Praj Industries Ltd (PRAJIND) Q3 FY23 Earnings Concall Transcript

Praj Industries Ltd (NSE: PRAJIND) Q3 FY23 Earnings Concall dated Feb. 06, 2023

Corporate Participants:

Anuj Sonpal — Investor Relations

Sachin Raole — Chief Financial Officer, Director of Resources

Analysts:

Amit Anwani — Prabhudas Lilladher Private Limited — Analyst

Vivek Ganguly — Nine river capital — Analyst

Vikram Suryavanshi — PhillipCapital — Analyst

Shailesh Kanani — Centrum Broking — Analyst

Amish Kanani — JM Financial Services — Analyst

Kunal Sheth — B&K Securities — Analyst

Prashant Shah — Serum Institute of India Private Limited — Analyst

Krisha Kansara — Molecule Ventures PMS — Analyst

Jay Shah — Capital PMS — Analyst

Divyanshu Sachdeva — White Oak Capital Management — Analyst

Ankur Kumar — Alpha Capital — Analyst

Hemant — Individual Investor — Analyst

Sanjeevkumar Damani — SKD Consulting — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Praj Industries Limited Q3 FY23 Earnings Conference Call. [Operator Instructions]

I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you and over to you Mr. Anuj Sonpal.

Anuj Sonpal — Investor Relations

Thank you Janvi. Good afternoon everyone, and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of Praj Industries Limited. On behalf of the company, I’d like to thank you all for participating in the company’s earnings call for the third quarter and nine months ended of financial year 2023.

Before we begin, let me mention a short cautionary statement as always. 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.

Let me now introduce you to the management participating with us on today’s earnings call and hand it over to them for opening remarks. We have with us Mr. Sachin Raole, Chief Financial Officer and Director of Resources; and Dr. Ravindra Utgikar, Vice-President of Corporate Strategy and Marketing.

Without any further delay, I request Mr. Raole to start with his opening remarks. Thank you and over to you, sir.

Sachin Raole — Chief Financial Officer, Director of Resources

Thank you Anuj. Good day, everyone. I welcome you to Praj Industries Earning Call for Quarter Three and Nine Months ended FY ’23. I trust all of you had the opportunity to go through our results and investor presentation for the quarter ended 31st December 2022.

As the company involved in accelerating energy transition of sustainable climate actions, Praj initiatives are showing definitive results. This quarter, we successfully commissioned Asia’s largest single train 510 KLPD syrup to ethanol plant. And I’m pleased to share that all performance parameters were achieved within 72 hours of plant commissioning. After successful demonstration of our RenGas Technology, we are now building a large-scale commercial CBG plant for one of the leading business conglomerates in India.

Praj MoU with Axens of France for Sustainable Aviation Fuel project to decarbonize aviation sector in India is yet another milestone development. India’s transportation fuel mix scenario is changing as evidenced from exclusive Biofuel Pavilion at India Auto Expo held in Delhi in January. Praj was also invited by CRM [Phonetic] to participate in this flagship automobile event. This clearly manifest Praj’s growing forward as technology solutions provider. In fact, Praj is also invited to be part of exclusive [Indecipherable] in India Energy Week, which is being inaugurated by Honorable Prime Minister today in Bangalore. Our CEO and MD, Shishir Joshipura is the leading flash delegation for this important event today.

We find Indian Budget ’23-’24 to be growth-oriented with sustained focus on infrastructure development. Honorable Finance Minister has given adequate focus on building sustainable industry ecosystem, with provision for MSME segments. Green growth [Indecipherable] priorities have emerged a strong development agenda. Honorable Finance Minister has made several provisions that will bolster nation’s bio economy and aggregate sector in particular. This budget provide INR35,000 crores for priority capital investment towards achieving India’s goal of net zero carbon emission.

The budget has made specific announcement To give further momentum to development of CBG projects, 500 new waste-to-wealth plant under GOBARdhan, that is Galvanizing Organic Bio-Agro Resources Dhan scheme, will be established for promoting circular economy. This will include 200 CBG plants, including 75 plants in urban areas and 300 community or cluster-based plants at total investment of INR10,000 crore.

5% CBG mandate has been introduced for all organizations marketing natural and bio-gas. To avoid cascading effect of taxes on blended Compressed Natural Gas, the budget has proposed to exempt excise duty on waste deprived compressed bio-gas [Indecipherable]. Removal of GST on blended CNG will help to demand for bio-gas from oil marketing companies. It was also announced that appropriate fiscal support will be provided for collection of biomass and distribution of bio manure.

As a welcome major for the financial stressed sugar sector, budget provided a relief of INR10,000 crore, sugar mills will be allowed to claim payment made to sugarcane farmers for the period prior to assessment year 2016-’17 as expenditure under their tax assessment. In another major policy development, recently the Jharkhand government has issued Ethanol Production Promotion Policy-2022, it has a provision for a subsidy of 25% or a maximum of INR30,000 crores for setting up ethanol plant to encourage the ethanol capacity creation. While India’s EBP 20 program is marching ahead of it’s target, there are clear indications for further demand for ethanol biogas Flex Fuel vehicle. At India Auto Expo last month, a number of automobile companies showcased vehicles that can run on ethanol blend up to 85%.

Now coming to our business operations, we closed quarter three FY ’23 on a strong note with healthy performance in terms of revenue and profitability. Our bio-energy business in domestic market, we continued strong performance from the order book, around 75% of the orders came from ethanol — 75% came from Starchy feedstock and balance from the sugary feedstock. We are observing that sugar sector is more optimistic for its ethanol capacity enhancement and same train is visible in our inquiry basket. Going-forward, we expect sugary feedstock with ethanol plants to dominate the future capacity creation. Our execution activities are at their optimal levels with multiple project sites in different geographies.

On international front, low-carbon ethanol has emerged as an interesting business opportunity in the USA. We are working on few leads which are maturing beyond inquiry stage and have recently completed engineering audit for few ethanol plants in USA. These audit will help ethanol producers to finalize their investment decisions for deploying our low-carbon ethanol technology solutions. Our services business is receiving promising response from the customers in both domestic and international market.

On 2G front, pre-commissioning activities are underway in full swing at IOCL Panipat Plant. On international front, in Europe, our discussions are advancing in a positive way with various prospects regarding our technology offerings. As for CBG, our first rice straw-based commercial plant is in the final stages of commissioning. We expect the mechanical completion by end of March ’23. Based on the learnings from the two commercial-scale CBG plants commissioned earlier this year and the expectations from the customer, we are investing in R&D for processing different feedstock combinations for enhanced efficiency and yield. With series of affirmative announcements about the CBG in the Union budget, we expect the sector to gather momentum.

On the critical equipment site, energy transition and climate action is emerging as a strong development agenda globally. Our Kandla facility will continue to serve the current market of oil and gas and fertilizer. To address the growing business opportunity in ETCA sector, we are investing in a new manufacturing facility to be housed in a new subsidiary.

Talking about Praj HiPurity business, our efforts of expanding offering basket is yielding the results. We are witnessing increasing traction for offerings in the high-capacity fermenters, which accounts for 20% of the total order booking of this year. We have also booked our first order in the semiconductor sector. AHS [Phonetic] has a healthy inquiry basket from international markets at this point of time.

Let me now take you through the financial highlights for the quarter and nine months ended December 31, 2022. Total income from operations for the quarter stood at INR909.97 crore as compared to INR585.64 crore, delivering a growth of 55%, EBITDA grew by 69%, stood at INR86.16 crore against INR51 crore in the corresponding period last year. PBT came in at INR85.90 crore in quarter three, as compared to INR50.25 crore of quarter three of the last year, up by 71%. Profit-after-tax stood at INR62.31 crore in quarter three as compared to INR37 crores in quarter three of last year.

For nine months FY ’23 income from operations was INR2,516.42 crores as against INR1,504.31 crore in nine month ended, for the last financial year, up by 67%, EBITDA for the period under review stood at INR209.67 crore as against INR127.7 crore. PAT stood at INR151.68 crores as against INR92.60 crore over the last year.

Export revenues accounted for 17% in this quarter. Of the total revenue of 72.7% is from Bio-energy, 19.6% from engineering and 7.7% from PHS business. The order intake during the quarter was INR944 crores with 83.4% coming from domestic market. Of the total order intake, 82% came from Bio-energy, 9.5% from engineering and balance from PHS business. The order backlog as of December 2022 stood at INR3,380 crores comprising of 87.5% of domestic markets.

As mentioned earlier, to address growing opportunity basket from energy transition and climate actions agenda, we are planning to set-up a new subsidiary with an investment of INR100 crores. We have already started working on this expansion program. Cash in hand as on December 31, 2022 in INR604 crores.

I now conclude my remarks and I would like to thank you all for joining us on this call. We would now be happy to discuss any questions, comments or suggestions you may have. Thank you.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]

The first question is from the line of Amit Anwani from Prabhudas Lilladher Private Limited. Please go-ahead.

Amit Anwani — Prabhudas Lilladher Private Limited — Analyst

Hi sir, thanks for the opportunity. First question is on the CBG announcement we just made, sir. Sir, what would be our addressable market, anything you have worked out on this? And will this be a viability gap funding for the projects and how much portion of the plant we typically do, what kind of percentage deployed while the CBG plant is made?

Sachin Raole — Chief Financial Officer, Director of Resources

Okay, so when we take-up the CBG plant, the addressable technically from our side is to construct the entire plant, that is realistic kind of a thing, but instead of doing the entire plant, we prefer to do only the processing part of that plant, which is almost 50% — 55% kind of a number for any greenfield floor of CBG project. The opportunity right now, the details are still awaited how this budget has spilled out around INR10,000 crore of investment, how it is going to be made, whether it will be in a form of anything of a subsidy or viability funding, we are still awaiting the details from this front.

And from our point-of-view, we can actually address the entire market and that’s the reason why we mentioned that we are investing into understanding different feedstocks, because the combination of feedstock is going to be very, very different than what we are looking at. So technically, the addressable market is the entire market from our side, depending on what will be the nature, what will be the size of plants, we will be decide how we would like to take-up or participate in this kind of a program.

Amit Anwani — Prabhudas Lilladher Private Limited — Analyst

Right, sir. My next question is, sir, on the ethanol order intake, which I can see, we peaked with INR997 crores in 4Q and post that it is actually declining on the sequential basis. In this quarter we did about INR774 crores. So, how to read this, are we seeing these peaked out? And second thing is, on the 2G, what is the visible orders which are expected to come in FY ’24 and what is — in 1G, what is the yet to be tendered out opportunities?

Sachin Raole — Chief Financial Officer, Director of Resources

Okay, for the Bio-energy segment, the order book which you are mentioning is right, but you need to also understand this is a project business. So order closure need not necessarily happen the way in which we expect to happen. So there is no necessity that we will see a sequential growth or degrowth on whatever to conclude what is happening in that particular segment of business. It is a long kind of a call and we have to see from a longish nature, how the order closures are happening. We are seeing continuously, mainly from the inquiry basket point of view, that inquiry basket is absolutely robust, yes, sometimes it takes some time from the closure of those orders and that’s what has actually happened.

On the 2G side, your question was — another question was related to 2G. Right now in our order book, very small component is still pending for servicing the existing orders. We have not seen any new order intake and we hope and expect that we’ll see first commercial plant start its operation. So we’ll see a movement happening on the order book going-forward. But right now there is no additional order book which you have booked in the last quarter.

Amit Anwani — Prabhudas Lilladher Private Limited — Analyst

Right. So my last question is on the INR100 crore investment which you talked about. I think this is into engineering business if I am not wrong.

Sachin Raole — Chief Financial Officer, Director of Resources

That’s right.

Amit Anwani — Prabhudas Lilladher Private Limited — Analyst

So — and I think this is hydrogen.

Sachin Raole — Chief Financial Officer, Director of Resources

Okay, so —

Amit Anwani — Prabhudas Lilladher Private Limited — Analyst

Maybe any clarity as to what exactly was —

Sachin Raole — Chief Financial Officer, Director of Resources

— equipment business, which basically first the industry which I just mentioned, like petrochemical and gas, that basket is getting increased to address the energy transition related investment. We are putting up a manufacturing capacity to serve this market. So we will be serving our critical equipment customers in a different way. We feel that the demand for those equipment is absolutely increasing, not only the equipment, but the modularization is actually taking a very definitely state. And we believe that the demand, which we have currently or what we are witnessing, our existing facility at Kandla will not be sufficient to serve that kind of a demand. And that’s the reason we are putting up this additional manufacturing facility.

Amit Anwani — Prabhudas Lilladher Private Limited — Analyst

Sure, sir. My last thing if I can squeeze in on the gross margin or what is your view for the coming quarters on the gross margin, we saw gross margin exploding this quarter? Thank you.

Sachin Raole — Chief Financial Officer, Director of Resources

Okay, so the gross margin, what we have seen is, we are seeing that our old orders were the fixed price contract. We’re having some kind of a pressure because of the commodity prices, they are coming to a closure. We believe that all the old orders should get over by quarter four and some portion in quarter one. So the trajectory of margin, if all things remain the way in which they are right now, especially the external factors, we will see the change in the margin trajectory from the next financial year. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Vivek Ganguly from Nine Rivers Capital. Please go-ahead.

Vivek Ganguly — Nine river capital — Analyst

Thank you for the opportunity. My question is regarding the bio-CNG policy. So we haven’t tracked too much about it, but is it likely to be along the ethanol policy where there was a mandate and then there was also a buyback arrangement with the oil marketing companies, so on and so forth. Is it how do you all see that panning out? And also this INR10,000 crore support that they are talking of is likely to be in the form of a subsidy or a viability gap funding, if you can shed some light on that will be very helpfully.

Sachin Raole — Chief Financial Officer, Director of Resources

Okay. So Vivek, thank you for your questions, but you must have noticed in this budget announcement, a very clear indication is already given by the finance minister that going-forward, there will be some kind of a mandate on lending CBG pool, when and how that will happen, we’ll have to wait-and-watch. Technically it is not a blending you can actually replace CBG with CNG, but they said that at least minimum 5% of the CBG should be used and that’s what the majors been discussed or they announced in the budget.

So the point is right, whether it will take a policy like ethanol, we like to see, because this is a beginning in that direction. From our point-of-view it seems very clearly that government is also interested in introducing CBG the way in which it is introduced on the ethanol side. So there is a focus on CBG, which is very, very clear and got highlighted in this budget, it is a very positive note for CBG, because that’s what was required to create some kind of a positive ecosystem for CBG. So, yes, your point is right, it might happen in that direction, but we’ll have to wait and watch.

On the scenario of this INR10,000 crore of investment, we are also awaiting the details on that front, whether it will be in the form of liability funding or it will be in the form of a subsidy, what kind of a modus operandi will be there for funding, we like to see, and we’ll have to wait for more details on this side.

Vivek Ganguly — Nine river capital — Analyst

That’s all from me. Thank you.

Sachin Raole — Chief Financial Officer, Director of Resources

Thank you.

Operator

Thank you. The next question is from the line of Vikram Suryavanshi from PhillipCapital. Please go-ahead.

Vikram Suryavanshi — PhillipCapital — Analyst

Yeah, hi sir. Just wanted clarity on this INR100 core investment. We recently completed our expansion in Kandla and had earlier capabilities to manufacture, so this additional INR100 crore investment, sir, what you are talking about will be a particular specific opportunity or it will be agnostic to products, even there would be opportunity to — for their renewable chemical material, we can do in this subsidy or it is like a specifically worked on particular opportunity?

Sachin Raole — Chief Financial Officer, Director of Resources

Thank you Vikram for your question. Yes, we have recently done some expansion in Kandla. And we realize that the expansion in Kandla is not good enough to take care of the demand which is coming up from the segment of critical equipment. Because the investment which is happening across in the green energy, all and above what was happening on the CNG or LNG site, the investment is very, very huge which will require some kind of an investment from our side, because here the manufacturing has to happen at our end, we can’t outsource manufacturing to third-party and that’s why this investment is being planned. Naturally it is backed by some kind of inquiries, which we are seeing in our hands, we are seeing the demand initiatives going to get developed over a period of next two to three years. And we feel that it is very, very for our — or it is the right time for us to make this investment.

Vikram Suryavanshi — PhillipCapital — Analyst

Okay, got it. And this sustainable aviation with joint venture or efforts with the France, we already have Gevo for the USA. Any specific differentiation here we have in terms of technology or it is more about geographical markets there?

Sachin Raole — Chief Financial Officer, Director of Resources

So Vikram, this is actually a complementary arrangement which we are having. The Gevo arrangement for — or the Gevo MoU for adapting their technology on this — conversion of molasses into isobutanol. But beyond isobutanol, meaning you want to convert into SAF, Axens is going to play a role there. Axens is also going to play a role when we are converting ethanol to SAF. So this is the last leg of SAF manufacturing where the Axens is going to play a role and Gevo is in the first leg, where there is a conversion of molasses to isobutanol. So two different roads, but the last leg is going to be taken care of by Axens.

Vikram Suryavanshi — PhillipCapital — Analyst

Okay, got it. Thank you, sir.

Sachin Raole — Chief Financial Officer, Director of Resources

Thank you, Vikram.

Operator

We move to the next question is from the line of Shailesh Kanani from Centrum Broking. Please go-ahead.

Shailesh Kanani — Centrum Broking — Analyst

Congratulations, sir, on good set of numbers. Sir, a couple of questions from my side. One is that, I wanted to know if there has been any change in our strategy in market, wherein we are concentrating more on margins than market share. And what would be your current market share?

Sachin Raole — Chief Financial Officer, Director of Resources

That’s a good question, Shailesh. And this is a question on rather the strategy is actually based on the inputs which we are receiving from all the well wishers like all the analysts and people like you. We always kept on debating whether we should concentrate more on a market-share or more on the margin side. And actually we are trying to balance between these two instead of paying too much attention on the market share.

We decided that we need to pay more attention on the margin and we are getting very, very selective in the selection of the orders, especially from the new segment where the promoters or entrepreneurs are completely new. So we are actually evaluating and figuring it out, what kind of seriousness is there in the game and we are selecting those orders only. So to that extent, yes, market share will look very different because we used to talk about market share of 60%, today we are looking at market share of somewhere around 50%.

Shailesh Kanani — Centrum Broking — Analyst

So if you can elaborate more on this, what has been the reason and when is the strategy changed, because the margin — so is it a forth coming up standard has been implemented, say, a couple of quarters behind?

Sachin Raole — Chief Financial Officer, Director of Resources

No, we started these — working on these strategies since this quarter, where we decided that we will need to be more choosy on the order booking intake, especially when the starchy feedstock is becoming a prominent one. So this is a — this was going on since last couple of quarters, but actual implementation we did in this quarter.

Shailesh Kanani — Centrum Broking — Analyst

Okay, so the positive impact on margin is yet to come, right, first — because of this?

Sachin Raole — Chief Financial Officer, Director of Resources

That’s right. That’s right. Because as I mentioned in the earlier question also, we are still executing the old orders, where we are still having some kind of a backlog, hopefully that should get over in quarter four and from the next quarter we will see the normal orders with the normal margins playing its role.

Shailesh Kanani — Centrum Broking — Analyst

Okay. And in terms of 1G ethanol, if you can just tell me the — tell us the opportunity which is pending on tendering in quantum terms? What is the quantum of orders you see in next, say, two years by the time we reach E 20?

Sachin Raole — Chief Financial Officer, Director of Resources

So, frankly the market is very, very dynamic installation, we just can’t see from range of EBP 20 only, because the way in which market will evolve, it not necessarily reminds EBP 20 with oriented market. Flex fuel vehicles as I mentioned in my opening remark is going to be a big contributor going forward. Which vehicles that are not only for the segment of four-wheelers, but even two-wheelers segment is also coming up in this kind of — where ethanol is going to get used. So the demand scenario is still not completely what I can say emerged and the backdrop of all these developments parallelly which are happening.

If you look at only from the EBP 20 angle, it’s very, very, what I can say, myopic according to me. We’ll have to see the additional channels which will get opened up for the convention of ethanol, we’ll put a canons of demand on a very, very different platform. We are evaluating all these scenarios, trying to figure it out how the consumption is going to play throughout and prepare ourselves for the capacity creation going-forward. I will not be able to give you a specific number. This is what we are going to contribute to, but you get an idea of what we are talking about, because it’s not going to be only EBP 20 related market.

Shailesh Kanani — Centrum Broking — Analyst

Okay, fair enough. Sir, last question if I can ask. Sir, we have partnerships on various new products, we have been working on various new products, can you please categorize the potential opportunity quantum wise, and also period wise like in short-term, medium-term and long-term work, when we can see some tools or some order booking or some revenue coming in?

Sachin Raole — Chief Financial Officer, Director of Resources

So all these MoUs which we have actually entered into or we are still entering into, are made from the medium-to-long term kind of a scenario. They’re not made from quarter-to-quarter or very short-term. This is a development which we have undertaken to keep our growth trajectory on the positive side going-forward too. So these are the three, if something goes wrong on the EBP 20 or anything happens on — no, no further demand coming up on the ethanol side. We are keeping all our options ready with all other avenues, which will actually give us the growth trajectory, which we are looking for. But just to answer your question in short, we are looking for all these MoUs to get developed into some kind of a commercialization from medium-to-long term.

Shailesh Kanani — Centrum Broking — Analyst

Okay sir, thanks a lot, that’s all from my side.

Sachin Raole — Chief Financial Officer, Director of Resources

Thank you, Shailesh.

Operator

Thank you. The next question is from the line of Amish Kanani from JM Financial Services. Please go-ahead.

Amish Kanani — JM Financial Services — Analyst

Yes, hi sir. Sir, congrats on a good execution as well as to the improvement in margins, sir. Sir, about CBG, sir, if you can remind us, my old note suggest that typical CBG investment is of the size of INR35 crores, INR40 crores. And with this GOBARdhan scheme, talking about 500 plants, does it mean that we are talking about say initially INR20,000 crore kind of a market opportunity? And is it possible to guesstimate, how soon they can come up? I understand budget is not clear about Viability Gap Funding, versus whether the government is doing investment upfront, but some thoughts will help us. Thanks.

Sachin Raole — Chief Financial Officer, Director of Resources

So, it’s very difficult just to — what I can say, give the number, but let me just try to figure it out. INR10,000 crore is the investment, which has been talked about by the Honorable Finance Minister in her budget. But it is divided between two big segments. One is on the CBG side and one the cluster segment, cluster segment investment might be on a lower side. Now, what will be the percentage of allocation of fund to that side and what will be on the CBG side, seriously we will have to see.

But taking a queue, some kind of a queue, or some kind of an estimate, let’s say, one plant is going to cost INR30 crores on an average, and this particular number, because small plants will cost little lower than that number. We are talking about the investment number which you mentioned, more or less in that kind of a direction. Yes, it can be in the range of INR20,000 crore, but we’ll have to still wait how this is going to get evolve over a period of time. So, today, it might be little premature to give you some kind of a number over there.

Amish Kanani — JM Financial Services — Analyst

Okay, okay. And sir, is it fair to assume that your the market-share, the way we are dominating in ethanol. Is it fair to assume that our market share here will be in the similar size? Can we assume a market share in excess of 50% or it’s again too early? But my point is, what is the competitive landscape in this market beyond Praj?

Sachin Raole — Chief Financial Officer, Director of Resources

So, as compared to ethanol, CBG competition market or rather the landscape is very, very different. In ethanol, there were very few players in that space, so we are playing a very serious role on ethanol, but in CBG we are seeing multiple kind of a competition number. So, it is completely — the entire market, if you look at including the competition is completely evolving. So it is too early to say that whether market share is going to be 50 or 10. We would like to play a meaningful and a leading role in that segment. That’s what I can say at this point of time.

Amish Kanani — JM Financial Services — Analyst

Sure, sir. And sir on the Flex fuel side, you did mention about, CRM calling us and also a lot of manufacturers offering their products. Here, sir, how do you see the evolution. One, in terms of lot of players are showing their EU85 kind of a vehicle. So the question is, how do you see that market evolving. And is there a role where the government will again mandate that you have to introduce these vehicle with the next timeline and stuff like that, sir?

Sachin Raole — Chief Financial Officer, Director of Resources

So this is what auto industry is looking forth by introducing vehicles which can run on ethanol, blended ethanol or on the ethanol. This is what the plans they have actually announced in the Auto Expo. We’ll have to see to what extent these numbers are coming up, but the encouraging part was, there were multiple players who actually talk about it, it’s not only one player or two player. So this gives a confidence to us that the population as a percentage of flex fuel vehicle is going to be on the higher side, which will add to the demand, which is required for the ethanol.

Amish Kanani — JM Financial Services — Analyst

Sure, sir. Sir, and last question before I go to the —

Operator

Sorry to interrupt, sir. We request you to please come back in the queue. [Operator Instructions]

The next question is from the line of Kunal Sheth from B&K Securities. Please go-ahead.

Kunal Sheth — B&K Securities — Analyst

Yes, hi, congratulations on the exceptional number and thank you for the opportunity. So, my question is pertaining to — so what is our sense and how much of 1G ordering would have been already completed by now?

Sachin Raole — Chief Financial Officer, Director of Resources

So are you referring this to EBP 20?

Kunal Sheth — B&K Securities — Analyst

Yes, yes, that’s right.

Sachin Raole — Chief Financial Officer, Director of Resources

Yes, so if you are only considering the capacity creation requirement for EBP 20, somewhere around balanced capacity of maybe INR450 crores to INR500 crores is still remaining to be created.

Kunal Sheth — B&K Securities — Analyst

Okay. And sir, as far as 2G is concerned, you were saying that, we have already completed the pilot projects and now the inquiries for 2G are active?

Sachin Raole — Chief Financial Officer, Director of Resources

So Kunal, yes, what we mentioned that there were three orders, commercial-scale orders we are currently executing, we are in the final leg, one is at an advanced stage, two, might be a year down the line. Apart from these three orders, we said that there are no new orders which have been announced in the domestic market. But at the same time I was referring to Europe market where we are dealing with couple of inquiries and being a complex kind of nature of this entire 2G story itself, it’s taking time, but it is moving in a very positive way, because we need to have the right promoters and the right investors to commit to this 2G story and which is what is happening right now in Europe with Europe site.

Kunal Sheth — B&K Securities — Analyst

Sure. And sir, what is your sense on, while we’ve been maintaining this 950 to 1,000 kind of a run-rate for several quarters now. So do we think there is enough visibility in the short-term, I understand there are lot of triggers in the medium-term to maintain this run-rate for next few quarters?

Sachin Raole — Chief Financial Officer, Director of Resources

Our endeavor is natural to maintain that kind of a run-rate. And we’d like to see, as I mentioned earlier also, that this is a project business. The order finalization sometimes takes time. The positive input which I can give you on the order book that we have right now looking at a very all-rounded kind of an order book and not getting concentrated only on one business that’s the effort which we are right now doing. So it will help us in maintaining this kind of a run rate, but it is completely what I can say is our endeavor to keep this run rate on.

Operator

Thank you. Sorry to interrupt sir, please join the queue back.

Kunal Sheth — B&K Securities — Analyst

Sure.

Operator

Thank you. The next question is from the line of Prashant Shah from Serum Institute of India Private Limited. Please go-ahead.

Prashant Shah — Serum Institute of India Private Limited — Analyst

Hello, good afternoon. Can you hear me?

Operator

Sir, your voice is very feeble.

Prashant Shah — Serum Institute of India Private Limited — Analyst

Yes, can you hear me now?

Operator

Yes, better.

Prashant Shah — Serum Institute of India Private Limited — Analyst

Yes, okay. My one question was on just a follow-up of what you indicated right now, if you can just give us a trend or your view on the trend in the order book for the last three, four quarters. I think it’s picked out somewhere in Q4 and Q1, and has been on a slightly softening trend over the last Q2 and Q3. And my other question was a slightly book-keeping question. If you see the difference between consol numbers and standalone numbers, if you can just explain why Q3 last year, the standalone number — standalone PAT of INR64 crores, turned out to — became a PAT of INR37 crores at consol level and this year why the trend has reversed? If you can just explain that much. That’s it. Thank you.

Sachin Raole — Chief Financial Officer, Director of Resources

Okay, Prashant. Firstly, your question related to order book. I have already said that we are trying to see how the composition of order intake from different business should give us the run rate which we are looking at, this competition may change, the order placement scenario may change. And quarter-on-quarter, it will be a little difficult for us to comment what is going to happen. I see that on the annualized basis, our order booking is going to be in the site. That’s what our plan is, to maintain the gross growth momentum, which we have already achieved.

Second question is related to difference between the standalone and the consolidated numbers between these — in this quarter. So if in — or rather the September quarter versus December quarter — in the standalone —

Prashant Shah — Serum Institute of India Private Limited — Analyst

December quarter to December quarter.

Sachin Raole — Chief Financial Officer, Director of Resources

December quarter to December quarter, so if we look at in the standalone, we were having — you are talking about only quarter?

Prashant Shah — Serum Institute of India Private Limited — Analyst

I’m talking last — yes, for the quarter only. Last quarter — last year Q3 quarter to end this year Q3 quarter.

Sachin Raole — Chief Financial Officer, Director of Resources

In a standalone number.

Prashant Shah — Serum Institute of India Private Limited — Analyst

On standalone number, if you see last year Q3, we reported a profit of INR64 crores, where — which on a consolidated number turned out to be INR35 crores.

Sachin Raole — Chief Financial Officer, Director of Resources

Okay. So if you look at in INR64 crores of the last 31st December, ’21 quarter, we were having the dividend income from a subsidiary company to the tune of INR30 crores. So technically if you remove that dividend, the profit should have been in the range of INR34 crores. So profit has moved actually from INR34 crores to INR55 crores in this quarter.

Prashant Shah — Serum Institute of India Private Limited — Analyst

Okay. Okay, so that was the only component there?

Sachin Raole — Chief Financial Officer, Director of Resources

Correct.

Prashant Shah — Serum Institute of India Private Limited — Analyst

Okay, fine, thank you very much.

Sachin Raole — Chief Financial Officer, Director of Resources

Thank you.

Operator

Thank you. The next question is from the line of Krisha Kansara from Molecule Ventures PMS. Please go-ahead.

Krisha Kansara — Molecule Ventures PMS — Analyst

Hi, sir, congratulations for the [Technical Issues]. So, sir, my question is —

Operator

Not clearly audible, if you can please speak up.

Krisha Kansara — Molecule Ventures PMS — Analyst

Am I audible now?

Operator

Can you — yes, you can proceed now.

Krisha Kansara — Molecule Ventures PMS — Analyst

Sure, thank you. So, sir, my question was regarding the recent news flow, the government has preponed the ethanol blending target by two years. So just wanted to know your take on this. Is it practically possible for the industry to achieve this 20% target in one year?

Sachin Raole — Chief Financial Officer, Director of Resources

So, Krisha, thank you for your question. The target was moved first from 30% to 25% from the blending target point-of-view. Now, what is the announcement which you have heard or read in the newspaper is related to availability of ethanol of 20% blended, the gasoline will be made available from ’23 onwards itself. So this is going to be like on a trial basis, because it has to start so that we can actually see this as a ’20 program catching-up in 2025. So this is what is going to happen from ONGC side, they will be putting up fuel pumps, it would be 20% blended petrol.

Krisha Kansara — Molecule Ventures PMS — Analyst

Correct, so the 20% —

Sachin Raole — Chief Financial Officer, Director of Resources

So it is not the entire target which was announced, it is not the entire 20% target is advanced by two years, but it is the availability which is going to happen from 2023.

Krisha Kansara — Molecule Ventures PMS — Analyst

Correct. So basically, they will initiate this 20% blending from 2023 itself, but only on selected petrol pumps, correct?

Sachin Raole — Chief Financial Officer, Director of Resources

That’s right

Krisha Kansara — Molecule Ventures PMS — Analyst

Thank you, sir.

Operator

Thank you. The next question is from the line of Jay Shah from Capital PMS. Please go-ahead.

Jay Shah — Capital PMS — Analyst

Hello, are you able to hear?

Operator

Yes.

Jay Shah — Capital PMS — Analyst

Yes, congratulations, sir, for a great set of numbers. Sir, my question was a bit on the macro side, if you can explain us some moving parts in the whole hydrogen chain that what is happening? And secondly, sir, on the last call you mentioned about the Inflation Reduction Act, the bill that was passed in the USA, are we getting some traction there and attention there from the — even the U.S. players on the clean energy front?

Sachin Raole — Chief Financial Officer, Director of Resources

The second question, can you please repeat. First question, I got it, but second question, if you can repeat.

Jay Shah — Capital PMS — Analyst

The second question is, sir, Inflation Reduction Act, the IRA bill that was passed, which —

Sachin Raole — Chief Financial Officer, Director of Resources

Understood, understood, yes. So the first part, hydrogen is, according to us, is little early to mention what is going to happen, what kind of a — what I can say, the roadmap is going to come up for hydrogen, because there is a talk around it in a big way, but we like to figure it out, how it is going to get actually played out in the near-future. We are definitely preparing our self on multiple fronts, including for that matter, the investment which we have mentioned for putting up a manufacturing facility is basically to provide critical equipment required for hydrogen manufacturing. So we are preparing on all the fronts, one on the energy side, second on the equipment side also. And I would not — I mean, at the cost of reputation, I will say that in the equipment side, we are actually making everything to find out how it can be offered in a modularized way. So we are investing a lot on that side and that is on the hydrogen side.

Second thing on IRS, I also mentioned that in the international side, we have seen especially from USA, demand which will emerge on the low-carbon ethanol. This is nothing but an outcome of this higher EBP, just mentioned. Where we have already started providing our services. We have already done audit for at least three plants at this point of time and there will be status of these audits, and we are moving from one stage to second to prove that what can be done with our technology solutions for reducing the carbon intensity in their ethanol. So yes, action is going on based on what is happening on the IRS front too.

Jay Shah — Capital PMS — Analyst

Okay, sir. Thank you. And sir, just the last question, you had mentioned that a lot of European companies and the U.S. companies, they are waiting for how our Panipat plant turns out to be, because you said that a lot of eyes were there on how we are able to ramp-up this. So what is the progress on them?

Sachin Raole — Chief Financial Officer, Director of Resources

So as I mentioned in my remark, Jay, that our pre-commissioning activity going on. So, we have completed the mechanical completion, so plant is technically ready, but it has multiple sections. So we are actually going to section by section checking of that, reasoning without how it is going to perform, so that when we are taking up the entire plant from the commercial production point of view, we should not have any surprises. So we’re getting that completely done in next couple of months time that’s first development which is going on of the Panipat site.

Yes, we mentioned that based on the visibility of commercial production from a commercial clients, the other markets are naturally going to react to it and that’s what is going to happen in Europe. It is going to be a long-story, it is not going to be a short-story and that we always maintain that it is not going to be in the short-term, it is going to evolve only in the medium-term. But every step, I can tell you, as a feedback to you guys that on a quarter-on-quarter basis, we are very definitely progressing in a positive direction.

The investors and the promoters both need to be completely comfortable before this, commit the investment into 2G piece. In the Europe, the investments for one particular plant is not going to be less than EUR200 million to EUR250 million. So this is a huge investment and that’s why it is going to be traded little bit more cautiously, where the Panipat plant will definitely help us in replicating that and our work which we have already started working with these prospects is going to give us some kind of an edge in the European market.

Jay Shah — Capital PMS — Analyst

Okay. Okay sir, thank you so much for the detail answer, sir, and all the best for the future quarters.

Sachin Raole — Chief Financial Officer, Director of Resources

Thank you Jay.

Operator

Thank you. Next question is from the line of Divyanshu Sachdeva from White Oak. Please go-ahead.

Divyanshu Sachdeva — White Oak Capital Management — Analyst

Hi. Hi Sachin sir, I’m audible?

Sachin Raole — Chief Financial Officer, Director of Resources

Yes, very much.

Divyanshu Sachdeva — White Oak Capital Management — Analyst

Yes, hi sir. So first question, I mean I’m sorry I joined the call a bit late. Can you please explain your this new MoU that you have signed with Axens, like what kind of role the Praj is playing and what is this main JV all about?

Sachin Raole — Chief Financial Officer, Director of Resources

So for SAF, there is a long, what I can say, manufacturing phase starting either from molasses or ethanol to SAF. So there are two-parts, first leg and second leg, second leg is related to SAF manufacturing, where Axens is, we have joined hand with Axens, where we would be using advanced technology for conversion of either isobutanol causes or converging of ethanol to SAF. So that’s the leg where Axens is going to play a role. We are going to play a role for isobutanol and ethanol. And that ethanol is going to be low-carbon ethanol. So it’s a churn where both of us are going to play a role. First part by Praj, second part by Axens.

Divyanshu Sachdeva — White Oak Capital Management — Analyst

Okay and this isobutanol to ethanol is also something which we have tied-up with Gevo?

Sachin Raole — Chief Financial Officer, Director of Resources

Yes, so isobutanol is from molasses to isobutanol, where Gevo is the one whose technology we have adapted. They have a corn technology after, we adopted their corn technology and molasses to isobutanol.

Divyanshu Sachdeva — White Oak Capital Management — Analyst

Okay, okay, and understood. And just one more thing, like if I see Gevo’s commentary, like Gevo and other, in fact airline commentaries, let’s say, for example, British Airline has committed around 10% SAF by 2030. Gevo has tied-up for an off-take agreement of 350 million gallons and tied-up with various airlines, like American Airlines, Alaska Airlines, Japanese Airlines, so it seems like Gevo is very, very positive in terms of SAF to be the next growth driver.

So anything like they have indicated or something like towards us like how they would pan this thing and how this thing should be very much incremental for Praj itself, because this seems very incremental and very positive, let’s say, they have also mentioned that the entire SAF space would be worth more than 30 billion gallons over the next two decades or something. So is it something that we are seeing going-forward from the Gevo side?

Sachin Raole — Chief Financial Officer, Director of Resources

So if you look at the European market and U.S. market, they have already started on the SAF front, which has not yet happened in India. There is no commitment in the sense, there is no blending mandate per se for the existing Indian market, but that has already started happening in European and American markets. Why airlines are committing? Because they have seen this commitment really to meet with going-forward and that’s what they’re committing their requirement of ethanol — requirement of SAF tranche is Gevo side. So that’s a big development that market is happening.

In our market also it will have its own impact and it will have some kind of a — we will see some kind of mandates coming or going-forward on the SAF lending in India too, which will create opportunity for us have manufacturing facilities for SAF in India. Right now these facilities — manufacturing facilities are going to be outside India and not in India immediately, at least for some time, but we will see that kind of a development happening in the medium-term.

Divyanshu Sachdeva — White Oak Capital Management — Analyst

Okay, all right, all right sir, thank you so much and all the best.

Sachin Raole — Chief Financial Officer, Director of Resources

Thank you.

Operator

Thank you. The next question is from the line of Ankur Kumar from Alpha Capital. Please go-ahead.

Ankur Kumar — Alpha Capital — Analyst

Hello sir, thank you for taking my questions. Sir, my question is on the order book and execution. So if I see our — while our order book has been growing, growth has slowed down a little bit. So can you comment more on that and our execution has been quite good. So given such high order book, what is the kind of guidance on revenue and margin front you would like to give?

Sachin Raole — Chief Financial Officer, Director of Resources

Ankur, I have already mentioned about how the order book is panning for us and how it is going to evolve over a period of time. As I’ve said, in the short-term, I mean if I just bucket it in the short, medium and long-term, I think in the short-term, ethanol is specifically going to play a big role. Short-to-medium term role, on the Bio-energy segment, where CBG playing its role. From medium-to-long term, we see SAF is going to play a big role. So in the Bio-energy segment from short to long term, we see very definitive candidates sitting with us in our Bio-energy offering. This is on the short, medium and long-term for the Bio-energy segment.

If I look at engineering, engineering has started picking-up beautifully well for us. It will span out once we have the manufacturing facility coming up, it will give us some kind of a facility scale to any kind of a blip in the Bio-energy segment, and it will give us complete filling up kind of effect on the engineering side from the medium-to-long term. So this is how the trajectory for us from the order booking or from the business growth kind of a thing which we are seeing going-forward. Revenue and margins, it will be too early. Generally, we don’t give any kind of a futuristic statement or a guideline on this, but I’m sure that it will be in-line with the order booking, which we are going to have in these business segments.

Ankur Kumar — Alpha Capital — Analyst

Sure sir, and in terms of execution, fourth quarter is the best quarter. So can we expect that to continue hereon?

Sachin Raole — Chief Financial Officer, Director of Resources

See, the way in which we have seen these years it has evolved, we are seeing more on less, more or less we are seeing quarter-on-quarters the execution is falling in-place. It is not — earlier it used to — your point is valid, but first six months used to be on the lower side, and the next six month used to be on the higher side. But we are now seeing that some kind of a trend length is coming up in our quarterly performance. So yes, quarter four is generally good. It will remain good, if I’m not wrong, but more or less, we will see going-forward the scenario, that more or less quarter on quarter numbers are going to be in some kind of a range.

Ankur Kumar — Alpha Capital — Analyst

Sure sir, thank you, and all the best.

Sachin Raole — Chief Financial Officer, Director of Resources

Thank you.

Operator

Thank you. The next question is from the line of Hemant [Phonetic], Individual Investor. Please go-ahead.

Hemant, your line has been unmuted. Please proceed with your question.

Hemant — Individual Investor — Analyst

Congratulations on a very good set of numbers, sir. And thank you for providing me the opportunity.

Sachin Raole — Chief Financial Officer, Director of Resources

Sorry, gentlemen, but I’m not able to hear you.

Hemant — Individual Investor — Analyst

Sir, congratulations on very good set of numbers and thank you for providing me the opportunity. Sir, a couple of questions from my side. Sir, firstly, what is current ethanol blending?

Sachin Raole — Chief Financial Officer, Director of Resources

Currently, ethanol blending.

Hemant — Individual Investor — Analyst

In terms of percentage?

Sachin Raole — Chief Financial Officer, Director of Resources

It has almost reached to 12%.

Hemant — Individual Investor — Analyst

12%. So sir, what kind of revenue visibility we have for the remaining 8%?

Sachin Raole — Chief Financial Officer, Director of Resources

See, the some kind of a capacity is already either got created or already got contracted. In another question I was mentioning that, another capacity of almost 450 crores to 500 crores of liters is still pending. So that capacity creation will come up over a period of time.

Hemant — Individual Investor — Analyst

So what kind of revenue we can expect from the 450 crores to 500 crores to liters of ethanol in the next coming period?

Sachin Raole — Chief Financial Officer, Director of Resources

To say, what is the total capex around this capacity is going to be there, then if it is 450 to 500, makes almost, 100, 250 plants can come up. The total investment will be in the range of around INR10,000 crores to INR15,000 crores. From the addressable market point-of-view, if you look at for Praj, it will be somewhere around INR6,000 crores to INR7,000 crores.

Hemant — Individual Investor — Analyst

Okay, okay sir, thanks a lot.

Operator

Thank you. The next question is from the line of Sanjeevkumar Damani from SKD Consulting. Please go-ahead.

Sanjeevkumar Damani — SKD Consulting — Analyst

[Foreign Speech], congratulations and thanks for giving me opportunity to speak. My first question is regarding the likely internal projection and of yours in this quarter sales. I mean, can you quantify the turnover that you are likely to achieve in this quarter, if at all?

Sachin Raole — Chief Financial Officer, Director of Resources

So if you’re asking me what will be the numbers for the coming quarter?

Sanjeevkumar Damani — SKD Consulting — Analyst

Top-line for this quarter, existing quarter, ending on March ’23?

Sachin Raole — Chief Financial Officer, Director of Resources

Sorry, we don’t give any kind of a guidance. I’m extremely sorry.

Sanjeevkumar Damani — SKD Consulting — Analyst

No problem, but it has to be 20%, 30% higher than the existing ones?

Sachin Raole — Chief Financial Officer, Director of Resources

Which is going to be guidance directly or indirectly, I’m extremely sorry.

Sanjeevkumar Damani — SKD Consulting — Analyst

Okay, sir. [Foreign Speech], would you like to give name to the three plants that you are already coming up for making ethanol from syrup, these companies named for whom you are executing if at all you can share?

Sachin Raole — Chief Financial Officer, Director of Resources

Yes, sure. It is Mirani Industries based out of Karnataka.

Sanjeevkumar Damani — SKD Consulting — Analyst

[Foreign Speech]. So 510 sir, you have written 510 liter per day single plant is being commissioned for then?

Sachin Raole — Chief Financial Officer, Director of Resources

Yes.

Sanjeevkumar Damani — SKD Consulting — Analyst

Or has been commissioned.

Sachin Raole — Chief Financial Officer, Director of Resources

Yes, yes.

Sanjeevkumar Damani — SKD Consulting — Analyst

Or it is for Mirani Industries, is a Private Limited company sir, or a listed company?

Sachin Raole — Chief Financial Officer, Director of Resources

So, you can have a look at them, if they have the full entity version within them and there are multiple two or three status they have within their own group.

Operator

Thank you. And sorry to interrupt. Sanjeev, we would request you to please come back-in the queue.

The next question is from the line of Shailesh Kanani from Centrum Broking. Please go-ahead.

Shailesh Kanani — Centrum Broking — Analyst

Thanks for the opportunity again, sir. Sir, I just wanted to understand if we have booked any after sales service revenues in this quarter and given that the ethanol production capacity in last three years have kind of leapfroged from four times to five times, so if you can shed some light going ahead, what kind of opportunity we can get from this?

Sachin Raole — Chief Financial Officer, Director of Resources

From the segment of services and them from the —

Shailesh Kanani — Centrum Broking — Analyst

Yes.

Sachin Raole — Chief Financial Officer, Director of Resources

So services, we are very cautiously trading that business. And that business has two or three segments, one is the consumables or the Bio-solutions, which we sell under that, which are basically act like a performance enhancers for the plant. We are seeing a good traction for that business within the domestic and international. International is taking some time, because that market needs a demonetization to be done of our performance enhancers there. So, one by one we are actually tackling that kind of demonstrations for those people whenever the sugar season is available. So last year we did for almost four or five customers in Brazil for the testing of this demonstration and we will continue that kind of a scenario going-forward also. So we see a good growth kind of a traction to come up the consumables business, which we call as performance enhancers in the domestic and international business, both.

There is another segment, on the operations and maintenance, O&M, we have started offering that services within the Bio-energy segment, especially on the 1G plant. And the idea was to get used to understanding of this segment very well, because this business, O&M business within 1G may not have that kind of an opportunity, but it will come up in a good amount of way in the CBG side and on the second-generation or even for the 1G plant which are coming up on the starchy based feedstock. So this was like a preparedness from our side to understand how this business can come up and we are doing at least two or three specific orders on the O&M at this point of time. To some extent, yes, that kind of an order book is already booked in this quarter of December.

Shailesh Kanani — Centrum Broking — Analyst

And, sir, one more thing, if you can just shed some light on Bio-Prism, RCM front if anything you can like to highlight the status or opportunity, anything on that front? On the RCM front?

Sachin Raole — Chief Financial Officer, Director of Resources

Yes, so RCM front, I didn’t specifically mention, because it’s not on the short-term kind of a scenario, it is going to be medium-term to-long-term. We are already marching past on our product development phases in a very, very positive way. The results for the first couple of products which we have started working on are encouraging. This business is going to be a little different and we aware about the nature of this business, because this business is not going to be as traditional like the ethanol business of CBG. So we are working on what kind of mechanism and business models will emerge. And we are trying to figure it out how to get into that kind of a stage, but it is going to be more on the medium-to-long term kind of a phase, not short-term.

Shailesh Kanani — Centrum Broking — Analyst

Okay, thanks a lot, sir.

Sachin Raole — Chief Financial Officer, Director of Resources

Thank you, Shailesh. Thank you very much.

Operator

Thank you. As there are no further questions, I now hand the conference over to management from Praj Industries Limited for closing comments.

Sachin Raole — Chief Financial Officer, Director of Resources

Yes, first of all, thank you very much for your time today. If you have any more questions, feel free-to write us at info@praj.net, and we look-forward to interacting with you again. Have a nice day. Thank you.

Operator

[Operator Closing Remarks]