Praj provides update of ethanol business in FY 2015 results

By Erin Voegele | June 11, 2015

Praj Industries recently released fourth quarter and fiscal year (FY) 2015 results, reporting increased new order inflows and providing investors with an overview of its business operations, including those in the fuel ethanol sector. The company reported full-year income from operations of Rs. 1011.85 crore ($158.02 million), up from Rs. 985.84 crore in fiscal year 2014.

“We ended the fiscal on a positive note, driven by balanced growth across business segments and geographies. The consolidated full year sales revenue registered a growth of 3 percent with 17 percent growth in EBITDA over the previous fiscal. Our growth prospects are exciting, backed by a strong order book, fundamentally sound operations and a steadily improving macro-economic outlook,” said Gajanan Nabar, CEO and managing director of Praj Industries.

During an investor call, Nabar called FY 2015 a watershed year for the company, noting that new order inflows were up 25 percent when compared to the prior year.

Regarding Praj’s fuel ethanol business, Nabar said there have been some important policy level shifts because of the ethanol mandate in some regions, which is likely to have a major impact moving forward. “In the past one year the government of India has announced several interventions that are positive for the ethanol blending program. These include sorting out of price issues and other logistical challenges, he said. “During the quarter, the government also decided to waive off the 12.36 percent excise duty on ethanol for the 2015-16 season.”

Nabar also noted that the EU has come out with strong support for renewable fuels that directs member states to blend 7 percent first generation biofuels and has placed a greater emphasis on the production of advanced biofuels from waste feedstocks. He also addressed the status of U.S. renewable fuel standard (RFS) regulations and indicated the U.S. EPA’s renewable volume obligation is expected to end uncertainty around fuel ethanol blending and create a definitive path forward for second generation ethanol blending. During the investor call, Nabar also addressed fuel ethanol support in Thailand, Zimbabwe, Ecuador, and Mexico.

“Our 2G cellulosic ethanol demonstration plant has received environmental clearance,” Nabar said. “We expect government support to be made available as part of the drive to promote use of fuel ethanol and to use availability of ethanol for blending with petrol. We entered into a strategic understanding with Gevo, a U.S.-based company with technology for isobutanol production. Isobutanol is a higher alcohol molecule with varied applications in gasoline blend stocks, jet fuels, solvents, etc. With this the company has access to an additional technology in the second generation domain.”