Praj Industries Ltd (PRAJIND) Q4 FY23 Earnings Concall Transcript

Praj Industries Ltd (NSE : PRAJIND) Q4 FY23 Earnings Concall dated May. 26, 2023.

Corporate Participants:

Anuj Sonpal — Investor Relations

Shishir Joshipura — Chief Executive Officer

Sachin Raole — Chief Financial Officer & Director

Analysts:

Prathamesh Sawant — Axis Securities Limited — Analyst

Levin Shah — Motilal AMC — Analyst

Shailesh Kanani — Centrum Broking — Analyst

Vikram Suryavanshi — PhillipCapital — Analyst

Lokesh Maru — Nippon India Mutual Funds — Analyst

Amish Kanani — JM Financial — Analyst

Utsav Mehta — Edelweiss AMC — Analyst

Arpita Gupta — Nivesh Mitra — Analyst

Aashav Patel — Molecule Ventures — Analyst

Ajit Muroor — — Analyst

Operator

Ladies and gentlemen, good day, and welcome to Praj Industries Limited Q4 FY ’23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

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

Anuj Sonpal — Investor Relations

Thank you. 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 fourth quarter and financial year ending 2023.

Before we begin, let me mention a short cautionary statement. Some of the statements made in today’s earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management’s beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today’s earnings call is purely to educate and bring awareness about the company’s fundamental business and financial quarter under review.

Let me now introduce you to the management participating with us in today’s call and hand it over to them for opening remarks. But first we have with us Mr. Shishir Joshipura, CEO and Managing Director; and Mr. Sachin Raole, Chief Financial Officer and Director of Resources.

Now without any further delay, I request Mr. Joshipura to start with his opening remarks. Thank you, and over to you, sir.

Shishir Joshipura — Chief Executive Officer

Thank you, Anuj. Good afternoon, everybody. I welcome you to Praj Industries Earnings Call for Q4 and FY ’23. First, all of you had the opportunity to go through our results for the quarter ended 31st of March 2023.

I would like to start today’s call with the news of a historic development in the sustainable aviation fuel space. Last week, Praj, AirAsia and Indian Oil, partner for India’s first commercial flight solved by a blend of indigenously produced sustainable aviation fuel that flew the aircraft from Pune to New Delhi. The test blended in the ATF was produced by Praj using indigenous feedstock leveraging its relationship with the United States. Honorable Union Minister of Petroleum and Natural Gas, Shri Hardeep Singh Puri received the special flight at the New Delhi Airport. During the event, Mr. Puri mentioned that the government has plans to come up with mandates on SAF in near future.

As India becomes signatory to COSIA, mandatory blending of SAF from 2027 in accordance with the agreement will create significant opportunity. If we target to 1% blending in jet fuel, India will require around 14 crore liters of SAF per annum, and this will translate to an additional requirement of 28 crores liter per annum of ethanol when these move on the ATJ battery.

In another significant development, our Board has given us an in-principal approval for formation of joint venture with Indian Oil for production of a variety of biofuels. Production of sustainable aviation fuel is likely to be the first project out of this JV.

India’s EBP 20 program is moving ahead as per the plan. Over and above the EBP 20 targets, OMCs have voted expression of interest for signing long-term offtake agreement with upcoming dedicated ethanol plants for additional capacity of 300 crore liters from 8 ethanol deficit states, namely Tamil Nadu, Kerala, Andhra Pradesh, Telangana, Gujarat, Rajasthan, Goa, Odisha and Union Territories of Jammu and Kashmir and Ladakh. This creates an additional potential opportunity for INR4,000 crores.

The government has launched 20% ethanol blended petrol outlets in 11 states in February, 2 months ahead of the schedule for separate launch, and it is expected that this will go nationwide by ’25, ’26. India currently has the capacity to produce nearly 10 billion liters, which is expected to increase to 12.5 billion liters by end of 2023. Several state governments have started to create supportive policies to drive ethanol production in respective states. The Tamil Nadu government unveiled its TN ethanol blending for 2023 in March 2023 with a mission to improve farmer income, revive the sugar industry in the state and to attract investments worth INR5,000 crores in molasses or grain-based ethanol production capacity. The targets for the policy term are to be self-sufficient and meet estimated ethanol blending requirement of 130 crore liters.

Our Board has given a final approval for capex proposal of INR200-plus crores, considering the potential presence by several positive developments in different business areas. We are setting up a modern manufacturing strategy to be housed into a new subsidiary, Praj Industries Limited. This unit will address the business needs arising out of significant development in energy transition and climate action segment.

We have very strong pipeline of enquiries building considerably. The new facility will be set up near a major port with capex maybe of INR100 crores. We are moving ahead with project development and expect to start the commercial production by last quarter of FY ’24.

To accelerate commercialization of bioplastics, we are setting up first of its kind demo plant for polylactic acid (PLA) with capex of around INR60 crores at Jejuri on the outskirts of Pune. This pilot facility is being used for scaling the production of food-grade lactic acid and polylactic acid.

We’re also setting up a new catalytic lab at our R&D center, Praj Matrix that we need an investment of around INR15 crores. This facility will become operational in August ’23.

Now coming to our business performance. Our domestic bioenergy business continues to build on its leadership position as we had discussed in past, majority of orders came for ethanol plants based on the starchy feedstock. Sugar mills are also setting up dual feed plants now and are adding starchy feedstock modules to their existing ethanol facilities. Our enquiry pipeline is showing a strong continued demand for starchy and sugary feedstock based ethanol plants.

On international front, low-carbon ethanol is developing as an interesting business opportunity in the United States. Owing to slowdown in the U.S. market, this activity while developing very healthily might be a little shift in time lines for product finalization. We are in the process of completing FCA studies for several projects, which would then translate into firm business opportunity as soon as economy returns to normal.

In Europe region, we are discussing a few potential opportunities for greenfield 1G projects in non-EU countries. Our service business is receiving promising response from customers in both domestic and international markets. Our strong offering of an entire suite comprising of enzyme and performance enhancers is finding high acceptance in the market.

With a view to enhance our reach and service to customers, we are building a strong distributor network in both domestic and international market.

On the 2G front, I’m pleased to share that we have produced first ethanol from our IOCL Panipat project. Our team is now focusing its efforts in continuous operation and reliability enhancement of the plant along with the IOCL team.

As for CBG, our first rice straw based commercial plants for HPCL has commenced bio gas generation and flaring. This high-yield plant is now under stabilization and should start regular dispatch of CBG by end of June 2023. The business landscape is developing extremely favorably for our engineering business basket.

On the ETCA front, the opportunities arising out of increasing demand for sustainable energy and decarbonization of energy and downstream chemicals, blue and green hydrogen, green ammonia coupled with growing demand for waste-to-energy solutions is driving the demand for modularized solution in a significantly positive way. Our traditional business of oil and gas, fertilizer etc. is also seeing good traction, driving demand for our EPA solutions.

On the ZLD front, we are working on bringing modularization approach to our offerings. We have already received our first order for a modularized ZLD system. This augers well for future business development in this segment.

Our brewery business has now reached its pre-COVID levels, and we expect to transfer to capacity enhancements too. Fermentation is one of our key capabilities. We are capitalizing on it to explore opportunities for our PHS business in a large-size high-capacity fermenters space. We have received an interesting order for a large site fermenter for a pharma application to be set up in Oman. We have also booked our first order in the semiconductor sector for ultra-high purity water system. PHS has a very healthy inquiry basket for international market too.

The union government is currently working on a policy BioE3, biotechnology for Environment, Economy and Employment that will boost biotechnology-based manufacturing for green growth. It aims to reduce dependence on petrochemicals in multiple sectors and attract over INR10,000 crores investments. As a key stakeholder, Praj will participate in developing national biochemical policy as a knowledge partner.

Overall, we remain very positive on continued development of potential across our bio-energy businesses. In spite of global economic challenges, we expect a favorable business environment aided by stabilized commodity prices and an ever increase awareness to decarbonize the global economy.

Before I conclude, I would like to share, and I’m sure all of you join me in congratulating our Chairman, Dr. Pramod Chaudhari, who was bestowed with Eminent Engineer Award by Engineering Council of India in the industry category for his exemplary contribution in engineering field.

With this, I will now hand over to Sachin for his comments on the financial performance.

Sachin Raole — Chief Financial Officer & Director

Thank you, Shishir. The consolidated income from operations stood at INR10 billion in Q4 of FY ’23 as compared to INR8 billion in Q4 of FY ’22. PBT for the quarter stood at INR1 billion as compared to INR718 million in the corresponding period of last year. Profit after tax stood at INR881 million as compared to INR576 million in Q4 of FY ’22.

For the full year 2023, income from operations stood at INR35 billion as against INR23 billion in FY ’23. PBT stood at INR3 billion in FY ’23 as against INR2 billion in FY ’22. PAT of FY ’23 came at INR2.3 billion as against INR1.5 billion of FY ’22.

Export revenue accounted for 17.4% of FY ’23 and out of the total revenue, 73.8% came from bioenergy, 19.3% from engineering and 6.9% from the PHS business. The order intake during the quarter was INR10 billion, with 76.5% from domestic market. Of the total order intake, 82.3% came from bioenergy, almost 10% from engineering and balance 7.8% from PHS business.

As compared to the last year, export order intake has seen 9% growth, almost INR743 crores as compared to INR679 crores of the last year. The order backlog of March ’23 is at INR34 billion, comprising of 84.7% of domestic orders and 84% from Bio-energy, 11.2% from Engineering and balance 4.6% from PHS business.

Cash in hand as of 31st of March 2023 stood at INR6,910 million, that is INR6 billion. The Board of Directors proposed a final dividend of INR4.50 per equity share, that is 225% of the sales value of INR2 per equity share for the financial year ended 31 March 2023. It is subject to the approval of shareholders at the forthcoming Annual General meeting.

With this, I will conclude my remarks. Thank you all for joining. We could now be happy to discuss any questions, comments or suggestions you may have. Thank you.

Questions and Answers:

Operator

[Operator Instructions] The first question comes from the line of Prathamesh Sawant from Axis Securities Limited.

Prathamesh Sawant — Axis Securities Limited — Analyst

Yes. Hi, sir. Congratulations for a great set of numbers. So sir, I just wanted to ask a first question with respect to your JV with IOC. Just wanted to understand what would be your capital allocation policy for the same? What kind of areas will you be expecting in these projects? And what kind of returns can you expect?

Shishir Joshipura — Chief Executive Officer

Sir, you faded out towards the end of your question, but since you were asking what are the plans of the JV with Indian Oil. To give the answer, currently we have — both the boards have accorded an approval for this joint venture to go forward. Then the joint venture between public and private sector, there is a whole process that needs to be put in place that needs to be going through. And therefore, we expect it to become functional only towards end of the financial year. And as per the agreement, the joint venture will then obviously make up its business plans as it wants to go forward, as I mentioned. And the purpose is to propagate the cause of bioenergy in the country. And they will — we are expecting that they will start out on a SAF project to begin with. And as development and the business model evolves, we will know what kind of investment should be called for, what role they will play in the SAF facility, etc., but it’s probably too early for me to make comments on internal rate of return for that join venture. That’s little out in future. I hope I answered your question.

Prathamesh Sawant — Axis Securities Limited — Analyst

Yes. Yes, sir. And secondly, sir, some more light on the high-purity business. Do we see this demand for semiconductors positive for the high-purity business?

Shishir Joshipura — Chief Executive Officer

Semiconductor manufacturing facilities also need more or less a similar grade of high purity water that pharma application needs, and that is why I made specific mention that that’s the first contract that came through for — and of course, not only for semiconductor or even their supply chain as well.

Prathamesh Sawant — Axis Securities Limited — Analyst

Okay. Okay. And finally, sir, one last question from my end is with respect to the engineering segment. So do we see a good traction for the CPS and business, CPS modules?

Shishir Joshipura — Chief Executive Officer

As I mentioned — but most traditional sectors of PPS and CPS has been serving oil and gas, fertilizer, chemicals. And on the other hand, the entire — which will be served by PPS and [Technical Issues] subsidiary, which will be specifically addressing the EPC opportunities, both of them are seeing very good pipeline build for inquiry and traction. And many of the solutions that either of them would offer to different segments would involve modularization.

Prathamesh Sawant — Axis Securities Limited — Analyst

Okay. And sir, what portion of it would be going towards green hydrogen or the booming sectors?

Shishir Joshipura — Chief Executive Officer

So we are right now not saying that I will only go and chase green hydrogen opportunities because our aim is to ensure that we are able to serve the needs of our customers. These are very focused customers. We don’t — a very finite set of customers. So if they have a specific need for meeting a talent or the solution for either green hydrogen, it could be a green ammonia project, it could be an LNG project. So what’s the nature of the project is one dimension, but what’s important for us is that we are able to add value. So we’re not going to rest as for only green hydrogen or anything like that. It depends on how the program — overall progress of the project develops. But across the broad spectrum and not necessarily limited waste to NSG, green hydrogen, blue hydrogen, green ammonia and other different segments which have different needs, and we’ll be serving all these segments.

Prathamesh Sawant — Axis Securities Limited — Analyst

Okay, sir. Thank you, sir. That is from my end.

Operator

Thank you. [Operator Instructions] Next question comes from the line of Levin Shah from Motilal AMC. Please go ahead.

Levin Shah — Motilal AMC — Analyst

Yes. Congratulations, sir, on a good set of numbers. So my first question is on the export opportunity. And specifically, you mentioned in your opening comments that the U.S. market has seen some delays. But as we understand, there is a time line under which this IRA benefits will be given to the companies who basically modernize their plant. So is this a very short-term delay that we are seeing or various — the inquiries, how will we see this order inflow coming in from this enquiry?

Shishir Joshipura — Chief Executive Officer

Yes, Levin, great question. So when the IRA announcements were made, there has also — for the industry based synergies, they’re also seeking some clarifications on the laws that have been rolled out from the IRS because there are some tech breaks and credits that are announced there, so how to avoid double accounting, how do you go about specific accounting, etc. So some of the those issues are being resolved. That’s number one. The banking crisis in the United States — so this delay is not that we — everything is number 3 years or anything like that, but at least definitely for two, three quarters, we see a delay.

Levin Shah — Motilal AMC — Analyst

Okay. And sir, we were — some of the projects we were already at like an advanced stage in terms of doing the project work. So for that also, have we seen some pause in the activity or that is progressing, and it is only on the new inquiries that we are seeing some delays?

Shishir Joshipura — Chief Executive Officer

So the way the U.S. project progress is that they go through an FCA level of studies as they call them. And these studies are 3 states. Some customers can go for 2 states, but definitely 2 states, nobody goes for less than that. So those studies have moved forward. However, once the studies are over, the next step of creating a big capital investment is something that is taking a little more time, obviously, because of the funding issues, high interest rates in the economy, etc. So I think those are — but those are what I would call as not long-lasting situation. So as I said, as soon as the situation turns, we expect that this will come back on the table because as you rightly said, the IRS program will still stay same. They are not changing.

Levin Shah — Motilal AMC — Analyst

Understood. And sir, second question is on the capex. So interestingly, we had announced around INR1,900 crores kind of capex last quarter and now we are seeing that we’ll do INR200 crores with the addition of this polylactic acid and R&D capex. So this will be polylactic acid plant would be — this will be a pilot plan, right? We are not seeing any commercial sales coming out of this plant?

Shishir Joshipura — Chief Executive Officer

No, this will be a pilot plant. And the idea is to demonstrate a technology for PLA. Just very briefly, I won’t go to detail. But there are only a couple of companies in the world who have the technology today, and they are not letting it out external to themselves. So they are only using it for their own capacities. And our attempt is to bring a very different dimension to the whole field and bring charges, competence to play in terms of our understanding of the entire biological processes and ensure that we are able to provide a viable solution for PLA.

Levin Shah — Motilal AMC — Analyst

Got it. Sir and this INR100 crore capex on the ETAC part under Praj GenX, what kind of revenue potential will this INR100 crore capex entitle?

Shishir Joshipura — Chief Executive Officer

So the idea is that, of course, INR100 crore capex, as you know, in the module business, we have to create a basic facility which can shift heavy material. So that is why a lot of investment goes into that. And then once the basic infrastructure is set up, we are in a position to then leverage that for making multiple modules over a period of time. So we are — this INR100 crore investment should actually potentially be able to do almost 30 times to 40 times kind of sale out of that facility, but over a period of time, the more automation will walk in, some specific machines can walk in. So that will happen as the specific tasks develop. But the first installment of — our first tranche of INR100 crores as we start invest, our expectation is by end of this financial year, we’ll be able to make it functional from a customer’s perspective.

Levin Shah — Motilal AMC — Analyst

Got it. Thanks, sir. I’ll come back in the queue and all the best.

Operator

Thank you. Next question comes from the line of Shailesh Kanani from Centrum Broking. Please go ahead.

Shailesh Kanani — Centrum Broking — Analyst

Thanks for the opportunity and congratulations on excellent set of numbers, sir. So first, I would like to know outlook on CBG orders, how we are seeing the pipeline? And are we — have we booked any orders in this quarter — additional orders on the CBG plant?

Shishir Joshipura — Chief Executive Officer

So CBG activity is still not at a very high level, and I’m talking our market activity level is still not very high. We are beginning to see an increasing interest from customers, but we’re still not somewhere that I can say, yes, there’s a very healthy pipeline that is building up for enquiries, etc. So that is little slow in making. As I mentioned, we — and also one of the fact is that while there have been a lot of expectation around different feedstocks, the fact is that there is no proven capacity on ground which customers can rely upon. And that is why the HPC commissioning takes a very important dimension, as I mentioned at the end of June. We will be in a position to start dispatching gas from there, which will clearly establish high-yield technology, which is one of the key requirements for this to go forward and become effective. As well there are also some more what I’ll say the last mile connectivity issues that need to get sorted out. And I think everyone — all the elements in the value chain are working on dissolving these issues.

Shailesh Kanani — Centrum Broking — Analyst

The traction is slow as of now. But when do you expect it to pick up?

Shishir Joshipura — Chief Executive Officer

So I think I’ll probably be in better place to answer this question next quarter somewhere around, because we need to see this establish and see how many of the issues are being resolved. We are very confident that our technology will showcase that we are able to produce best-in-class performance. Having said that, we need to wait till the proof of the pudding is there on the ground. It is not too far out, sir.

Shailesh Kanani — Centrum Broking — Analyst

Fair enough. Sir, just wanted to understand the accounting statement of the INR100 crores demo plant, what we are putting up, I think two plants in total for bioplastic as well. So how is that accounting treatment goes, that will be debited to P&L or that’ll be capitalized in the book? I think it was debited into P&L, right?

Shishir Joshipura — Chief Executive Officer

Sachin, you want to answer that?

Sachin Raole — Chief Financial Officer & Director

Yes. So this investment is actually made for not one product, but it is like a multiproduct kind of a facility. So it will sit in our asset, INR700 crores will not come to P&L. For example, the way which we have built up our demo plant for 2G or the demo plant for CBG for testing different feedstocks, sitting in our fixed assets and naturally, the depreciation and operating expenses are getting debited to P&L. The asset block will sit on the balance sheet side and not on the P&L side.

Shailesh Kanani — Centrum Broking — Analyst

Okay. I thought that they will be amortized in the year. Sir, only one more question. Sir, our book-to-bill ratio has deteriorated obviously, because we had excellent execution in FY ’23. So it is badly now 1 times TTM basis. So how does the management view this? And as we are entering — are we entering into a territory where this can hinder our growth going ahead, growth rate going ahead? Last question for my side. Thanks a lot.

Shishir Joshipura — Chief Executive Officer

I couldn’t get the question clearly, Shailesh. Are you saying?

Shailesh Kanani — Centrum Broking — Analyst

I’ll just repeat it. Our book-to-bill ration is on a TTM basis has deteriorated, right? It is barely 1 times in FY ’23 revenue terms. From 1.2 times what we had in —

Sachin Raole — Chief Financial Officer & Director

So your question is that our revenue booking versus the outstanding order booking, that ratio is deteriorating. Am I right?

Shailesh Kanani — Centrum Broking — Analyst

Yes. Yes.

Sachin Raole — Chief Financial Officer & Director

So frankly speaking, the way the execution capabilities or capacities get built up, we are very — we have started to build this capacity, GenX is one such example that I gave you. We are very confident that we will be in a position to continue to build. So I don’t see that to be a concerned point at all whether we will be able to book and bill higher or lower number. Probably we’ll do a better performance. So capacity is not the constraint. Having said that, as we go through the year, this year, obviously, there were some — as I mentioned in the past as well, that the year of two half when the commodity prices are completely different than in the second half, they stabilize well, the movement of labor force, etc. So we are now in a position to say that we have reached the capacity built and where we have been able to — saw even higher book and bill — booked during the year, we will build that, of course, that also depends on a customer cycle time because, as I’ve mentioned, especially for our 1G business where we are building more starch-based plants, those project cycles are slightly different than a sugar-based plant for the simple fact that there are many first time and they — who are putting up those projects and therefore, sometimes the time lines may get flexed.

Shailesh Kanani — Centrum Broking — Analyst

Okay, sir. Thanks a lot. I’ll turn back to queue.

Operator

Thank you. Next question comes from the line of Vikram Suryavanshi from PhillipCapital. Please go ahead.

Vikram Suryavanshi — PhillipCapital — Analyst

Yes. Good afternoon, sir, and congratulations for good number. I just wanted to take this question from Levin, for that low carbon opportunity what we are talking about USA, is it more linked to the 3 billion gallon requirement of SAF only, or is there a possibility that USA, apart from the SAF, there could be increased demand for even existing ethanol-based also just to get landscape of this low carbon opportunity?

Shishir Joshipura — Chief Executive Officer

So Vikram, for production of SAF, very clearly and especially on the ATJ pathway, where ethanol becomes a feedstock for that, the requirement is clearly for low-carbon ethanol. That’s number one. So all such applications where one wants to follow an ATJ pathway, a low carbon ethanol is necessary input that is required. So plants will have to decarbonize the process, that is number one. Number two, the process of decarbonation is also process for improving efficiencies of the existing plant. It’s not only decarbonizing. It also improves the efficiency significantly. So there are plants who are now talking to us because it makes economic sense for them. Forget about the low carbon argument for the time being. They are saying it makes sense for me.

For example, one of the solutions will cut their steam convention by up to 90%. Now when that kind of thing happens, their operating costs go down and margins improve. So obviously, they — the producers who are thinking in terms of being cost efficient, improving their margins, improving energy efficiencies, they are differently focused.

Also remember that a lot of capacities in the United States were built at least 20 years and before that, okay? And therefore, those — a lot of those plants are now coming up for refurbishment of source because they will need to improve. A benefit of all these would also be that they’ll be able to go to a low-carbon ethanol. So there are different levers that will drive that market for low carbon ethanol. The big lever amongst them is obviously the requirement of SAF.

Vikram Suryavanshi — PhillipCapital — Analyst

Okay. Got it. And one more question on the CBG, you highlighted about uptake. You said infrastructure will take some time to pick up. But just to take again that if you look at the sugar company side, particularly from threshold opportunity to CBG, is there any — how is the feedback coming from that? Probably they can have their own requirement for — transportation requirements of sugar cane and all that. So can that ecosystem work in a closed loop for sugar company from like fresh molasses to CBG and use within their factories? How is that opportunity? Is it practical?

Shishir Joshipura — Chief Executive Officer

Yes, Vikram. So for the sugar companies, very clearly, the chestnut [Phonetic] to CBG also, of course, a very attractive opportunity now on multiple counts. And also let us understand because there’s a proven commercial working model on the ground to run on both north and south of India. Having said that, I think what is also very important is to understand that for the last two years or so, a lot of mill owners and the customer are also busy setting up the ethanol capacity. So this is also a question of prioritization at their end as to what they want to start first and then start next.

The third is that chestnut-based plants have a very thing in their favor, the output, which also includes fermented fertilizer, organic fertilizer that is of a high grade and that becomes very easy for them then to create an additional revenue stream. As we move through the year, we expect that a lot of sugar companies will start thinking positively about setting up their own capacities.

Vikram Suryavanshi — PhillipCapital — Analyst

Got it. And before closing, can you share what was the grain in sugar order mix in the overall order inflow for this quarter, broadly?

Shishir Joshipura — Chief Executive Officer

Sorry, is the question how much — what percentage of our booking was starch-based, is that the question?

Vikram Suryavanshi — PhillipCapital — Analyst

Yes, and sugar based in our — this quarter for order inflow.

Shishir Joshipura — Chief Executive Officer

Just give me a second. Okay. So sugary feedstock versus that is about 60% on the yearly basis, 60% of the capacity came on starchy feedstocks and 40% on sugary feedstock.

Vikram Suryavanshi — PhillipCapital — Analyst

Got it. Thank you very much.

Operator

Thank you. Next question comes from the line of Lokesh Maru from Nippon India Mutual Funds. Please go ahead.

Lokesh Maru — Nippon India Mutual Funds — Analyst

Thank you. Congratulations, sir, on excellent set of numbers and execution. My first question is on the same breakup of sugar and starchy feedstock-based orders within bioenergy for the quarter Q4.

Shishir Joshipura — Chief Executive Officer

Sorry. So what’s the question, Lokesh?

Lokesh Maru — Nippon India Mutual Funds — Analyst

Sir, the same breakup which is there for the year 60-40, what would that breakup be for the quarter?

Shishir Joshipura — Chief Executive Officer

Pretty similar. I mean nothing much to choose. Fairly similar.

Lokesh Maru — Nippon India Mutual Funds — Analyst

60% on starch and 40% on sugar. So also, sir, one question on this side, sugar side. Like you had highlighted last year that India had the production of cane was at all-time high levels of 40 million metric tonnes rate last year. This time, it has come down by 10% or so. Are you seeing any moderation on the sugar side? And at the same time, given that the broken rice price prices are quite contained at this point in time, is it helping you the starchy — on inquiries on the starchy feedstock order inflows by any chance? How is shaping up at this point?

Shishir Joshipura — Chief Executive Officer

Yes. So Lokesh, one clear thing is that in a manner of speaking, the sugary feedstock gets restricted to a few states. When starchy feedstock does not have that kind of restriction, right? It can — and as I mentioned, the government is also pushing for “ethanol starved” states to starchy feedstock. So all these 8 states that I mentioned are starchy feedstock. There is no different grain there. So as we start to spread the EBP 20 program reach, more and more ethanol would be required also to be served into non-sugary states, which are not the traditional producer of ethanol. So we do believe that there will be a push or there will be continued higher share of business for starchy feedstock. Having said that, I think sugar mills are also understanding their — a very, very important role that they will play in this overall program. And I don’t think we are going to stop at EBP 20, it’s going to grow.

The ethanol is going to become a very important element of our overall energy mix. And therefore, they could get a very important dimension for us to remember, we have not talked about it before is the fact that sugar-based ethanol is low carbon intensity ethanol as far as India is concerned. So this is a very important dimension in favor of sugary ethanol, sugary feedstock-based ethanol. And we’ll have to see as to how it goes. There are many other sectors to be solved. But I’m sure that as we go forward, we will see a different dynamic emerge on this space. As of today, as we see it in the immediate future, yes, starchy feedstock will be higher than sugar.

Lokesh Maru — Nippon India Mutual Funds — Analyst

Okay. And sir, given that if, let’s say, the monsoons are lower than expected, the precipitation is lower than expected. In that scenario, how is it — are you expecting any policy from the government to — so that these projects on starchy feedstock side as well and both sugar as well, are they don’t — they are not hurt from a margin point of view, if at all there is inflation within most of these commodities, agri-commodities.

Shishir Joshipura — Chief Executive Officer

I have no view to give you on this as to what government should or will do because we don’t know that we’re still forecasting normal monsoon. We’ll have to see how that thing develops out. I think what is very important though that if should such a situation arise, I think that’s when we’ll start to understand the value of the ethanol that we’ve been talking about for quite some time that the eventual solution lies in our ability to use the waste feedstock and I think that by that time, of course, we would have also — as I mentioned earlier in the opening remarks, we have stabilized IOCL funding with plants as well. And I think that would be a very, very big test for us. All the — I mean, I say as is all of us, not only Praj, but all of us who are the involved entities to ensure that we are in a position to create a sustainable path forward. And we clearly see that as and when — as we start to move to the future and not only for this monsoon, I’m talking in general, that there will be a definitive play for the 2G feedstock based ethanol production as well because that is the lowest carbon intensity ethanol.

Lokesh Maru — Nippon India Mutual Funds — Analyst

Sure, sir. Understood. That’s all from my side. Thank you.

Operator

Thank you. Next question comes from the line of Amish Kanani from JM Financial. Please go ahead.

Amish Kanani — JM Financial — Analyst

Yes. Hi, sir. Congrats on a good set of numbers. Sir, as we also previous —

Shishir Joshipura — Chief Executive Officer

Can’t hear you at all.

Amish Kanani — JM Financial — Analyst

Sir, is it better?

Shishir Joshipura — Chief Executive Officer

Yes. Thank you.

Amish Kanani — JM Financial — Analyst

Yes. So sir, our outstanding order book, if you see on a year-on-year basis has grown by 20%. And our win rate on order inflow, if you see the last five quarters, it moved — jumped from INR700 crores, say, six quarters back to now between INR900 crores to INR1,050 crores. The question is, sir, what is the kind of pipeline that you’re seeing, sir, which gives us some idea of the growth coming for us on a short to medium term, because long-term growth, we have been ceding a lot of technologies, which gives us a comfort that there will be a growth. But on a short to medium term on a high base, if you can give us some sense of how the growth will pan out? Thanks.

Shishir Joshipura — Chief Executive Officer

Yes. I’ll take you a little bit of a story kind of an answer on this one. So our Chairman always tells us that we have to move in terms of our mental thinking of being a single feedstock single product kind of an approach, which was you put in one feedstock at one end and you get ethanol at the other end, through a multi feedstock, multi product thinking. And I think that is what is going to play out in future as we go. We have already started to see some signs of it, CBG plants produce fertilizers. If we have ethanol plants, they produce energy, we — they also produce CBG depending on how we treat. I think there are multi — feedstocks was no longer sugary, also starch feed, it’s also cellulosic. So we are beginning to see a different dimension emerge where multiple feedstock in one end and multiple products at the other end. And I think that’s what is going to be the future. Future is not what we’ve seen it so — what we’ve seen in the past, future is very different than what we’ve seen, but it’s very exciting, it’s very big. And therefore, we believe that we will be in a position to see a completely different game play out, different segments will emerge.

Coming back to the specific question that you had, we are, as I said in the opening remarks as well, for our 1G business, for our 2G business for our, CPES business, especially mobilization and for the ETCA related business, which is completely different landscape opening, we see a very, very healthy inquiry pipeline. So we see no reason why we should be slowing down in any case.

Amish Kanani — JM Financial — Analyst

Okay. That helps. And sir, on the margin front, we have seen a double-digit margin, which we are always aspiring for. The question is to follow on if you can explain us if possible, between what was helping a richer product mix versus, say, commodity price inflation, which is slowing down. And in that context, on a yearly basis, how should we look at the sales margins for FY ’24? Thanks.

Shishir Joshipura — Chief Executive Officer

Amish, as I mentioned, year of two halves. First half we did not have — we still had the impact of the ever-increasing commodity prices in a volatile fashion. And second half of the year saw that moderate and cool down. And I think that’s been — let me not say anything else. That’s been a good big factor for us to be able to manage. The second is the fact that we are also in a position to move to a healthier product mix by establishing higher value, we’ve taken some tough decisions internally to ensure that we are able to protect our margins.

Our teams are focused very — we call it not just a growth but healthy growth, and that is how many of our efforts have been focused in the direction both in terms of how we improve internal process. We are not — want to talk about it, but there’s a big effort in the way in digitalization of our operations, driving standardization for our plants. So there are different levers that we are using to ensure that we are able to become not only big but also healthy.

Amish Kanani — JM Financial — Analyst

Okay. That helps. All the best.

Operator

Thank you. Next question comes from the line of Utsav Mehta from Edelweiss AMC. Please go ahead.

Utsav Mehta — Edelweiss AMC — Analyst

Hi, sir. Good afternoon. Thank you for taking my question. I just wanted to know the amount of customer advances on our balance sheet. And what is the quantum of retention money?

Shishir Joshipura — Chief Executive Officer

Sachin, would you please — that is your territory.

Sachin Raole — Chief Financial Officer & Director

Yes. yes. Sorry, sorry, sorry. My phone was on mute. So the customer advances are in the range of almost INR700 crores. Retention amount out of the receivables should be in the range of INR100 crores, INR120 crores.

Utsav Mehta — Edelweiss AMC — Analyst

Okay. So just wanted to understand, year-on-year, we’ve seen almost INR300 crore increase in receivables, it’s as much as our EBITDA. So is it primarily happening — I mean, couldn’t be happening only because of retention. So if you could just throw some color as to why such a sharp increase in receivables?

Sachin Raole — Chief Financial Officer & Director

Because that you are looking at in the absolute number, but if you look at in terms of number of days, receivable number of days, rather there is reduction of almost — you can call it as a flattish, but from 86 days, now it has reduced to 83 days. So INR1,000 crore turnover happening in the last quarter, naturally because of payment term that money is supposedly to start coming in this quarter. So that’s the reason why you are seeing that jump in the absolute number of receivable. But in number of days terms, it is 83 days versus 86 days of the last year.

Utsav Mehta — Edelweiss AMC — Analyst

Understood. Last bit on retention. So if you could just throw some color on what are your typical kind of retention clauses in your contracts?

Sachin Raole — Chief Financial Officer & Director

So we had actually trying to do a basic retention to a great extent, whenever there is a new contract, new customer, new territory, there might be an issue coming up on retention. But otherwise, as a policy, we are doing a basic retention and that’s the reason we have seen reduction in the number of retention over a period of time, even though the turnover rates — the top line has grown to be fixed [Phonetic] as compared to the last year. Our retention absolute number has remained very, very range bound. Generally, we try not to have a retention. But yes, if there is a clause for retention, this money is linked to mechanical completion of our project and doing the trial run and subsequent to that retention many coming back to us.

Utsav Mehta — Edelweiss AMC — Analyst

Okay. So it’s not typically six months or 12 months in terms of running the —

Sachin Raole — Chief Financial Officer & Director

No, no, no.

Utsav Mehta — Edelweiss AMC — Analyst

This is very useful. Very useful. Thank you so much for your time.

Sachin Raole — Chief Financial Officer & Director

Thank you.

Operator

Thank you. Next question comes from the line of Arpita Gupta from Nivesh Mitra. Please go ahead.

Arpita Gupta — Nivesh Mitra — Analyst

Hi. Congratulations on a great set of numbers. So my question was regarding volume. So when we look at the order book numbers, they are, I’m sure affected by inflation and prices, too. So if you could give any clarity on what kind of volumes maybe in terms of number of plants that you commissioned on any other way?

Shishir Joshipura — Chief Executive Officer

Arpita, the problem is that there are six business areas and I find it very difficult to give you equivalent unit number, which will — but just to give you some idea, I’m not saying that, that is the correct measure or anything like that. But we also — so you can imagine we have similar problem on our shop floor, how do I determine what capacity I have got. So some of the things that we did was to create an equivalent unit concept where we sort of reduce everything to — in what we make, okay? That is part of what we actually deliver to our customers in what we make. And we saw on a yearly basis, a doubling of our output volume from the previous year on an equivalent basis. I don’t know whether that answers because the things is there are so many different businesses for me to go and explain to you what the equivalent capacity.

Arpita Gupta — Nivesh Mitra — Analyst

No, that helps. So doubling from previous year, that means FY ’22 versus FY ’23, right?

Shishir Joshipura — Chief Executive Officer

That is correct. Now again, that is what we make. So again, the order mix can change where what we make as a higher content compared to what we buy and sell because when we put up a project, there are a lot of things that we buy for the, pumps and valves, instrumentation that we just have to — but we have integrate it into our system, but we don’t make them, right? So there are different — so depending on the nature of the project, where are we putting it up, what’s the feedstock, what’s the customer level of competence, I think there are too many of variables there. So you can come and ask me, so you double the unit and how come the sales didn’t double. But that’s not the way to look at it.

Arpita Gupta — Nivesh Mitra — Analyst

No, I understand. Yes, yes. Fair enough. Understood. So any guidance for the next three to five years, either in terms of volume like the common units that you mentioned or the top line or EPS estimates, any guidance for the next three, five years?

Shishir Joshipura — Chief Executive Officer

No. So we would not be able to give you a guidance of three to five years. I mean, then I’ll have a very different job if I can do that accurately. But having said that, I mentioned that the new investment that we are making in the Praj GenX facility, for example, and that’s one of the things that we are doing, who’s likely to lead — if you create a capacity equal to 30 times, 40 times of investment that we have made over a period of time. And we’ll continue to do that in our other parts as well. So where I need not do a greenfield project, but a brownfield expansion of our own capacity. And that’s something that we have got. We have worked on a module where we have created some very highly dedicated vendor base for some of our technologies, for some of our offerings. So they — it’s not my own work, but it is still — they only work for me under my quality program under my position, even under my material. So there are different modules that we are deploying to see how we can use our capital to its best possible extent.

Arpita Gupta — Nivesh Mitra — Analyst

All right. Just the last question. [Speech Overlap] Yes, please go on.

Sachin Raole — Chief Financial Officer & Director

Arpita, additionally, as a practice, we don’t give a guidance. We talk about what are the business prospects and possibilities and opportunities, but we don’t give a guidance of the factories.

Arpita Gupta — Nivesh Mitra — Analyst

All right. Sir, just the last question from my side and pardon me for a basic question. But how do you compare ethanol blending versus the upcoming EV revolution in the Indian vehicles? So…

Shishir Joshipura — Chief Executive Officer

Arpita, this is something on which we’ll be very happy to dialogue with you. Maybe you can set up a separate call and we have a very definitive view on why broadly one line for India or for that matter any agrarian economy, the right solution is a flex-fuel vehicle and not EV. Unless electricity comes entirely from renewable sources, there is absolutely no case for electric vehicle, at least not on the grounds of pollution free and it reduces — it doesn’t reduce the pollution.

Arpita Gupta — Nivesh Mitra — Analyst

Okay. But the targets of EV set up by the government will not affect our industry growth?

Shishir Joshipura — Chief Executive Officer

The point is that the industry is moving in direction. And I think somewhere along the line, we as consumers become more and more aware of this issue, I’m sure that there will be — and I’m not saying that there is no space for electric vehicles. Please do not assume that. Probably they’ll coexist along with other technology. Please appreciate that today, we already have a huge vehicle park on the ground of nearly 100 million vehicles in India, which are based on ICE engine. So we can’t just wish them away. They’re already there. There’s a whole setup in the infrastructure in the country to distribute fuel, we don’t have our electricity. There are many, many things. At the same time, we have to — the enemy is not ICE engine, the enemy is greenhouse gas emission, and that’s the problem that we need to solve.

Arpita Gupta — Nivesh Mitra — Analyst

All right. That really helps. Thanks a lot.

Shishir Joshipura — Chief Executive Officer

Thank you.

Operator

Thank you. Next question comes from the line of Aashav Patel from Molecule Ventures PMS Surat. Please go ahead.

Aashav Patel — Molecule Ventures — Analyst

Sir, congratulations to the team for a robust set of numbers. So over last three years, our revenue base has shifted from close to INR1,000 crores top line annually to INR1,000 crores quarterly, which reflects our excellent execution skills. But in the meantime, margins have remained same around 9% range. In other cap good companies, what we see is because of lean manufacturing structure as and when the top line increase is multifold, the operating leverage kicks in and margin expansion is visible. But due to our RM increase, especially the steel prices, we have not seen our margins increasing in line over the last two years. So now as newer orders comes into the execution and proportion of older orders get reduced, how do you see margins going forward, say, in FY ’24 and ’25, assuming the steel cycle remains — steel prices is consolidated around the current level?

Shishir Joshipura — Chief Executive Officer

So Aashav, as Sachin said, we will not give a guidance for future numbers or anything like that. It’s not the policy of the company. But obviously, the period that you described, we came through a very highly volatile and increasing trend for commodities that is hopefully not right now in front of us. So that obviously will help, and it was damaging. Our first project life cycles are long. So when we get the order to the time we actually buy the material, there’s a significant gap because we have to engineer the plant first.

So there are — there was a COVID period. So there was the external adverse sectors, they have all sort of weaned away. So we expect that as we move forward, we will be able to manage a better performance. This is something that I said at the beginning of this year that as we go through the year, we will see a year of two halves, first half again, on the lower side, and you can see that from a quarterly margin in there as well. And I mentioned that we will move to a more healthier regime in the second half of the year, and that’s what we’ve been able to do.

Aashav Patel — Molecule Ventures — Analyst

Okay, sir. That’s all from my side. Thank you.

Operator

Thank you. Next question comes from the line of Ajit Muroor [Phonetic], an individual investor. Thank you.

Ajit Muroor — — Analyst

Hello. Can you hear me?

Shishir Joshipura — Chief Executive Officer

Yes, we can.

Ajit Muroor — — Analyst

Okay. Great. So congratulation on a great set of numbers. My question is on the strategy. Are you, as a large industry trying to get into actually making the biofuels versus just being the process consultants and process manufacturers — process equipment manufacturers? Is that strategic direction?

Shishir Joshipura — Chief Executive Officer

No. So let me answer it like this. So in our current businesses, our basic business model is from technology, engineering, manufacturing, production and in some cases in India, even help customers with their operations. So we call it a TEMPO model, T-E-M-P-O. And that is what has given us so far, and we have no reason to believe that anything else is required to be done for these businesses.

So it’s a new business opportunity horizon opens up. And that has a different set of dynamics in the market. We’d like to react to that, right? We cannot say [Foreign Speech] market dynamics can be anything. So what we have said is that in our current businesses with our current business model, we are very confident that we’ll continue to grow the we have.

However, if a new horizon opens up, and that has a different set of — just like I was mentioning to you, if it comes to my company three years ago, we would — you would not heard the word distributor in our company at all. That is not who we were. But now I talked about the distribution channel being set up both in India and international markets for our solutions business, for our PSS business because that’s the need of the hour. So that business model will evolve a period of time. There is no thing that we want to become produces of fuel, not at all. We have no plans right now to compete with our customers.

Ajit Muroor — — Analyst

Okay. Got it. I think that was it from my side. Thank you for answering the question.

Shishir Joshipura — Chief Executive Officer

Thank you.

Operator

Thank you. Ladies and gentlemen, we have reached the end of question-and-answer session. I would now like to hand the conference over to management of Praj Industries Limited for closing comments.

Shishir Joshipura — Chief Executive Officer

So thank you, everyone, for your time today. In case you have any more questions, feel free to write us at info@praj.net. We look forward to see you again, next question for this interaction and have a nice day. Thank you.

Operator

[Operator Closing Remarks]