ahead with any kind of areas which are not currently in our domain or like let's say substantial increase, how it will come, if you can throw some light?
So Arnab, first of all, we have said that we want every segment of our business to grow. It's not that we're saying that everything will be equally split at the end of 6 years. No. What we have said is, a, between the domestic and international, if you were to take a cut, our aim is to go 50-50. So that is half of our booking -- half of our business in 2030 should come from domestic business and another half will come from international business.
So from that perspective, we have created evenly. But as far as business segments are concerned, we are saying every business must grow to its potential, and we are not limiting, anybody to say, oh, you need to be 1/3. There is no such lock on any business, that's the second one.
Third, you mentioned that the Engineering piece' business is, obviously, they're starting out on a smaller base compared to our Bio-Energy business. So in that sense, there is a different base on which we are operating.
But we -- as I mentioned to you, the opportunity is opening up on CBG side, on the ETCA business, on the modularization opportunity of ours. We are clearly seeing a pipeline of our inquiry building very, very healthy. And therefore, we are saying that our business -- so some businesses in rate, percentage terms may grow faster because it starts from a smaller base. But in overall terms, we see Bio-Energy growing, we see Engineering business growing at the back of modularization we also see PHS growing, each at their own potential rate that's possible in the market.
Sir, another question is in terms of bioplastics for PLA, sir, when we think like revenues will kick in?
No. So as I mentioned to you, we are right now in the process of commissioning our demonstration plant which would be -- so let us -- and then obviously, we have to invite interested customers, that interest of customer is already building up on the PLA side of the equation. And then -- so we don't expect any revenue or order book to happen literally this year, but maybe in the following years, we'll be able to talk about it. Because bioplastic is very likely to start creating different molecules out of that plant.
Sir, any sort of numbers that we are targeting from that segment?
No. As I mentioned to you, we will not be able to give a specific number for that yet. In due course of time, surely, we will talk about it.
The next question is from the line of [ Dhaval Shah ] from [ Infinite ].
Congratulations on wonderful performance. While though the environment was challenging, there were equal opportunities and Reliance, Adani, everyone is announcing big plants in CBG. So how are we positioned to capture that segment? And do we see CBG overtaking bioethanol in terms of revenue mix in our Bio-Energy segment?
So Dhaval, yes, what good news is that large private corporate houses, energy companies, are saying that they want to develop this segment. So that -- I think that actually goes to say that there is a definitive potential that is likely to unfold as we travel to this. Obviously, these corporates have very ambitious plans. We are also working with them. We have commissioned project for them.
So we know that -- I also mentioned at the beginning of the call that we are very, very proud that we now have 3 feedstocks on which we have got absolute benchmark deals established at commercial scale.
I made the specific mention because there's been a pain point for the industry so far that there was always ifs and buts around what works and what does not work. But now we have established this beyond any doubt that on 3 important feedstocks, mainly spent wash, press mud and rice straw we are able to deliver absolutely benchmark performance as far as these are concerned, and on a reliable and consistent basis.
So the second one because people are finding these plants were not running on a continuous basis. So a lot of people have said there are challenges. But that's something that you have told. So technology-wise, we are there. Sachin also mentioned that we are developing further on newer feedstocks because these are not the only feedstock that we work.
Maybe in the first slot, this is the most important feedstock, but we already know people are talking of cotton stock, mayfair grass, many other the second crop residues. So slurries for municipal waste. There are many, many dimensions which are now emerging in terms -- of poultry litter. So we are now in the process of establishing the correct performance parameters on these alternative feedstocks as well so that we are able to offer to our customers a wide array of feedstocks on which they can run their plants.
We are working very closely with the companies that you mentioned and also some others in the field, and we are very confident that we'll start to see a big significant change in the complexion of this business, whether it's more bigger than bioethanol or I think we are not having that rate, we are very clear in our head. Each business must go to its potential, whatever is the potential. And if it has to create potential it has to create new openings, that's what we will drive.
So I mentioned that ethanol, SAF becomes a big application in -- that's -- chemicals become the big application. We will talk about the diesel blending of alcohol. There are many things that will go as we move forward will start to change. And all of -- the feedstock itself will undergo change in our opinion once we fully stabilize the IOCL plant and maybe a year down the line, we'll be talking very -- some very different dimensions of the business emerging both in India and abroad in terms of what can happen to cellulosics feedstocks. So we are not going to limit ourselves to say one should grow bigger than others. For us, each business should grow to its potential.
But since CBG seems to have more potential. And even there is more competition as well, Thermax is also doing -- taking big orders. So I was just worried can we position ourselves better and capture the larger pie of the market?
No, we are very focused on CBG. CBG for us is a very, very important business. We are not -- I'm reiterating that it's a very important business for us, not only in India, but even outside India. And we will start -- as we go through the year, you'll hear more about it.
The important question to be resolved there was the fact that market, competition, customers, everybody was worried about reliable yields coming out of the plants. And that's something that we have proven -- right now, at the commercial scale, we are the only proven technology in the country. So absolutely focused on ensuring that we completely go around encashing this potential.
And sir, just a quick update on the IOCL JV. Where are we right now?
Sorry to interrupt you, sir, I request you to come back for a follow-up question.
Dhaval, since you asked half the question, maybe we will go through the full question.
Thank you. What is the update on the IOCL JV? Is there any movement on that? Where are we heading there?
Right now, no, in the sense that we are still awaiting the final approval. So as soon as we hear that, which is in the pipeline, so we will hear it soon. Along with many of the news in June, in the month of June.
Yes. So we are waiting for formal approval for the formation of JV but we have already started groundwork. What should happen under this JV, what businesses should start shaping up in that? What is required from our side, how the structure should look like. So the groundwork is already happening on that front. Only the formal approval is awaited, after that, we will be in a position to talk about the business plan for the JV in a greater detail.
The next question is from the line of Shailesh Kanani from Centrum Broking.
Sir, just one question with respect to our Engineering division and Bio-Energy HPS, if you can just talk about the tenure of average order book, means by what time we can expect all numbers to get converted into revenues in all 3 segments?
See, average, Shailesh, is you can briefly consider as 9 months to 12 months for both the businesses. But in Engineering business, what Shishir earlier was mentioning, there is a possibility that if some orders are such that the execution time is a little on a long-ish cycle, so it can go from 12 months to even for that matter, 18 months because the entire modularization -- if we are supposed to do the equipment and the modularization booked together, then the time line can be going beyond 12 months also. But on an average, you can consider between 9 months to 12 months.
Even for the Bio-Energy segment? Because I was under the impression the Bio-Energy would be a little bit longer, to 12 to 15 months?
No it is not. Given 12 months project will not go, if it is of a very large capacity and if our scope is absolutely like an LSTK, then there is a possibility. But otherwise, it will run within a period of 12 months. Even for that matter, CBG also between 10 months to 12 months is what I can say, a period for execution.
And just a follow-up on CBG. We are doing the whole EPC turnkey projects as CBG projects, right?
Not necessarily, so if the customer so demand.
Okay. Otherwise, what would be the addressable market in a CBG project, if EPC is not completely done?
So every customer has a different model, right? So they say -- some will say, okay, you know what, you just do your technical piece and we'll do the rest. Some will say, no, I'll give a piece of land and please fill everything. Some will say, no, see we will manage, you manage others. So every customer is their own. There are no fixed models for this, unfortunately. What remains common is that the technology piece, the critical part, that is done by us.
So that would be what percentage? If I say what percentage that would be of INR 100?
So let's assume if the LSTK project is going to cost us INR 100. Our scope can go from 30 to 100, on a scale of 30 to 100. And additionally, you also need to keep it in mind if it is the -- whether it is press mud based or agri-waste based plant, the solutions which we provide on the -- for maintaining the performance of that plant is like a recurring business for us under our services umbrella.
The next question is from the line of [ Rohan Mehta ] from [ Phykon ] Family Office.
So I just wanted to get your thoughts on CBG. So how do you compare CBG plants right now versus ethanol when it comes to payback period and the unit economics, how viable are the CBG plants right now?
Sorry, your last portion, we were not able to hear because your voice is a little low.
What I was saying is, where do you see the viability in the CBG plants right now? How viable do you think are CBG projects at the moment?
If you're looking from the viability of CBG projects, it is still, what I can say, to some extent, it is work in progress. But projects are viable, they are having IRR ranging from 14% to 18% depending on what is the feedstock, what is the size and how they are selling apart from CBG, being solid manure or taking care of liquid manure. So it's a range.
The next question is from the line of [ Godwill ], an individual investor.
Sir, I was referring to the latest [indiscernible] by 2030, around 30 cities in India will go waterless or thing. So we are having an active participation in water-treatment plant. So can you shed some light on our business prospects into the segment, waste water treatment and other things?
Our water treatment is in 2 parts. One is our PHS business, which is serving ultra-high purity water through pharmaceutical segment. And then we have zero liquid discharge system for some targeted industries, which have mandate not to discharge any liquid out of their premises like metals and mining, pharmaceuticals, fertilizers, chemicals. So we offer zero liquid discharge solutions to those organizations.
And sorry, we didn't get your name. Can you please let your name note, please?
Godwill. Can I ask one more question?
Yes, please go ahead.
Yes. And congrats on securing your first order for this blue hydrogen participation. Sir, can you kindly let me know the prospects of this industry and how can we go forward with this particular segment?
So hydrogen, as you know, is going through a transition and transformation, both where traditionally only the gray hydrogen was being produced, and then it goes to blue and green. And then, of course, there's a pink hydrogen as well, depending on what the process of the customer end is.
So right now, the held belief is that hydrogen is something that will become fuel of the future, but that's on a long-term horizon. And obviously, a lot of effort is going on by the leading corporates of oil refineries, oil energy majors to start cutting down their own CO2 emission from their operations, and this is a very clear step in that direction. So we will see development at thing in the zone as well.
Ladies and gentlemen, we'll take this as the last question. I now hand the conference over to the management from Praj Industries Limited for closing comments.
So thanks, everyone, for your time today. If you have any more questions, please feel free to write us at info@prag.net. I once again thank you for your time, and have a nice day.
Thank you. On behalf of Praj Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.