Key takeaways of the conference call
Income from operations stood at Rs 209.28 crore for Q4 FY’09 compared to Rs. 213.24 crore in the corresponding previous year period. EBIDTA margins were subdued at 24% at Rs. 49.97 crore when compared to Rs. 65.75 crore in Q4 FY’08. PBT stood at Rs. 40.51 crore (Rs. 67.54 crore) after accounting for exchange loss of Rs. 9.70 crore.
For year ended March 2009 Income from operations increased by 10% from Rs. 701.62 crore compared to Rs. 771.88 crore in FY’08. EBIDTA at Rs. 147.67 crore (Rs. 164.78 crore in FY’08) was lower on account of forex losses of Rs.23.13 crore as against exchange gains of Rs. 21.96 crore in FY’08. PBT stood at Rs. 160.80 crore (Rs. 174.37 crore in FY’08).
Around 45% of revenues come from domestic markets and the rest from international markets.
EU Parliament has passed the package which outlines the mandates and obligations of member states for adoption of the Renewable Energy Directive (RED). The RED mandates 10% (by energy content) biofuels blending in all transport fuels by the year 2020, starting 2011. This entails additional 12-14 billion litres capacity for bioethanol over a period of 7-8 years.
The American Reconstruction Plan also offers several incentives for second generation biofuels.
Praj continues to assert its leadership position in the Indian market with some key wins from Maharashtra, Karnataka, Andhra Pradesh and Punjab and Chattisgarh in the north.
Praj achieved a break-through in ‘cellulosic biomass-to-ethanol’ technology at Pilot Scale. The first phase of the scaled up program was achieved with this break-through wherein the pilot plant has successfully achieved production of ethanol from corn cob and sugarcane bagasse under different operating conditions. The company expects to achieve engineering scale plan in 2011 and thereafter go for commercialisation.
The company has an order book of Rs 800 crore. Around 40% of the order book is from domestic and the rest 60% from international. Most of the contracts are fixed price contracts. However fall in commodity prices shall not improve margins as the company books material as soon as it gets order.
The company expects more order inflows from international markets compared to domestic markets.
The company expects global business environment to revive soon, more specifically it expects recession to be reversed quickly. Most of Praj clients are coming out of cautious mindset with regard to business as they are seeing less impact on ground than they had expected. Lower interest rare regime and low commodity prices shall help to improve sentiments.
Praj industries hold a market share of around 75% in India, 50-55% in South East Asia, over 50% in South and Central America and around 30% in Europe.
The company has a cash balance of Rs 300 core in the quarter ended March 2009 compared to Rs 330 crore at the end of December 2008 quarter. Net Cash inflow decreased mainly due to dividend payout, reduction in creditors and capex plan.
The company does not expect any major capex plan in FY’10.
Debtor days have slightly improved to 83 days.
The US domestic biofuels production is of 35 billion litres at capacity utilisation of 70.72% with an import of about 2 billion liters. The company expects US biofuels production to be around 38 billion liters in FY’10.
Developed markets have better margins than other markets.
The company expects to maintain current margins leaving out the forex accounting procedure.