We are not looking for huge capital infusion at this point in time. We will have normalised capital in the range of about Rs 20-25 crore to be spent in the year coming forward.
CEO & MD
Praj Industries , a technology and engineering solutions provider for the production of bio-fuels and biochemicals has reported a subdued quarterly result for April-June period.
Gajanan Nabar, CEO & MD, Praj Industries’ outlook remains cautiously optimistic as the company’s revenue improved by 20 percent Y-o-Y with its emerging business contributing 40 percent in Q1. In an interview with CNBC-TV18, he adds that the company is not looking for huge capital infusion right now.
On the brewery front, he hasn’t seen much investment in the last two years. However, he expects an improvement in investment in the forthcoming quarters.
Q: Can you first start by taking us through your numbers for the quarter and also explain what has changed sequentially that your performance dragged on a sequential basis?
A: Quarter-on-quarter (Q-o-Q) there is a dip in the performance as we have always seen the first quarter is slightly sluggish in our kind of business. However, if you see year-on-year (Y-o-Y) this quarter, there is a 28 percent improvement in the revenues and also improvement in the EBITDA and PAT margins.
Broadly, our business is structured into two broad categories. The core business which is ethanol and breweries segment and the second one is the emerging business which is water, critical process equipments and high purity water.
The contribution of the emerging business has been in the range of about 40 percent this quarter that is significantly higher than what we have seen in the last whole year. I think that is in the right direction. We also have higher export sales this quarter close to 48 percent against the corresponding quarter last year and that has contributed to improvement in the margins.
Q: Can you just tell us what we can expect in terms of growth from Praj in the rest of FY15 and what exactly is the order book, where does it stand at this current point in time and what about your capex as well?
A: Praj does not give guidelines of our numbers but outlook from the overall sentiment standpoint remains cautiously optimistic. We have to see some more action on the ground to actually start seeing traction in the order book on India level. However, we are certainly seeing improved sentiments that would help the business going forward. So, that is one.
Second is we are not looking for huge capital infusion at this point in time. We would have normalised capital in the range of about 20-25 crore to be spent in the year coming forward. That is where we are.
Q: The government has proposed that ethanol blending be increased to 10 percent from 5 percent in petrol. What kind of impact do you see for your company if you could give us some numbers?
A: This government is pretty pro ethanol blending policy and we believe that that is good for India overall, it is sustainable, it brings in the sustainability of index up, it is good for the overall economy and it reduces import content of oil. However, right now though we have a 5 percent blending mandate we are just getting to about 1.37 percent overall. So, there is a long way to go to even go to 10 percent. First we have to reach the 5 percent barrier that we are currently facing. I think there are further more tweaking and changes in the policy making have to happen to get to 10 percent. If we go to 10 percent it opens up the whole new opportunity window for all of us.
Q: What about the breweries market and what kind of outlook can you give us for the rest of the year for that business?
A: Last couple of year’s brewery market was very stagnant. There were not too many investments that happened in India. However, we are seeing the last six moths a lot of action in tat area too. So, that probably people will see in our numbers going forward that our brewery business would contribute much better than it contributed in last two years. More importantly Praj also has envisaged and entered into international brewery where we have got two large orders which we had announced earlier and both the orders are tracking very well. So, we are going to see further more action for Praj in international brewery areas too. So, overall the news is positive on brewery but the order book traction will have to happen in the next six months time.