Praj Inds

Despite a 15% (YoY) drop in net sales at Rs.187 crore for Q3Fy13, the company, by cutting down costs, lower forex loss and lower tax, posted a net profit at Rs.23 crore, up 9.5%.  The coming months will herald good times for the company as the Cabinet Committee of Economic Affairs (CCEA) has made it mandatory for oil marketing companies (OMCs) to blend 5% ethanol with petrol and will be implemented from 1st June 2013. CCEA has also approved market-based pricing of the biofuel, opening the market for ethanol producers – which is mostly sugar companies. The Ethanol Blending Programme (EBP) will require 105 crorelitres of ethanol annually and will help OMCs to save cost by way of difference in the prices of ethanol and petrol. Praj is a big name in India Inc when it comes to ethanol blending and it is now building a commercial scale demonstration plant to produce ethanol—also called cellulosic ethanol—from biomass, which could be any form of agricultural waste, such as wheat and paddy waste, or wood chips. The capacity will be around 100 million litres of ethanol per year and FY14 will be a defining year for the company.

Ethanol plant business accounted for about 82% and non"ethanol 18%. The company has acquired controlling stake in water treatment company, Neela Systems. It holds 60%and this came at a total cost of Rs.76.49 crore. The integration process is still ongoing as sales performance of this unit was down in first half and it hopes to absorb overheads when sales buildup. Current order book stands at Rs.850 crore. At end of Q3FY13, promoters stake was at 31.19%, Rakesh Jhunjhunwala holds 8.45% and VinodKhosla holds 1.61%.