Praj Industries Ltd (NSE: PRAJIND) Q4 2025 Earnings Call dated Apr. 30, 2025
Corporate Participants:
Unidentified Speaker
Sachin Raole — Chief Financial Officer & Director
Analysts:
Unidentified Participant
Nupur Jainkunia — Analyst
Mohit Kumar — Analyst
Nirav Vasa — Analyst
Dipesh Agarwal — Analyst
Aditya Mongya — Analyst
Tushar — Analyst
Shailesh Kanani — Analyst
Sagar Dhawan — Analyst
Trilo — Analyst
Vikram Suryavanshi — Analyst
Amit Anwani — Analyst
Raman — Analyst
Manish Goyal — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Praj Industries Ltd. Q4NFY 25 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Nupur Jain Kunia from Velorem Advisors. Thank you. And over to you ma’am.
Nupur Jainkunia — Analyst
Thank you. Good afternoon everyone and a very warm welcome to you all. My name is Nupur Jain Kunia from Valorum Advisors. We represent the investor relations of Raj 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 2025. Before we begin, a quick cautionary. Some of the statements made in today’s earning conference 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 belief 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 conference call is purely to educate and bring awareness about the company’s fundamental business and financial quarter under review. Now I would like to introduce you to the management participating with us in today’s earnings call and hand it over to them for opening remarks. We have with us Mr. Shishir Joshu Pura, CEO and Managing Director and Mr.
Sachin Raulay, CFO and Director of Resources. Without any further delay, I request Mr. Sachin Ravele to start with his opening remarks. Thank you. And over to you sir.
Sachin Raole — Chief Financial Officer & Director
Thank you Nupur. Good day everyone. I welcome you to Praj Industries earning call for quarter four and financial year 25 trust. All of you had the opportunity to go through our results for the quarter ended 31st March 25th. I would like to start today with two key developments. India has officially achieved 20% ethanol blending much ahead of the schedule. Raj is proud to have been a key catalyst in this historic shift towards energy, self reliance and sustainability.
In another significant development, Praj has partnered with Udai Inventa Fisher, a subsidiary of Tizen Group Udet to offer end to end solution for PLA production. UIF is specialist in polymer technologies. The offering will cover all stages from feedstock conversion to polymer production. Raj will take care of feedstock to lactide through a fermentation route and UIF will be responsible for polymerization. Taj will also do the entire engineering and building up of the entire plant for pla. Now coming to the business performance Our results for the quarter are reflective of the developments taking place globally in the bioeconomy and energy transition space.
This year has been a year of transition shaped by several external factors such as changing face of energy policy across the globe, availability of liquidity, emergence of new sectors and increased focus on carbon abatement. We have mentioned in past that branch business is string made up of pearls represented by several business units. The business construct for the year is reflective of this fact as we saw significant contribution from CBG services and international business. On the domestic bioenergy business front, India has achieved its EBP20 target way ahead of the schedule this August. Very well for the future policy initiatives to expand the share of bioenergy in the overall energy mix of the country.
We are fully geared up to serve any emerging needs from the enhanced blending mandates. Our technology team is focused on enhancing margins for our customers by developing CO products and plant yield improvement solutions. We have commercialized technologies for production of distillers, corn oil, rice protein, high protein, DDGs etc. Which are gaining increasing taxations from the existing ethanol producers. These CO products will significantly alter the financial viability of myenergy projects. These patented technologies will significantly differentiate Raj in the market and create unique sustainable competitive advantage. On the project execution front, we are still witnessing liquidity challenges for financial closure of projects.
Funding agencies have become more stringent on the approval processes which is leading to extension of average execution cycles by almost 12 months. On international bioenergy front, there is a strong buildup of inquiry pipeline mainly from America, Brazil, Argentina and Paraguay. To cater to this potential, we have strengthened our presence in Americas by adding local resources. The much awaited 45Z draft notification has been issued and is likely to be enacted by October 2025. This will create significant pipeline for low carbon ethanol opportunity in the market of America. During this quarter we won a significant contract from a customer in Paraguay to set up an ethanol plant based on starchy feedstock.
On CBG front we have signed an agreement with an industry leader in South India to set up a CBG project of 36 ton per day capacity. The project to be one of the largest single location facilities in India. Earlier this month we have signed terms sheet with BPCL for developing 10 CBG projects under the joint venture. The next step is going to be regulatory approvals and formation of a formal jv. In parallel, we will be working on with the feedstock owners to develop the projects. Under this arrangement. We have started discussing biometriment module addition with our CBG customers since it can significantly improve the viability of the CBG plants.
We are witnessing increasing traction in this segment. We have healthy buildup of inquiries that are expected to translate into firm business as we move forward. Our services business has witnessed healthy growth in order book and revenue from both domestic as well as international markets. Our order book for financial year 25 has doubled as compared to the last year. There is increasing traction for solutions such as biogenic CO2 capture, fermentation process management and operations and maintenance services. Moving on to engineering business, SaaS GenX commenced operations at its Mangalore facility in March 2024. During the financial year 25, the Mangalore facility was audited and approved by eight key customers.
Three customers have already signed Long term Framework Agreement for supply of goods and services for the financial year ended 31 March 25. The reported profit before tax incorporates scale up related expenditure totaling to almost 76 crores in the consolidated profit and loss account. With requisite client approvals now secured, JNX is geared up to contribute to group revenue and PBT from FY2526. Our brewery business is witnessing some early momentum after long pause after period of three years. First greenfield plant has been announced and we have received this order on PHS front we continue to grow in newly identified segments of high capacity fermenters, complex injectables and blood plasma storage batteries.
EVs, solar cells and semiconductors are new business avenues for Praj hyperity and we are seeing healthy buildup of inquiry pipeline from these segments. Overall we see a positive development for all our business lines and we continue to remain confident and committed to our long term goal. On 20 March 25, a fire incident occurred at the office block of Praj Matrix, our R and D center in Pune. Fortunately there were no casualties or injuries and the facility did not sustain any major damage. There has been no impact on any of our R and D operations. We are now in the process of refurbishment of higher impacted office block area which is expected to be ready in two months time.
On the financial performance, the consolidated income for operations stood at 8 billion in quarter four of financial year 25 as compared to 10 billion in quarter four of FY24. PBT for the quarter stood at 582 as compared to 1 billion in the corresponding Period of the last year, profit after tax stood at 398.16169 million in Q4 of FY25 as compared to 919.36 in Q4 of FY24. There has been improvement in margin and of course the margin has to be considered after considering the cost of material and direct expenses by almost 2.3% over quarter three of FY25.
As I mentioned earlier, fire at office block at R and D Center temporarily disrupted the activities at the R and D Center for two weeks and there is no financial loss since the facility is under insurance cover. For the full year ended March 31, 2025, income from operations stood at 32,280 million as against 34.62.78 million. PBT stood at 2703 million in FY25 as against 3774 million in FY24. BAT for 25 came in at 21.89 million as against 28.33 million in FY24. Export revenue is accounted for 24% for FY24 as against 18% of FY24. Of the total revenue, 70% is from bioenergy, 20% from engineering and 10% is from PHS business.
The order intake during the quarter was 10,320 million with 61% from domestic market. Of the total order intake, 70% came from bioenergy, 21% from engineering and balanced, 9% from bass business.
operator
Sorry to interrupt, sir. Sorry to stop you. Yeah, disturbance from your lines. Can I reconnect it?
Sachin Raole — Chief Financial Officer & Director
Please do that.
operator
Ladies and gentlemen, please be on, be patient and hold the line. We’ll reconnect the management.
operator
SA.
operator
Foreign.
operator
Ladies and gentlemen, thank you for patiently waiting. We have the management back with us. Over to you, sir.
Sachin Raole — Chief Financial Officer & Director
May I know where the call got disturbed? Any. Any idea?
operator
Just last two, three sentences. Which.
Sachin Raole — Chief Financial Officer & Director
Okay, okay. Maybe I will start from the export revenues. Because that’s where I believe you. You called me up and said that there is a disturbance?
operator
Yes, sir.
Sachin Raole — Chief Financial Officer & Director
Export revenues accounted for 24% for FY25. Of the total revenue, 70% is from bioenergy, 20% from engineering and 10% from PHS business. The order intake during the quarter was 10,320 million with 61% from domestic market. Of the total order intake, 70% came from bioenergy, 21% from engineering and balanced, 9% from PHS business. The Order backlog as of March 2025 is at 42,930 million comprising 63% of domestic order with 77% from bioenergy and 18% from engineering and balanced 5% from PHS business Cash in hand as on 31st March 2025 is 6 billion. The Board of Directors proposed a final dividend of Rupees 6 per equity share at the rate of 300% of the face value of Rupees 2 per equity share for the financial year end date 31st March 25 which is subject to the approval of shareholders at the forthcoming agm.
Some other developments in the board meeting of yesterday’s Considering the emerging growth horizon for companies business areas. The Board of directors requested Dr. Pramod Choudhary to accept a role of Executive Chairmanship for the next five years which Dr. Choudhary graciously consented to. Accordingly, the board has approved the appointment of Dr. Pramod Choudary as Founder, Chairman and Group mentor in the Executive Director category for a period of 5 years with effect from 1st of July 2025. Board has also approved the appointment of Mr. Pad Choudary, son of Dr. Pramod Chowdhury as non executive, non independent Director with effect from next agm.
With this I will conclude my remarks. Thank you all for the joining and we would now be happy to discuss any questions, comments or suggestions you may have.
Questions and Answers:
operator
Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch. Don’t telephone if you wish to withdraw yourself from the question queue. You may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. We have our first question from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Mohit Kumar
Yes, good afternoon, sir. And thanks for the opportunity. My first question is only. Sir, the.
Sachin Raole
Sorry. Sorry, I’m not able to hear you.
Mohit Kumar
Can you hear now, sir?
Sachin Raole
That is clear. Yeah.
Mohit Kumar
Sir, thanks for the opportunity. My question is. Sir, can you please help us dissect the other.
Sachin Raole
I’m again losing you.
Mohit Kumar
I’ll try once again. Go back in the queue. Sir, can you please help us dissect other expenses? Their sequence 3 and y o Y look much higher.
Sachin Raole
Okay, so when I mentioned about the improvement in the margin for the quarter of 2.3% is after considering the cost of material and the other expenses. Our other expenses has a major component of site expenses which are meant for putting up of a project at the customer site. In this quarter the site activity was on a higher Side especially because we are now constructing the CBG plants which has major component on the site activity as compared to the material which are involved in the normal equipment business. That’s the reason this other expenditure which you are seeing right now is on a higher side as compared to that cost of material is lower.
And that’s why this margin is looking in a very different way.
Mohit Kumar
Understood, sir. My second question is on the what is the outlook on order inflow from ethanol in domestic sector? Is it fair to assume that a substantial growth in the new order inflow will be contingent to government increasing the target?
Sachin Raole
You are basically asking only for domestic ethanol business, right?
Mohit Kumar
Yes, domestic. Domestic.
Sachin Raole
Only domestic. Okay. So as as I mentioned in the opening remarks, that EBP20 program has almost reached to its finality. So technically the capacity which is required is either already built up or already committed for ABP20. But there are different avenues which are emerging after ABP20 program, such as in the form of flexi fuel vehicles or the vehicles which can run on only on the 100% ethanol or the blending with diesel which is also going to come up in the near future. So all these developments are going to create demand for ethanol in the domestic segment.
One more avenue which will come up for demand for ethanol is on the SS site which will start building up over a period of time and which will need ethanol as a feedstock. So there is a possibility of different avenues which will come up for ethanol demand in the near future. Would you like to add to add.
Unidentified Speaker
To what Sachin said, there are two, three other drivers that we see clearly emerging. One, the existing producers are now looking for solutions to enhance their operating margins and therefore three, two or three steps that Sachin also briefly mentioned in each one, the core product development that we are now offering to our customers for the same input that they now already doing for production of ethanol, they will now be able to garner higher revenue because they will be able to develop a separate CO product. Now what is that CO product? Whether it is rice protein, whether it is high protein DDGs, whether it is corn oil, whether it is CBG, it depends on the overall scheme and the location of the project.
So one big dimension will be this. The second is as the plants have started to operate and people have learned and stabilized their plants, it very clearly being a process plant means opportunities for for debottlenecking the plant which leads to then a enhanced recovery or enhanced output. Or you can also look at lowering the cost by improving the efficiency. There are different steps that one could take that Also we see now emerging and we are regrouping that as a very special offering from our end to help our customers debottleneck their plants to either higher outputs or to lower cost of operation.
That’s the second one and the third opportunity that is likely to come which Sachin mentioned about opportunity from saf. One opportunity would be for setting up the SAF project. But for SAF projects to work we need carbon intensity of the ethanol to be lowered. And that is another set of solutions that we will come up with even in the domestic market as we move forward. Because that be the key requirement as we move forward for SAF to have a low carbon intensity ethanol. So different levers will come into play in the ethanol segments. Just plain vanilla Greenfield projects are not the only option.
There’ll be other brownfield expansions debottlenecking all the other co product development etc that I mentioned.
Mohit Kumar
Understood sir.
Mohit Kumar
Thank you and all the best. Thank you.
Sachin Raole
Thank you.
operator
Thank you. We have our next question from the line of Nirav Vasa from Ask Investment Managers. Please go ahead.
Nirav Vasa
Hello sir and thank you very much for the opportunity. So my question pertains to diesel blending. Any idea by what time can we expect initial orders or some backing from the government for the same can we expect in in this financial year?
Sachin Raole
So the diesel blending program as you would probably appreciate has to obviously meet the tech requirements first and that is the testing that is currently underway. We have passed all but one stages of testing and that final stage of testing is now currently underway where joint study is being undertaken by arai, bpcl, PRAJ and Cummins. And we are because it is and this has to be extended time test because we have to test it from the perspective not only from mileage and combustion and power but also from an environmental perspectives of what happens with respect to what I would call as emissions the fuel specification standard that needs to get specified as to what needs to because we can’t sell anything as fuel in India unless it gets so notified by the government.
So these tests will then get recommended to the government saying now this is possible and based on that a new standard will get defined. So it’s difficult for us to put a timeline that will it happen this year in month of September, in month of August. But this is definitely progressing as a joint program and we are sure that we will see a very positive traction on this during the year. Government has taken steps to actually initiate this program notification but obviously all these steps have to be gone through environmental norms to be met. The power norms to be met, fuel to be specified, certified recommendations to be made.
It’s going through the steps.
Nirav Vasa
So my other question is pertaining to the petrol blending from 20% to 30%. So according to your assessment, the journey from 20% to 30% would require significant, significant contribution from second generation ethanol or that is something that can be managed using molasses, maize and some other feedstock, agri feedstock.
Sachin Raole
I think as we, as we move forward, two or three things will likely shape the new capacity creation for ethanol. One, of course, as you rightly said, if the blending percentage changes, that itself will drive the demand. Second, we’ll have to map it against availability of feedstock and also availability of feedstock regionally. I mean something that is of no use in south. But then you end up transporting ethanol, which is not the purpose. And what is likely to happen is that there is also a big push now from government to use starchy feedstocks, especially corn, because that seems to be a very amenable crop for us to use.
We are working on a program of intercropping right now which is at a very advanced stage. So different feedstocks will emerge? Definitely, yes. In what form, at what moment in time is a matter of the locality, the geography, the current availability, the capacity availability, technology availability, debt stage, etc. Etc. So we are very confident that as we move forward, we will see emergence of new feedstock as well. Kuzi will also be one of them.
Nirav Vasa
Final question is.
operator
Sorry to interrupt, sir. May we please request you to rejoin the queue as there are several participants waiting for their turn.
Nirav Vasa
Thank you.
operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to take questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow up question, we request you to rejoin the queue. We have our next question from the line of Dipesh Agarwal from UTI amc. Please go ahead.
Dipesh Agarwal
Yeah, Grafton. Gentlemen, my first question is what would be the impact of the possible tariffs on us both on your existing business as well as a potential business on Saf and Pratt Gen X?
Sachin Raole
You’re sorry, your voice was a little bit getting disturbed, but if I understood your question, you’re asking about US tariff scenario, right?
Dipesh Agarwal
Yes.
Sachin Raole
Yeah. So currently the equipment which are getting exported to us for both of our businesses, that is ethanol business and the critical equipment, equipment, business, they carry duty between 5% to 7%. The announcement for tariff is of 26%. Of course for next 90 days it is reduced to 10% and of course there will be some Discussions and negotiations which will be happening to reach to a stage of final tariff rate which we currently unfortunately don’t know as per our agreement with our customers. Naturally these duties are not on our head. The customer is supposed to take care of that.
But if you look at the competition which India has in US market from other markets like Taiwan and Korea and China, their duties are going to be far far different than what duty structure is going to be for India. Is our current understanding. We like to wait and watch till we see the complete picture how the tariff scenario is going to emerge over a period of next now whatever balance 70 days or 80 days.
Sachin Raole
So our current understanding is that compared to the countries that we compete with, especially for our engineering business in that market, we are more favorably placed as far as duties are concerned. However, the impact of duty itself on the project is something that remains to be seen. And of course as we know that this is a dynamic scenario. So what’s the final number that it settles to is something that will determine how things move forward.
Dipesh Agarwal
What would be share of US in our revenue? Only US if you look at currently it is minuscule in that sense. On the because even though the customers are customers are based out of us, the projects where the our critical equipments are going, they’re even going to Europe market also Canada and Europe both. Yeah. So in the US currently it might be 3 to 4% kind of a revenue which might be forming a part.
Dipesh Agarwal
Of our current number for projects located in United States.
Sachin Raole
Yeah, ordering may be happening out of United States but projects getting located in United States is a very low number.
Dipesh Agarwal
Understood. Understood. The other comment is on the CBG side if you can help us how now this year the scenario would be because you have tied up with all the OMC seems like the largest oil and gas company on the private is also setting up a large CBT plant. So what is your expectation with respect to the CPG ordering now and how confident are you in terms of Braj being getting this proportionate share being number one or number two in that segment?
Sachin Raole
Yes, so that’s very good question. I think what we are witnessing is right now statement of intention from many of the OMCs and other PSUs that they would like to be participating in the journey of cbg. Our participation with them obviously comes with a very different purpose. One when an OMC is involved the offtake of the gas which has been one of the major issues for the industry gets addressed. The CGD networks that are now being built are also across the cities and as you probably know that from next year January it is a mandatory blend that is required to be done in the grid 5%.
So that becomes the next driver for it. The third thing is the technology itself. I am very happy to share with you. In fact this happened just last week. We have done a record commissioning from start to final output at guaranteed level with DCM in 60 days. So that’s the project that we have commissioned at a a record pace. So that clearly establishes us as a leader in the business of cpg. No other company can come anywhere near this record. We have also, as Sachin was mentioning we are building a very single large capacity, single location project which is also in a manner speaking a repeat contract from a customer who already experienced one of our plants.
So that goes to show that there is an increasing confidence in the ability of technology to develop. The next development which is very very significant especially from CBD’s perspective is the development of Biobutumin technology at Raj. As you are aware we had mentioned in our last call that a road built using biobutamin from our technology is now integrated as stretch of national highway by Hon. Mr. Sri Garcare near Nagpur and beyond that that becomes a very very important co product for. For a CPG production. Which helps to address several challenges that the CPG industry faces.
We have worked closely with CRRI to get the product specified and that is it is currently under the process because the byproduct of biobutumin actually happens out of a waste stream processing. So it enhances the value significantly for CBG projects as well. So as we move forward we believe that after the initial dust has settled and people have understood what technologies work and what don’t and where is the valuation that is happening. Raj will be in a position to be the market leader as we should be given our technological progress.
Dipesh Agarwal
Sure. And last question. If we look at last two years.
operator
Mr. Dipesh can maybe request you to rejoin the queue.
Dipesh Agarwal
Sure.
operator
Thank you. We have our next question from the line of Aditya Mongia from Kotak Securities. Please go ahead.
Aditya Mongya
Everyone and thank you for the opportunity. I hope I’m audible to all.
Sachin Raole
Yes Aditya
Aditya Mongya
thank you so much. I’ll go ahead with my questions. The first question that I had was more on this next year and how you see it from an order inflow perspective as in the imponderables over here are ebb 20 having been achieved already then ponderables over here are the ATPA orders that you may end up achieving and the vulnerable over here is the CBG pipeline as you see through it. I would want to focus on both the bioenergy and the ETC segment separately.
And to gauge from you how do you see through from a wireless perspective things happening from an inflow perspective in FY26. That will be your first question.
Sachin Raole
Okay, so we were talking about FY25 as a year of a transition looking at what is happening on the EBP20 program. Rather we started working on what should be the scenario beyond EBP20 program and what can be the contributor to our order book starting let’s say from 2627 and going up to 20 2030. That’s the planning which we were doing for last two, three years. What Shishir was talking about, the products which are coming out of for the commercialization, the value adds which you mentioned for the ethanol plants is the one which is going to contribute in a big way ABP20.
We like to also see how EBP20 is going to move to ABP24 or 30 where there are some talks which are going on from the decision making point of view at a government level. So There will be one more lever which will be available for taking EBPD1 from 20 to 30. There are multiple avenues which are possible within the existing plants which again Shishir was earlier mentioning that what kind of a value add which we can do for our customers that that will be another stream of order ordering which can happen under the ethanols ethanol business.
For us I think there is more than enough opportunities which are available in that market or in that segment technology wise or from the solutions point of view we are completely ready to offer that. So that’s on the ethanol side. CBG scenario is still evolving. Again CBG is not going to remain only cbg. Cbg as Shishir was making a mention there will be an addition of our offering to that in the form of a biobutumen which actually differentiates our offering as compared to anyone in the market and takes up into a very different league because it enhances the financial liability for the projects which are having a waste in the form of a lignin.
So that’s the business segment which will emerge. But of course there are other factors which still needs to get settled down. Market is still need to have more developers to come on the board. Some kind of an ecosystem from the offtake has to still get completely streamlined. So I will have some cautious kind of an approach to cbg. But of course it is going to be one of the big contributor in the next year in our bioenergy segment in the engineering side. If I may shift my gear to the engineering business now. As I mentioned earlier, already 8 customers have verified or audited our facility of Mangalore.
Unfortunately my Kandla facility is so blocked that I cannot take any more order in Kandla because it is blocked for next 18 months. So I can’t take any new orders in Kandala. I would like to take orders only in Bangalore. And that’s why we were preparing ourselves in the form of infrastructure resources, installing our new equipment and plant and getting them tested. As I mentioned, eight customers have already inspected, audited and approved this facility. We have also advanced that to signing three long term almost eight years long term agreement framework agreement with them. What does that mean? These are not the orders, these are the agreements which actually sets the guideline for placement of orders from my customers.
So it becomes little easier for them to directly place PO on us. And every time we don’t have to go through the entire process of commercial discussion on these orders. So we have advanced with three customers on that by signing these long term agreements with them. I think the engineering business is definitely going to start contributing from the order booking in next year. As we were earlier mentioning about how this facility is coming up, we had mentioned that first two quarters we will see the buildup of order coming up in this facility. Some activities have already started.
One of the projects for which we will be getting supply order in the near future. Engineering activities have already started in this year. So we see these engineering businesses also going to contribute in a big way in the entire landscape of our order booking. I can’t give you a number unfortunately, but I very clearly see that there are possibilities of all these businesses to contribute in a big way. I missed out two or three other elements which are going to contribute to our order booking. One segment is on the services side. We are expanding our services business since last three years.
It is taking a good shape. As I mentioned earlier, this year’s order book is almost two times of the last year and now we are again looking at a rapid growth coming up in that segment on the services side. Another one is the internationalization and internationalization is happening across. It is happening in bioenergy segment also. And let me also make a mention of PHS business because initially they were having some kind of a sporadic kind of orders from international side. But since last two years we are seeing a continuous flow of international orders coming in PHS2.
So services business internationalization is what is going to contribute for the order booking of our next year. As I said I only can’t give you a number because that’s what we generally don’t talk about from the guidance point of view. But I can give you a direction the way in which order booking is going to look like.
Aditya Mongya
Understood this helps. And the second question that I had was on margins. Now your margins are consolidated 10% levels at this point of time. Just trying to get a sense of margin.
operator
Sorry to interrupt. Aditya, we are not getting you. Your voice is quite breaking in between.
Sachin Raole
But Aditya, if I’m understood your question, you want to understand how the margin is looking like for this quarter and going forward. Am I right? Okay, maybe in the meantime we can take another, another caller and maybe Aditya can come up in a call.
operator
We have our next question from the line of Tushar from Kamaya Care Wealth Management. Please go ahead.
Tushar
Yeah, good afternoon and thank you for the opportunity. I just wanted to know if corn is the long term solution for the ethanol. And you know the companies, they want to increase their margin. So it seems a natural, you know, transition for the value addition in the existing plan. Like there are players like Globals and VCL are working on that on the corner department. Just wanted to know sir, in terms of opportunity, what sort of opportunity? In number terms you are saying that and for what percentage would be that? Uh, for any, just an average capacity cost and you know that value addition would take what percentage?
Sachin Raole
If I understood the question correctly very clearly the focus is on adding higher value to existing customers. And obviously that’s highly value accretive for both them and us. That also makes sure that we are able to bring all our technology prowess to our projects. As markets mature, as technology is mature, as customers operations mature, they then start to look for some of these solutions. We are seeing this across the different markets in the world. Depending on which point of curve they are, they are moving differently. But all of them are looking for solutions in a broad category of how do I enhance the value of my own operations.
And that is where I think a very significant role is played by the fact that we have steadfastly focused on technology development as an area. And that is why you heard us talk about biobutamin, distillers, cornoil, high protein DDGs. We have talked about low carbon ethanol, reducing energy intensity, improving yield. These are all solutions of technological kind that allow one to realize higher value and deliver higher value both. So I think that is, that’s the key lever as we move forward. Could you Just repeat the second part of your question. You were a little breaking up so I couldn’t catch that part.
Tushar
Basically I just want to understand the market size of that value addition existing clients are looking for. And second is that what would be that percentage?
operator
The next question is from the line of Shailesh Kanani from Centrum Broking. Please go ahead.
Shailesh Kanani
Good afternoon everyone. Thanks for the opportunity. Sir, one clarification was needed on the margin front where in our PPT we have mentioned about Genex facility expenses cost impact of around 50 crores plus interest and depreciation of 37 and 15 crores. So. So that total is 102 crores. So are we indicating that if this this is directly impacting the PBT of nearly 100 crore is that understanding right? Without corresponding revenue?
Sachin Raole
Yes Sheila, sure your calculation or maths is right. But there was some orders which were getting executed in Gen X which has also given a contribution. So almost 20 crores contribution will be there. So if you look at and in the notes to our results also we have mentioned the number of 76 crores or 77 crores as the hit to our PBT in the consolidated accounts which is net of contribution which we have got for the orders getting executed or got executed in FY25 for Prajnics. So if you look at math it’s 105 minus 20 and this is on a standalone Gen X basis and 6,7 crores inter intercompany adjustment which which brings down that number to 76 crores.
So 76 or 77 crore is the number which we have mentioned in our notes to accounts.
Shailesh Kanani
Okay. And so does it mean that if we have a full year revenue of Gen X this would be getting absorbed and there is no repeat or in case we are building up a team. So the cost is already in the PNL so executing the future orders this will not announce, right? I understand material and other cost would increase but this is part in the P so it will not announce, right?
Sachin Raole
Your understanding Shailesh is absolutely right. That moment we start executing the orders all these fixed costs will start getting absorbed. And yes to the extent of losses which we have mentioned from this Gen X business for setting up rather this is. I will not use the word expense it’s our investment but going getting through P and L this expense will not or rather will get absorbed because of the orders which will get executed there so will not have an impact on the consolidated profit and loss account or PBT of the company.
Shailesh Kanani
Thanks a lot. And second Clarification which I wanted is that we have also mentioned about a large CBG order of around 36 ppd. Has it been included in our ordering flow?
Sachin Raole
Currently yes. In the current quarter order book it is sitting there.
Shailesh Kanani
Okay. And one indication I wanted to know on the international side in last two years in terms of execution has there been. See we have not put any orders for Gen X. That is what I understand for the Mangalore facility at least. But in terms of order book and revenue the ratio has deteriorated. So has the order. Orders which we have backed in last 18, 24 months are of longer duration or they are taking time for execution. Any color you can provide on that.
Sachin Raole
You are saying for the international bit rate, Right?
Shailesh Kanani
Right.
Sachin Raole
So the. Our international order has both the segments sitting there with his engineering and the bioenergy engineering orders in there of a larger value. Naturally their delivery cycle is little longish so it can go up to 18 months. The orders can actually go even up to 24 months. So the cycle is very very different as compared to the ethanol business under the engineering side because the as you know that under critical equipment business and Gen X business we are. We are having equipment and modules both. When you are building up modules the time requirement is pretty huge because all the equipment are supposedly to get loaded on those modules and then those modules need to be dispatched to the client.
So the cycle is a little longish. So your observation is right.
Shailesh Kanani
Okay. And just one more thing. On Gen X there has been some delay as you have mentioned in the opening remarks as well in earlier times as well any monitorables for us to expect momentum in the second half or anything which you can give more color and closing with also I would like to take this opportunity and thank Joshua. Sir, I believe this will be your last call. So thanks a lot sir for over the years for all the help, the guidance, the learning, what we have got from your side. Thanks a lot for that answer sir.
Sachin Raole
Thank you Shailesh. Learning is mutual. Your questions are also pushing us to think differently. So thank you so much. Thanks for all of you, all your colleagues, all of you have been. I was wanting to do this thank you speech a little later but since you said. I am really really thankful to you guys because unless you ask questions, it doesn’t. It shows two things. One that you care and the second that you are asking us to think differently. And when more minds work together, obviously we are able to think from different dimensions. So thank you very much for being there for us for all these years.
And I’m sure that as Praj goes forward, you guys will continue to ask same penetrative set of questions so that Ashish and Sachin and everyone will be in a position to benefit from your wisdom and take the company forward. Thank you so much for everything.
Shailesh Kanani
Thank you.
operator
Thank you. The next question is from the line of Sagar Dhawan from Valq Investments. Please go ahead.
Sagar Dhawan
Yeah, thanks for the opportunity. Just wanted to understand you know basically in the current order book that we have what could be the broader mix of the domestic ethanol orders in that which could be, you know, in the nature of slow moving even the current scenario domestically.
Sachin Raole
To be very frank with you, we are not calling them slow moving, slow moving only. We are seeing that the execution cycle is getting elongated for them. There is no. Unfortunately I’m not having a number right now in my hand to give you. But they are not non moving. They are slow moving for a reason. Because we are also following very strict regime for recognition of a revenue that if a client is ready with everything then only we start working with them. And that’s what is taking some time. And that’s what we mentioned earlier also that the execution delays are on that account.
As I said, unfortunately I’m not having a ready number. Maybe we can provide you subsequently.
Sagar Dhawan
Sure sir. Understood. And the other second part of the question was let’s say the current order book on bioenergy which we are having of 3300 crores or given in the presentation what could be the execution cycle for that which you’re looking at for that piece?
Sachin Raole
It should be somewhere between 12 months to 15 months.
Sagar Dhawan
Okay, sure, got it. And so the other question that I had was on the engineering segment. So we are seeing, you know, if I look at it on a full year basis FY25 to basically take care of the quarterly fluctuation. The order intake on engineering side has been actually has gone down about 17% in the full year 25 compared to last year. So anything specific to call out there?
Sachin Raole
Actually no. As I said we are not in a position to take order in our Kandla because that facility is completely choco block for next 18 months. So we are supposed to get all these orders now happening in the Gen X and that’s the readiness of Gen X which we are waiting for. So that’s the only thing because we had to regret couple of orders on the Kandla because our Gen X facility was not completely ready.
Sagar Dhawan
Okay, good. Thank you. Thanks for taking the question.
operator
Thank you. We have our next question from the line of Trilo from Amphithe Capital, please go ahead.
Trilo
Thanks for moving my question, the first question is on flex fuel. So could you please share some insights regarding what’s the development in this flex fuel segment and what are the actions that the government is taking to, you know, successfully implement this?
Sachin Raole
Could you just repeat your question? You are a little breaking up, so I couldn’t hear it very well.
Trilo
Hi, am I audible now? Yes, please. Thank you. Oh yeah. So I want to just, you know, get some sense on the development of the flex fuel policy and when do. We see some sort of light on that aspect. Also, could you just, you know, give. Us some sense on what kind of. Order book, you know, can we expect for the company in subsequent year? That’ll be helpful.
Sachin Raole
So I mean our role as an organization that is closely associated with development of biofuel technologies, our role is to make sure that we are developing technologies that can use differently available feedstocks across the country for conversion to ethanol and ethanol becomes available. So that’s the role that we play, of course, as an important part of the overall industry ecosystem. We do provide our inputs to the requisite bodies through to industry bodies, to the government panels. When we are invited. We also talk with automotive manufacturers, bodies and things like that. So our role is to provide inputs and say what is possible and how it could be made available.
Because the moment flexible vehicles come, obviously the demand for ethanol will shoot up and obviously then there needs to be a roadmap available for making ethanol available. I think that’s the role that we are playing. For me to predict a date on which date the flexible policy will be announced is not within the domain of either my knowledge or authority. So that will be very difficult.
Trilo
Okay, could you just talk about the order book, you know, expectations for the financial year 26. I know you guys don’t get into. Any numbers or growth percentage, but it will be helpful for us to understand. What kind of growth has been, you. Know, sort of thinking about in the subsequent year.
Sachin Raole
Yes. Sachin mentioned in his speech that we have also mentioned that in the past that Raj’s business is a string of pearls. And we are beginning to see different pearls now beginning to shine. We are not dependent only on one business segment. So our services business, the CBG business, our push and thrust for internationalization, you’ll probably notice that in the quarter that went by we were 39% of our. The book came from international business. And that is a stated strategy of the company where we have stated that we want to move to an eventual situation of 50, 50 between domestic and international, even as we grow our sales three times.
So of course both segments will grow. But we expect international to grow at a faster pace compared to domestic. So that will be a clear dimension. These other businesses that I spoke to you about earlier, I mentioned about higher value enhancement, core product development solutions. So we are the engineering solution, the whole Gen X picture that we discussed. So we actually have multiple. We are fully ready in some of the areas where like genex facility was getting ready. But now we are ready. The co product development has picked up high speed. We are now ready to commercialize Biobutumin, distressed corn oil is already commercialized.
Rice protein, we are ready to commercialize. So there are different solutions, different co product solutions for which we are ready with commercial solutions. So as we move through the year, I think all of these levers will start to play out and we will see a healthy development of the order book. We see more reason for that would lead us to believe that, you know, one segment, one part of a segment, sort of not having a visible opportunity will lead to any deficiencies in our performance. I think we will continue to build from here onwards in a very strong way.
There will be other levers that will take over a period of time. Sachin briefly mentioned about diesel blending program. I mentioned about cef. So there will be these opportunities that will come and emerge as we go along and travel through the year.
Trilo
Thank you very much.
operator
Thank you. We have our next question from the line of Vikram Suryavanchi from Philip Capital. Please go ahead.
Vikram Suryavanshi
Yeah, good afternoon sir. I think most of the questions answered so just on bioplastic with our demo plan being ready and now it is JV when we can start showcasing this for the orders and how would be the opportunity in international market?
Sachin Raole
So Vikram, we are already jointly pitching in for the order booking now with the prospective customers, this being a completely different segment. But of course there is a good amount of interest in the bioplastics in the market. So there is a definitive interest which is emerging. We are meeting the prospective customers and presenting our case to them jointly with TK and we will see some action happening. I can’t give you a timeline, I can’t predict a timeline right now for when the order booking is actually going to happen. But yes, the set of customers are interested in visiting our demo plant, understanding how it is happening and dialogues are going on.
Unidentified Speaker
Vikram, just to add to what Sachin said, the most very important factor is that this is now a domestically developed technology. So we expect it will be very, very cost Competitive compared to any other technology, number one. Number two, the availability of technology in global market also is pretty restricted and our model of making it available to anyone who wants it is something very is a significant departure from most of the current technology players strategy. I think these two things coupled with the fact that there is a local, very rich in experience company that is backing up this technology and now with this joint venture that we assigned with one of the world leaders will actually make the full end to end solution available to customers.
So these are the three key drivers that I believe will help move this forward. Maybe this is a little early days, but I’m sure as time forward in time we’ll be able to speak more specifically about. But there’s already a lot of interest from a lot of customers.
Vikram Suryavanshi
Understood. And for GenX, I think since we start order booking now, majority revenue will start particularly in second half of 2016. So is that understanding right?
Unidentified Speaker
So some, some revenue is happening but meaningful revenue will start happening only in the H2 because the orders for execution will start coming up at that point of time. Currently there will be engineering which we like to keep on doing based on the order booking which you’ll have.
Vikram Suryavanshi
Understood. Okay, that was it. Sir. Yeah. Thank you very much and wishing you all the success for. Yes sir. Thank you.
Sachin Raole
Thank you Ikram, it’s been a pleasure. Thank you and do keep in touch.
Vikram Suryavanshi
Okay, thanks.
operator
Thank you. We have our next question from the line of Amit Anwani from PL Capital. Please go ahead.
Amit Anwani
Hi sir, thank you so much for taking my question. First question. In the opening remark you highlighted about a 45B notification now being implemented from October 25th. And in the past we have been highlighting about the USF opportunity. So with this, what are the expectations of Order wins in US SAF in FY26 and FY27? Any color you would like to give after this development?
Sachin Raole
45Z relates to lowering the carbon intensity of ethanol. Okay. And as we said that we expect that since the draft notification now issued, considering normal cycle timelines, it should be notified towards the end of second quarter. That’s where we are today. As and when that happens, it will create a definitive opportunity for us because there are already existing projects in United States where the carbon scores lowering will present a very significant opportunity and financially also a very deteriorative which would become the eventually the feedstock for saf. For SAF projects to come, this is the first step that is required to move forward one or two projects that will come up.
In the meanwhile you will see that they will say okay, we already have secure access to low carbon ethanol or they’ll have their own low carbon ethanol production facility. So that remains to be seen as to what is the actual model deployed by the early project proponents that we will have to see in terms of the other notifications out of narrative for saf. For SAF we need to see in terms of. Because there is also another development where the CCUS projects which were dependent on pipelines are facing a little bit of a rough weather because pipelines are not getting approval.
So how will that be overcome? So. So multiple levers will have to come into play for us to see. But we remain confident that with the advent of 45G it will definitely create a good window of opportunity for us.
Amit Anwani
Right. Second part on you want order in Paraguay and earlier you want orders in Brazil. So any pipeline there or any other international market for 1G maize based sugar starch where we are seeing order wins in FY26, very high focus area for us.
Unidentified Speaker
So Paraguay, Argentina, Brazil, Guatemala, these countries both in Central America and South America are witnessing what I would call as movement for governments to a specify either higher mandates or new mandates for ethanol blending in their energy mix. So that’s a very, very positive step forward. Most of these plans are not all are likely to be starch based and we are very, very confident that with our strong footprint there, we will be in a position to move forward. Sachin already mentioned there are two projects for which the engineering orders are already under the way. So once they are finished, that’s the model in that market.
So then they’ll switch over to the equipment ordering situation. So we’ll look at that as well.
Amit Anwani
Lastly on GenX, since we are looking for order wins in Q1 Q2, any development which has happened, what kind of quantum we can expect with respect to order inflow or revenue which you might be Factoring in. For FY26. For general,
Unidentified Speaker
there are dialogues that are currently underway. Orders are in finalization stage in handshake stage and we will let you know the numbers once they are done. I can’t let the number out before the orders are finalized. You will appreciate that
Amit Anwani
and wish you all the best. Joshi Pirasar it is always a pleasure to interact with you and I wish you very best. Thank you Amit. Thank you very much.
Sachin Raole
Pleasure is entirely mine.
operator
Thank you. We have our next question from the line of Raman from Sequent Investments. Please go ahead.
Raman
Hello sir, can you hear me?
Raman
Yes Sir.
Raman
I have two questions. First, we have currently an order book of 4293 crores. So what was the execution timeline with respect to this?
Sachin Raole
So as I earlier mentioned that execution cycle for most of the orders is in a range of 12 to 15 months. I’m telling you the average couple of orders which are there from the critical equipment and modularization side, those might be in a zone of 18 months but majority of the orders are in the zone of 12 to 15 months, kind of an average period.
Raman
Okay sir, and the second question, it’s with respect to compressed biogas. Earlier in the earlier call you mentioned that the industry was facing, the entire industry was facing an economic and operational challenges and now that the pricing mechanism has been changed, I mean it’s linked to the 80% of CNG prices. I guess that’s the new pricing mechanism. So now I want to understand the outlook, current outlook and the future outlook. Is the, is the entire industry still facing challenges or now the operational concerns have been sorted out.
Sachin Raole
So this is a very new nascent and emerging industry. Nowhere in the world this exists. So there are still nuances that need to get ironed out. Yes, you’re right that on the pricing front there seems to be a decent solution that has been provided and there’s already representation made by the industry to government saying no, they need a higher percentage of the pump price. So that’s under discussion. Having said that, I think there are other issues that need resolutions around what to do with salt, fertilizer, liquid fertiliser. They have now been notified which is the first positive step.
So they at least now can legally sell those products in the market. So that’s the second portion. Third is as I mentioned that from January of next year there’s a mandatory blending obligation on the CGD companies. So that will also create demand and push for rapid infrastructure development. Also development of plants in and around those networks because they’ll be looking for CPG as a source. So that’s another one. So there are several positive elements off take side. Still some more resolutions are required but I’m sure as we go through the year we will see those happen.
Raman
Okay, a follow up question sir, on the revenue front with respect to Q4, both bio energy and engineering have seen a significant dip. Like bioenergy has decreased by 15% on year, year on year basis and engineering has decreased by 30%. So can I know why was there this significant decline in the revenue?
Sachin Raole
So as we said, you know that the, the execution cycles have stretched from their normal cycles of nine to 12 months, they stretched to 12, 15 months so and we are very cautious about some of the domestic projects progressing forward in view of the tighter liquidity norms, tighter money disbursement norms that the financing organizations are now putting the banks etc putting on our customers. So we have the order book a B we could not then for the fact that they were not fully prepared to accept and pay for them. So that stretched the project cycles.
Third, there was also during the year and I’m being very open here during the year there’s also a bit of a, I would say order intake time mismatch for us, especially for our exports jobs where the thing started about six months late. So because the orders came in, but they came in little late so we could not go ahead and create that invoicing which normally would have happened. So those are the. If you would recall, our first quarter was not a very high order booking quarter. So that also impacted our ability to do the same thing during last quarter of the year.
Raman
So last follow up question, so can we expect there will be a spillover in terms of revenue in the next year because of the majority of the order which were supposed to be closed in this year will be closed in the coming year?
Sachin Raole
Yeah, that’s what we had said that the order book is there and the order booking is happening as per the strict norm of the branch. That order has to be there, agreement has to get signed, the advance needs to be paid. So there is a commitment from customer that they want to go ahead with the project. Yes, there is a delay delays in only an execution site. So naturally this order book is going to get executed. Instead of getting executed over a period of nine to 12 months, it is going to get executed over a period of 12 to 15 months.
So yes, there is a spillover which can happen of the order book which you are holding right now.
Raman
Okay, thank you sir.
operator
Thank you. We have our next question from the line of Manish Goel from thinkwise Wealth Managers. Please go ahead.
Manish Goyal
Yeah, thank you. Thank you very much. I have a couple of questions. So first on the overall margins, probably there are three or four perspectives. One is on what kind of revenue booking would be required to achieve breakeven at GeneXplant. Would it be say, considering you probably have an impact of 80 crores, would it be revenues of 400 to 450 crores required and do you expect that we achieved a breakeven in entire FY26 or it will be probably back ended and on a quarterly revenue run rate. So this was first part and second was on the margins related is probably do we see a very good improvement going forward considering we would have a better revenue mix with higher services revenue and higher international revenue considering higher order book from the international markets.
And third angle to this is also that with CBG plant revenue mix improving where probably we see a higher outsourced work can it probably offset some of these margins? That was my first part of the question sir and I have couple of more so please provide opportunity for that.
Sachin Raole
Manish, in the first part itself we have asked three questions but I will try to answer. Your question was related to BEP for breakeven point for genics. More or less your calculation are right. The breakeven point for genics will be in somewhere in the range of 400, 450 crores. That’s right. Your second part of the same question was whether this is going to get executed in an equal manner on a quarterly basis. Answer is no. As we mentioned that the modularization and equipment orders are little longish from the execution point of view. The execution period is going to be little longish revenue might get.
Of course it’s a. It’s a point. It is based on the percentage of completion method basis. But initially some engineering component will come through and then the supply, the work on equipment and modularization will start. So there will be some kind of a lumpiness in the revenue getting booked for GenX. We had already mentioned that we are not expecting huge revenue booking to happen in first half of the next next year. It will start happening from quarter three onwards. So you will see some kind of a lumpiness from the revenue point of view. But your point is right.
Breakeven point will be somewhere around 400 and 450 crores. Your second question was related to margin improvement. Your point is right. Because of the services element and the internationalization there will be possibility of improvement of margin. We are not betting right now too much on that and giving you a very different picture. We always mention that our first target is to reach on a sustainable basis to a double digit EBITDA margin. That is what we are trying to do right now. The moment these other components will start playing in which are going to contribute higher on the margin side.
Yes, they can be margin accretive going forward. Your third question was related to cbg. Sorry I missed it out now.
Manish Goyal
No. So basically the revenue composition of CBD probably may include higher outsourced work. So can it probably impact your overall margins or you believe that we can achieve double digit margin in the cbg.
Sachin Raole
So CBG has some component of Outsourcing of course but it also has the site activity which I had mentioned earlier in my remarks that site activity is on a higher sale as compared to the bottled components or the third party component. But yes, that component will definitely be there. So there will be three three parts to it. One portion which we are supposed to do in the form of equipment, second one will be outsourced and third one will be site activity. And in the CBG business site activity will be little more as compared to the first two components.
Manish Goyal
Okay. And sir, on the depreciation part probably three observation from the cash flow statement that probably your principal payment on leases has remained steady at 32 crores. So where I’m coming from is that your depreciation has increased from 44 crores to 86 crores. So if the lease payment outcome is steady at 32 crores does it improve that incremental depreciation is on plant and machinery from Gen x that was first. Second there is a bed debt provision of nearly 25 crores versus 23 crores. So is it also reflecting in our P and L and how do we see it going forward? And third question is on increasing working capital which is quite significant considering contracts work in progress has increased from 700 odd crores to more than thousand crores.
So what. What should we read into it? Thank you so much.
Sachin Raole
I hope this is the last installment of your questions.
Manish Goyal
Sure, sure.
Sachin Raole
Cash flow Liz, your observation is right but I can’t explain you the accounting standard On a call based on the accounting standard the tree treatment of the actual rentals getting paid out and the capitalization of lease assets and getting depreciated in the profit and loss account is little different. That’s why you will not see. I mean my lease rentals were. I mean if I. If I talk from the cash flow point of view the lease rentals were little bit in a staggered manner but the asset gets capitalized in one number. I mean the entire cash flow gets capitalized as one number and gets depreciated over a period of lease period.
Especially this is happening for my genics facility and that’s the reason why you are seeing that number the way in which you are seeing. Yes you are right. Apart from Genex facility we do have plant and equipment which got what I can say decapitalized in the genics facility. Those are also on a lease basis. That’s the reason those lease rentals have also started kicking in now. So that’s why on the lease. Second one observation of yours is on a bad debt provision. Let me clarify. This is a provision for doubtful debts. There are no bad debts surprisingly rather we have not actually written off anything as a bad debt in the current year.
Everything is on the provisioning side for doubtful debts because we have, we have beefed up our policy from the provisioning side and changed little bit and made it more little aggressive on the provisioning side. That’s the reason why you are seeing increasing the provision for doubtful dates. Sorry I again missed your third question.
Manish Goyal
Thank you.
Sachin Raole
Okay, thank you.
operator
This would be the last question for today and I now hand the conference over to the management for closing comments.
Sachin Raole
So thank you everyone for your time today. In case you have any more questions, feel free to write us@inforaj.net once again we would like to thank you all for your time and have a nice day.
operator
Thank you. On behalf of FRAJ Industries limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.