Corporate Ethanol Plant

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Praj Industries Limited,
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Pune : 411057, INDIA.
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Chairman's AGM speech


Chairman’s Speech at the Annual General Meeting

11th August, 2017

Good morning ladies and gentlemen. I welcome you all to the 31st Annual General Meeting of Your Company. Annual Report for the year ended 31st March, 2017 has been with you for some time now. With your permission, I shall take it as read.

The year gone by saw the global economy take guarded steps, owing to challenges like geopolitical volatility in Eurozone, currency depreciation in some of the emerging markets, fall in crude oil and commodity prices; which also affected the industrial capex. New administration in the USA has global spillovers, more so because of USA’s withdrawal from the Paris COP 21 Climate Agreement signed by 175 countries. However, momentum around the world to combat climate change and transition to clean growth economies by many individual countries continues.

Indian scenario offers some cause for cheer with good monsoon and healthy sowing data. The outside in view on India remains positive, with IMF retaining the forecast growth rate at 7.2% for the year 2017-18. On the flipside, weaker offtake and rupee appreciation are expected to have an adverse impact on the exports. This also means that the home market will remain an important market for Indian companies. Some temporary negative shocks which got induced by developments such as de-monetization and uncertainty before the GST implementation, resulting in lack of capex formation are more or less getting resolved now.

In such a scenario, leveraging its deep understanding of industry dynamics, Your Company has embarked upon three pronged strategy: rationalization of business portfolios, thrust on international markets by leveraging global footprints and driving innovation.

FY 2016-17 was very encouraging for the Bioenergy segment with the latest addition of 2nd generation cellulosic ethanol technology to the portfolio of sustainable solutions. A major milestone was achieved with successful commissioning of the Smart Biorefinery Demonstration Plant in Maharashtra, India, which was inaugurated by Mr Nitin Gadkari, Union Minister of Road, Transport, Highways & Shipping in May 2017. This technology platform will be used for development of other renewable fuels and chemicals. 2nd generation cellulosic ethanol will be a game-changer for the biofuels industry as it provides a highly viable use to the otherwise untapped agri residue. Additionally, the technology to produce biobutanol has entered the commercialization phase in association with Gevo Inc of USA. One of the major applications of biobutanol is aviation fuel.

It is heartening to be at the center of this energy revolution taking place in the country, leading to greater energy self-sufficiency. Two Oil Marketing Companies namely, Indian Oil Corporation Limited (IOCL) and Bharat Petroleum Corporation Limited (BPCL) have selected Your Company as technology partner for three 2nd generation biorefinery projects in India. MOUs have been signed to that effect.

Your Company is at the forefront of creation of an eco-system for fuel ethanol in India. Ethanol has become a topic of national interest in the discussion on energy security. Forums like the Bioenergy Urja Utsav organized by the Ministry of Petroleum and Natural Gas in association with Mahratta Chamber of Commerce, Industries and Agriculture and National Yuva Cooperative Society in Pune and World Biofuels Day celebration in Delhi yesterday on 10th Aug and over 100 places across India, are effectively being used for the dialogues. Announcement by Hon Minister for Petroleum & Natural Gas about finalization and early implementation of Biofuel Policy to accelerate immediate investments by OMCs to the extent of $2 bn and substantial investments in the coming years, is very heartening and expected to benefit Your Company in near future.

In the 1st generation ethanol space, Your Company continues to command a pioneering position. Modernization and retrofit of existing plants across the globe is tracking value-accretive offering. With a complete bouquet of sustainable solutions and strong base of over 750 global references, Bioenergy segment of Your Company has a competitive advantage to drive growth.

Another exciting area is the pharmaceutical and wellness related segment. Praj HiPurity Systems Ltd., a wholly owned subsidiary of Your Company, is enhancing the scope of work with greater attention on expanding reach across geographies. Stringent FDA norms and compliance with statutory requirements continue to open up promising opportunities in pharma, healthcare and wellness industry, in India as well as international markets. Through its modular process systems division, Praj HiPurity is geared up to capitalize on these opportunities.

Your Company has been investing in world-class R&D capabilities. Praj Matrix continues to follow the path of sustainability and innovation with the goal of providing eco-friendly solutions for a better world. While supporting innovation in the existing businesses, it is also creating its own niche in the industrial biotech sector.

In the engineering businesses – the focal point of Critical Process Equipment & Systems (CPES) Business is industrial equipment needing higher engineering input. The Company is leveraging its expertise to expand into modular skids and specialized projects. For Brewery segment, greater connect with domestic and global references is continuously ensured, thereby improving sustainable visibility.

As a project engineering and manufacturing organization, it is of utmost importance that manufacturing facilities meet all the safety norms and Your Company conducts itself in a manner that is consistent with the global sustainability standards. During the year, Kandla facility that caters to the international clients, underwent a rigorous audit conducted by Together for Sustainability (TfS). TfS is a joint initiative of prestigious global chemical companies to improve sustainability practices within the supply chains of chemical industry.

Also, Sanaswadi facility was bestowed with the prestigious National Safety Council Award, acknowledging efforts in the area of health, safety & environment. Additionally, Your Company was also bestowed with the best supply chain management practices award by the Indian Institute of Materials Management (IIMM) in the large manufacturing sector category.

Your Company always strives to give back to the community surrounding it. Praj Foundation came into being in 2004 with a clearly stated objective of bringing a social impact that would best reflect the Company’s strengths, with environment, education and health as focus areas. Some of the projects undertaken by Praj Foundation include preventive healthcare for women of villages around our R&D Center, sessions on health and growing own vegetables through kitchen garden projects, innovative learning through Introduction to Basic technology program etc.

I would like to make a special mention of the award winning Sustainable Water Resources Development Project in drought hit areas of Maharashtra state. The project includes broadening, deepening and de-silting the streams to enhance storage capacity of reservoirs. The stored water is used for drinking and agriculture. I am very proud to share that Your Company recently won the prestigious BT-CSR Excellence Award, 2017 in the Water Saving Category for a project in Jalna district. In addition, Praj also encourages its employees to participate in various engagements, either through Praj Foundation’s programs or in personal capacity.

A unique differentiator for Your Company is the quality of its strong leadership team, ably supported by competent engineers and research professionals. Each of our strategic business units is spearheaded by highly experienced and qualified executives to enable realization of business objectives. Center for leadership development at Praj continues to arm and enable them toward excellence.

As we look ahead, in the medium to long term, Praj will continue to implement the strategy of innovation and excellence across operational models to deliver superior technology solutions. It will also continue to enhance the relevance of offerings in the markets and thereby, create value for the customers.

I am glad to share that the Board of Directors has recommended dividend of Rs 1.62 per share (81%) on paid up capital of Rs 35.95 crore.

I would also like to share that tenure of Mr Prakash Kulkarni and Mr Kishor Chaukar, both independent directors, is coming to an end at the close of today’s Annual General Meeting. I take this opportunity to thank both of them for their valuable contribution and guidance to the Company throughout their tenure. We would like to felicitate them with a token of appreciation.

Finally, on behalf of the Board of Directors and Team Praj, I thank you for your support.

Now we will continue with the proceedings of the Annual General Meeting.

Chairman’s Speech at the Annual General Meeting

25th July, 2016

Dear Shareholders,

It is my pleasure to welcome you all to the 30th General Meeting of your Company. The Annual Report for the year ended 31st March 2016 has been with you for some time now. With your permission, I shall take it as read.

In 2016, as economies around the world grappled with a rather volatile and uncertain macro environment, India emerged as the fastest growing economy.

According to IMF, India is being termed as one of the bright spots among major emerging markets, with GDP expected to grow upto 7.5% in 2016-17. The rapid fall in commodity prices, increased FDI, further complemented by several steps taken by government to improve the investment climate, are expected to make the projected economic growth broad-based and sustainable.

Fiscal 2016 clearly proved to be a point of inflection for the domestic ethanol market which saw a higher blending rate. To meet its ambition of 20% ethanol blending, India will have to look at 2nd generation feedstock. The EOI issued by OMCs in this respect and centre’s plan to launch an integrated bio-energy mission with an indicative outlay of Rs 10,000 cr from the next financial years are the steps toward creation of a positive ecosystem for the ethanol blending program. With India’s commitment to combat climate change, ethanol plays an important role in our energy matrix, while also supporting the farming community and rural upliftment.

An increased pace of Research & Development, improved investments in 2G technology and innovation along with setting up of commercial facilities, we believe, will certainly jumpstart the commercialization of 2G technologies in the country, in the months to come. Your Company is expected to play a significant role in taking forward the 2G agenda of the country.

On the global front, many advanced economies in the Americas, Europe and Asia continue to witness pain as they attempt to revive growth rates during the period, led by a host of factors. This, coupled with the recent Brexit vote may see continued volatility. India will have a mixed impact, given its trade intensity with UK. Other economies will also show some level of uncertainty.

Praj is constantly sharpening its approach towards enhancing the brand salience and is taking several steps in a calibrated manner to become more future ready.

In terms of business operations, the focus on Innovation and Excellence remains rock solid. Your Company continues to work towards capitalizing on its strategy to drive the established businesses in a steady manner, while also ramping up operations in the emerging businesses. In sync with this strategic approach, your Company’s management is making efforts to build on an established strong global base of 750 references, leveraging innovation and breakthrough technologies, monetizing R&D investments, while also ensuring excellence in delivery and efficiency of operations.

Infrastructure projects have caught impetus in India – right from railways, power transmission, roads. In the wake of this, consumption-led growth will soon follow and is expected to restart another upward cycle of investments. Praj solutions find application in the consumption facing industries like textile, pharma, food & beverage. Crude oil prices, which saw largest ever fall in 2015-16, are also firming up. This should see our other businesses also regaining the lost ground.

Energy will continue to be of interest to your Company, especially the renewable energy. Exploring newer forms, apart from ethanol, your Company has been working with gas based systems for transportation. This will help your Company expand the portfolio of business in a synergistic manner as waste from distilleries and other process industries is a large source of biogas. Recently, we commissioned a gas based system for a waste-to-energy project for a reputed client with an in-house developed technology.

On the final note, while India remains a bright spot, it is tempered by lower credit offtake, growing bank NPAs, corporate debt burden, consumer price inflation and continued delays in the passage of certain bills including the GST. While CPI will see improvement due to improved monsoon, it may be a while before the other challenges are taken care of. Directionally, the Government has recognized the malaise and is working towards it. However, capital formation, which is crucial for industrial well-being, will remain a critical element of your Company’s growth take off.

Notwithstanding this, your Company will enhance the relevance of its offerings in the market alongwith reach and effectiveness. In the medium to longer term, Praj will continue to look at different business models of growth to increase the return on investments.

Finally, I would like to express my appreciation to all the employees, customers and stakeholders for their loyalty and trust.

And to all of the shareholders, I would like to express my gratitude for their continued encouragement and support. To demonstrate this, the Company disbursed an interim dividend of Rs 1.62 per share (81%) on paid up capital of Rs 35.59 cr, keeping up with the practice of consistent dividend payout.

Thank you ladies and gentlemen.

Chairman’s Speech: Integrating Transformation
29th Annual General Meeting of Praj Industries Limited

07th Aug, 2015

On our 29th annual general meeting of shareholders I welcome you to the Leed Platinum Certified building. I would like to acknowledge the team which worked towards the certification to make us only the 3rd building to be certified with Platinum Certification, the highest recognized green building certificate.

Now, I would like to draw your attention to a few of the transformative events of the past one year that have created a shift in the economic sentiments and social fabric of various nations.

Starting with India where we saw a new, majority Government take oath just over a year ago with a lot of expectations. We saw a number of path breaking programs being mooted by this Government. It includes SwacchBharath to Clean Ganga to Smart Cities to Make in India… and a real push forward for Renewable Energy. While many of these programs are work in process, we expect policy directions to drive investor confidence. With the various initiatives launched within your organization, your Company is prepared to take on the opportunities very swiftly once the economy goes on full throttle.

In the global scenarios, we saw the turmoil within European Union which, for a while, did spook the investor sentiments. We have also seen US turnaround with growth in economy as well as in employment rate. So, all signs say that economic climate is on the mend, though with some pulls and pushes. What happens in EU and in US does impact the emerging economies. However, those emerging economies that have built a strong internal market have stood the challenge and are forging ahead. This includes some countries in LatAm, Africa and in Asia. Asia too is in the throes of changes in the economic equation. China, which was indomitable, has seen a lot of stress. But, Thailand, Indonesia…..are continuing with their economic agenda.

Africa too is showing momentum. In spite of the negative commodity cycle, African countries continue to show signs of growth due to alternate investment opportunities spurred by stable democracies.

As shared with you all last year, within Praj, we are using the time presented by the economic cycle to prepare ourselves and to embed transformation throughout the Company.

Praj usually follows some discreet signals in the market that it sees as opportunities. I will mention a few of them.

Immediate is the strengthening of Ethanol blending mandate in India. The GOI has eliminated some of the challenges that deterred ethanol blending while making ethanol pricing more remunerative. This should spur higher output and hence blending of ethanol. We are already seeing enquiries for Ethanol dehydration plants. Since the new policy applied in the next sugar season, we expect the speed of investments to pick up closer to that.

In USA and in Europe, there is a greater push for advanced Biofuels and Biochemicals. During the year, we also tied up with Gevo which adds one more dimension of advanced Biofuels called Biobutanol. It will give us an entry into aviation fuels too.

Process Industry including Petrochemical, Chemical, Oil & Gas where oru Critical Process Equipment & Systems divison has earned a name continues to be benefitted by international and domestic opportunities.

We are seeing more stringency as regards pollution control norms. Water is becoming a major challenge and cleaning of water bodies is increasingly becoming more of a priority. Starting with the Clean Ganga mission, we will see many more initiatives to ensure that water bodies are kept free of pollutants.

We also see greater traction in the Pharma/Biotech space where PrajHiPurity has a significant interest.

In the Brewery, Critical Process Equipment & Systems, PrajHiPurity and Water & Wastewater business we would like to do what we have done in the ethanol business as far as internationalization is concerned. A plan is in place and action on ground has begun.

Modernization of distillery plants is a new initiative we launched a year ago which is seeing greater interest in India and overseas. It offers a good opportunity to drive down operating cost for customers.

Going forward, we wish to have 50% of our business from overseas markets. This will also test our solutions and our systems.

Towards this end we have the Innovation & Applied Technology team together with the Matrix team working on various technologies, some of which are already in the market.

We expect new technologies to contribute 10-15% to our business every year.

With the help of McKinsey we have been working on various systems, processes, procedures and other areas of operations which will ensure excellence in all that we deliver as well as greater value for all stakeholders. We are seeing some of the results already and expect greater traction in the coming year.

Praj is also working towards monetizing the R & D investments. We have launched Customized Research Services and Solutions offering services that will help other innovators take their ideas to market. This is additional to our own effort to commercialize technologies developed by Matrix – the R & D Center.

Any transformation is only possible if we have good leadership in place and if we can create leaders for tomorrow. The strategic business units are now headed by professionals who have years of experience in building businesses. Teams are in place to take the plans forward effectively. We are also planning a leadership development institute to create a pipeline of future leaders.

Now on the financial performance of the Company for the fiscal 2014-15.

Fiscal 2014-15 saw us achieving a consolidated sales turnover of Rs. 1011.84 cr with PBT of Rs. 86.38 cr and PAT of Rs. 76.26 cr. The EPS improved 40% to Rs. 4.30. Your Company continues to be a net foreign exchange earner and a cash positive, debt free company on stand-alone basis.

The Board of Directors has recommended a dividend of Rs. 1.62 (81%) per share of Rs.2 each.

To end, I would like to thank all of the shareholders for reposing continued confidence in the Company. I also thank our business associates.

PRAJ CIN NO. - L27101PN1985PLC038031

Chairman’s Speech: 28th Annual General
Meeting of Praj Industries Limited

28th July, 2014

Welcome to the 28th Annual General Meeting of Shareholders’ of Praj Industries. It is a great pleasure to welcome you to the new office of Praj Industries. This is the first AGM since we shifted to the new premise and hence very significant. I am also happy to share with you that this year, your Company completes 20 years of being a Public Company.

It has been a long wait of over five years since the world first got hit by the subprime crisis and the resultant global meltdown. We have been watching the gradual economic resurgence around the world. Some green shoots are visible in pockets. There is a rebuilding of hope and aspiration especially in India which is definitely on the move, with her new Government. With the Indian investment cycle kicking off and the promise of business friendly regulatory climate for new investments, the nation building exercise is on to a good start.

Ofcourse, there are challenges like delayed monsoon, conflicts in middle east, the Ukraine and Russia stand-off and slower economic recovery in some of the developed economies. But, amongst all this, we see the emergence of a new global trend.

The year 2014 is a bell-weather year in the making of paradigms. The world is getting redefined with new centers of globalization, application of technology for the larger good, rapid innovation, higher level of transparency, better governance, social responsibility and sustainability as a measure of success of corporate strategy.

In the last fortnight we saw the resurgence of global hub in the form of the BRICS with India playing a more significant role. While they have been in existence, we see a new resolve with stronger leadership in each of these countries providing a reason to believe that we will see faster growth in these economies.

Over the next 15 years, the global population will likely increase by more than a billion. It is estimated that emerging markets will also see doubling of the middle class population. This includes new markets in Africa, Asia and LatAm. Food and energy requirements are both forecast to rise by about 50%; and water requirements will increase by around 30 percent. Each of these challenges will be compounded to an unknown degree by climate change—which is in part caused by current carbon-intensive, fossil-fuel-based energy sources, and which will almost certainly impact water availability.

Your Company is gearing up to take on opportunities presented by the changes in the external environment. Transformation is the motto at Praj. Accelerating transformation is the mantra.

While first generation ethanol has become an integral part of the renewable fuels mandate in many countries, 2nd Generation will assume greater importance. As you have been informed, your Company is currently in the penultimate stage of commercialization of this technology. In India too, the new Government has already made its intention clear for 10% blending of ethanol in gasoline. We feel India has a great chance at integrating renewable fuels with fossil fuels resulting into savings in forex and environment.

Recently, the Government of India announced the ambitious Ganga cleaning project with an outlay of Rs. 2000 crore. We see a large role that can be played by technology, especially in treatment of industrial wastewater streams, forming 15% of the pollutants flowing into the river.

Throughout the developingworld,water, sanitation, and hygiene arematters of life and death. Eighty percent of diseases are related to contaminated water, and majority population does not have access to clean drinking water. Praj, through its industrial water & wastewater systems is doing its bit towards ensuringwater availability.

Given the water stress on communities, technology can play a large role in overcoming the same. Our EcoPhotox technology can be employed to treat wastewater from urban housing complexes which can be safely recycled for other uses. This is yet another example of how technology can respond to urban water stress for larger good.

Innovation is becoming even more critical as global changes create volatility in the operations of organizations. Your Company is known for innovative technologies. We are enhancing rapid innovation for quick deployment of technologies. An innovation council has been launched to embark on road map for the next generation technologies which are already providing us with a pipeline of solution suites. In the past 2 years we have filed for more than 12 patents. We now wish to quicken this pace in order to increase differentiated value in our offerings. We see a growing role of innovation in the area of efficiency – feedstock, energy, water. We have formed a separate team to monetize our innovations in these areas. This will usher a service led revenue model from modernization, O & M and spares. Building on the vast reference base, this initiative will also help expand business as well as enhance sustainability and profit for the customer.

A strong governance is emerging as another differentiators for organizations. An involved board is a definite strength. It not only conducts various review through committees on audit, remuneration, shareholders’ grievances and corporate social responsibility but also guides the management on strategizing and various aspects of corporate governance. Your Company is committed to a robust compliance policy related to its operations.

With the amendment in Companies’ Act, corporates will now have to mandatorily give away a portion of their Profits for the benefit of the society. We are proud to share that, caring for the society comes naturally to us. Praj Foundation along with Praj CSR has been doing a lot of commendable work in the fields of education, health, rural development and environment. Also, Praj employees are encouraged to take up sustainable projects in the field of their choice. A separate report on sustainability is available on our website for your reference.

Just to sum up, your Company’s businesses are responding to opportunities and challenges in the environment in many ways such as,
  • Replacement of fossil fuels in transport sector with projects of renewable energy like ethanol,
  • Applying technology for reduction of water stress through our water & wastewater business
  • Reliable Engineering Systems and Equipment for the Hydrocarbons & Chemicals sector through critical process equipment & systems
  • Quality of life to ensure better health & wellness through our solutions for pharma, biotech, health & well ness industries
  • Securing food and secondary agricultural resources through livestock health & nutrition products
  • Efficient systems for high quality beverages in brewery and distillery industry

Each one shows our play in a different industry segment. Gradually, we see ourselves getting evenly balanced on all the pillars of growth - energy, water, health & wellness, agriculture and quality of life. Over a period of time, we will aim to earn our revenues in a more equitable manner, with each business claiming a pole position.

Your Company is strong, resilient and well poised! I am confident that, with adequate tail winds, we can make accelerate the pace of growth.

We have already begun the process. With a new identity, a new office we have also engaged a multinational consulting firm to advise us on growth strategy that will enable value maximization for all stakeholders, in coming years. Blue print of our 2014-17 strategy action plan is expected to delivery enhanced value to all stakeholders. I thank our Board members for their continued inputs and our employees for their continued commitment.

In this 30th year of our operations, I would like to end with a note of appreciation for your support. As you know, your Board has declared an interim dividend of 30% to commemorate the 30 years. Together with the final dividend of 81% the total dividend would be 111%. I trust you will provide us your continued support and well wishes as we accelerate the transformation process.

Thank You!
Pramod Chaudhari
Pune, 28th July, 2014

Chairman's Speech at the 26th Annual General
Meeting of the Shareholders of Praj Industries Limited

Resilience is the Key

20th July, 2012

Good Morning. On behalf of myself and the Board of Directors, I welcome you all to this 26th Annual General Meeting of your Company.

By now you have received copies of the Annual Report for Fiscal 2011-12. I assume you have gone through the Annual Report and consider it as read.

The prevailing economic and political headwinds are constantly posing a challenge to growth. It has been well over 4 years since news broke out on the financial crisis in the US. Being a structural issue, the crisis took wind, reaching farther ,touching almost all economies. Credit tightening, demand destruction, job losses and weak sentiments have taken toll on the mightiest.

And yet, some green spaces still exist. Chiefly in the emerging economies, where business transactions were relatively stronger. The region of latin America, south east asia and Africa, where your Company has a strong base, has demonstrated a good growth. Of the 25 rapid growth countries mentioned in a study of leading consultancy, Praj has strong connects in nearly 60% of these countries. In fact, going forward also, we see these economies leading growth.

Another lead influencer in the economy is the consumption of transport fuel. Inspite of relatively stable transportation fuel intake, ethanol blending was much higher with production being maintained and higher capacity utilization observed. It is estimated that the world will consume biofuels to the tune of 55 mln tons of oil equivalent by 2015, a 30% increase over 2010.

Even as the world economy continues to be volatile, your Company has shown tremendous resilience. We got back on to the growth path with sales of Rs. 880.44 crore, crossing the watermark of 2009 sales performance. However, our Profit levels are differing and it is our effort to catch up with this at the earliest.

Your Company's Board has recommended a dividend of Rs. 1.62 per share of Rs. 2/- each endorsing their confidence in the company's future.

While performance is just one of the measures, we have demonstrated fortitude in terms of giving shape to some of the plans we had shared earlier, which have since been executed.

We have operationalized new business lines like critical process equipment and systems and water & wastewater treatment solutions…investing into them. This is the time when we can test our strengths and keep on developing and establishing unique value propositions which will also provide us the speed and scale required when the economy starts bouncing back globally.

We have put our reserves to a good use. We executed inorganic strategy in the newly created water & wastewater treatment systems business. We are now in the process of integrating our new subsidiary Neela Systems, in which your Company owns controlling stakes.

Another way in which our positioning could be gauged is in terms of market share. I am glad to say that globally, in our flagship business of ethanol, our marketshare has remained strong. In India, in fact, we have improved our lead.

We are now probably nearer the trough of the recession than the beginning. It is time to act and capitalize on the momentum we had set earlier.

We are deeply focused on innovation than ever before. For our preceding ongoing business of ethanol/alcohol plants and brewery plants, we are looking at how we can add more value. "˜More from Less for More" is the motto to be followed here. In line with our sustainability proposition, we have already strengthened the team which will continuously provide incremental innovation solutions and applied research. Lowering energy and water footprints is the key. These solutions are already a part of the value proposition whose impact is being seen. (Just this week, our ethanol team conducted four days Master Class program where more than 75 technical manager of our customers from different parts of the world participated and my personal interaction reconfirmed their confidence in our innovation based offerings.) Earlier, we had also mentioned that we will be expanding our offerings in select geographies. We have already done so.

We are also continuously evaluating geographies, not only for the existing business lines but also for the expanded businesses like water and critical process equipment and systems and other opportunities. We are ready with our blue print for the new lines of businesses. I am glad to say that the global lead generation is already on and we have also booked orders for the same as I speak. For ethanol/brewery businesses, we are working on some new geographies. We are re-evaluating Brazil.

As announced earlier, we are moving forward with our plans to scale up the biomass to ethanol program. We are evaluating various options for a commercial scale demo plant which will provide us with the field data to go towards full scale business launch. We are aware that many commercial scale plants have been announced. We feel this step will bring us closer and more firmly towards exploiting the opportunity globally. We are very much in line with the timelines mentioned.

While we have been working on the external environment, we are simultaneously engaging with the internal resources. Talent sustainability is another competitive edge we pride ourselves on. We are giving it a renewed push. While we are not only attracting and retaining new talent, we are working on succession planning and potential management to provide greater depth and width to the Company. A Company can only be as good as the people it employs and empowers.

All this will provide a strong brand equity for your Company. Your Company will constantly renew itself and recreate its value proposition. But, our core values of entrepreneurship, innovation and sustainability will provide us novel ways of doing business and the resilience to overcome tough times.

We have undertaken a medium term strategic plan which will help us direct our business ambitions over the next five years. As we approach 30 years of the Company's existence in 2013-14, we expect it to be a turning point in terms of how the Company will define itself and its businesses.

We have undergone trial by fire. This shows we are malleable and our resolve is stronger than ever. We feel we can withstand challenges with greater vigour and deliver shareholder value The global economy will bounce back , demanding new business paradigms. For the new paradigm, resilience is the key.

Thank you for your presence and patient listening.

Pramod Chaudhari, Chairman
Praj Industries Limited


Chairman's Speech delivered at the 25th Annual
General Meeting of the Shareholders of Praj Industries Limited.

The New Decade: Recharging for Growth

22nd July, 2011

Good Morning. On behalf of the Board of Directors, I welcome you all to this 25th Annual General Meeting of your Company.

By now you have received copies of the Annual Report for Fiscal 2010-11. The green initiative of the Government of India's, Ministry of Corporate Affairs has been welcomed by all. I am pleased to say that we have achieved over 50% compliance with this initiative in the first year itself. I thank all shareholders for supporting this cause. As you know, we had begun this exercise in the previous year itself. In a small way, we have pre-empted the trend here too.

I assume you have gone through the Annual Report and consider it as read.

The fiscal 2010-11 has been one of the toughest on your Company. The performance has gone down 8% on the topline over the previous year and the profit margin has halved. It is understandable that many of you might have concerns on these areas but at the same time it is also important to acknowledge the faith kept by many of you during this period.

In the short term, we are mindful of the looming double digit inflation figure in India and the high interest rates. The global economy is still very volatile.

As mentioned in my statement in the Annual Report, your Company's brand equity as well as market share remained very strong even during the slowdown and we are in a position to leverage the same as the economy unwinds.

Now that the past is well behind us, we are very much on a path of growth from here on.

Since the beginning of the past decade, barring the last two years, Praj has made smart returns on shareholder funds, on an average of 60%, and grown shareholder value substantially. We are now on to another decade, the second decade of 21st century. We would like to attempt similar growth trajectory and be back on the path of glory.

Biofuels is regaining its traction in the emerging markets in the first generation feedstock. The confidence level regards biofuels is increasing. In a recent survey by an industry resource, Industry executives predict over 40 percent growth in biofuels revenue in 2011 and job growth of 25 percent. Financing for renewable has also been on an uptick, particularly in the area of second generation and renewable chemicals.

We plan to deepen our relationship in these markets, offering multiple solutions. This will provide us with the scale of economy in terms of manpower utilization.

Interest in second generation bioethanol, from biomass and agri-residue like corn cobs, straw, bagasse and grasses, is getting stronger. We have been receiving enquiries from different parts of the world. People are also looking at bolt on plants. The next big opportunity is likely to be in second generation biofuels. We also see a move to revive biodiesel from non-food crops. Many Companies have come up with high yielding varieties which should create a new paradigm for biodiesel.

As you know, your Company is working in right earnest towards second generation biofules and in the area of renewable chemicals. Recently we had announced a joint development program with a second generation biotechnology Company called Qteros, USA. The program is progressing well and we are hopeful of a cutting edge solution in the near future. Praj Matrix- the innovation center is incorporating the changes required for the above in its processes and facilities and early signs show that we are moving in the right direction. Your Company is aggressively pursuing this promise by way of investments into R & D.

In the new decade, we will also pursue the Biorefinery Platform opportunities. Your Company has a strong foothold in this area. Ethanol is the starting point in a biorefinery. We are looking at other manifestations of a biorefinery to produce Food, Feed and Wellness ingredients, Energy and Biochemicals in conjunction with ethanol plants.

On another positive note, the Indian Government is strengthening its Bioenergy Mission. Already a number of initiatives have been launched, but having pledged emission reduction, the country is now following up with action. This will also give further impetus to all our work.

The Indian growth story and that of emerging markets remains fairly strong. Being consumption led, there are still areas of unmet demand. We would like to capitalize on the same.

One such business line is Brewery Plants. It is poised to grow as we see an increase in disposable income and quality of life. The brewery sector has recorded a YOY growth of 15%. Forming 10-15% of our revenues, we would like to internationalize this business to achieve higher numbers.

Water is one area which is seen as a necessity if any economy has to grow. We have made a beginning last year. We already have references in industrial water & wastewater treatment solutions. This year on will see us pushing for scale up of the business. For customized engineering, another consumption led story, we have already made investments into a new manufacturing facility in the SEZ area of Kandla which will enable ease of logistics for export business. This should see us scale up here too.

Another business where we see annuity revenue potential is bioconsumables. Here we are manufacturing a variety of additives for ethanol industry. With a good response from international markets, this area looks promising and hence we are already setting up a new, separate manufacturing plant at Jejuri in Maharashtra which will be in operation very soon.

As shared earlier, we would like Non-Ethanol business to form more than 25% of our revenues by 2013. We are close to getting there. As we target a higher topline, we will see higher absolute numbers for this initiative.

With increase in global foot prints, we have added nine new countries to our reference list. Praj is emerging as a Company with the unique ability to blend technology and execution. This is a very special combination deployed for customer's need and satisfaction. We continue to build our future with vigour to maximize returns on all our investments while retaining our core beliefs, core values and entrepreneurial spirit.

With multiple business lines, your Company is Recharging for growth for the medium to long term while aiming at long term sustainability and maintaining focus on its core mission and realigning all its strengths. We have the people bandwidth, the infrastructure, the brand equity, a global reach and supportive investors.

I would like to reassure shareholders that we will leave no stone unturned in our effort to make it another decade of growth.

Thank you for your presence and patient listening.

Pramod Chaudhari, Chairman
Praj Industries Limited


Chairman’s Speech delivered at the 24th
Annual General Meeting of the Shareholders
of Praj Industries Limited.

23rd July, 2010

Good Morning. On my behalf and on behalf of the Board of Directors, I welcome you all to this 24th Annual General Meeting of your Company.

By now you have received copies of the Annual Report for Fiscal 2009-10. It gives me great pleasure to share that we have incorporated some green initiatives in this area too. You would have noticed that we have printed an abridged format for standalone accounts. The non-abridged versions are available online. Also, for those who had registered their online contacts , we have sent an online link to the Annual Report, well in advance. application of technology and the green intent has helped your Company lower its carbon footprints, albeit in a small way. I thank all shareholders for co-operating with us in this initiative. Many of you have appreciated this, but for those who may not be in agreement, please do write in with your observations to our Secretarial Department.

I assume you have gone through the Annual Report and consider it as read.

The fiscal 2009-10, from the feedback received from some of you, has been disappointing for many. The performance has gone down 19% on the topline and in response the profit margin has shrunk from 20% to 19% or 100 basis point. I understand the concern you may hold.

Let me reiterate, growth is always expected from a Company and it should deliver on the growth expectations. However, many times, in the face of severe crisis like the adverse economic situation prevailing since 2008 globally, it also becomes imperative to preserve the core. We did just that. The year also saw us reaffirm our commitment to existing businesses including solutions for ethanol and alcohol plants, beer production plants etc. We have strengthened our commitment to our customers in these sectors, thereby ensuring that we remain the Company of choice in these areas.

We decided to strengthen our focus on areas which can be built around the core capabilities of the Company, namely engineering, world class equipment manufacturing, biotech led processes which includes advanced biofuels, bioconsumables and address clean technology solutions more vigorously, like water & wastewater treatment.

This has seen us introduce new businesses around customized equipment manufacturing which leverages our present manufacturing capabilities, termed world class. The introduction of water & wastewater treatment area was also brought forward. All these initiatives are expected to yield results in the near term.

Bio based solutions continue to draw a lot of attention around the world. Green Chemistry embodies a science which employs biotech for production of bio based products like chemicals, plastics and fuels. A huge opportunity is being projected. I am truly excited about this opportunity, not just because of the huge numbers being projected, US$ 450 bln by 2020.I am also excited about the application of science to world’s most difficult but common uses. It calls for not just basic R & D, but also pushes the frontier of human intelligence to a new high. The sheer opportunity for innovation is something Praj is always interested in.

This also vindicates our decision to invest into a state-of-the-art R & D center, Praj Matrix. Praj Matrix has been working on several fronts including green chemistry. Yet another aspect of the entire business of green chemistry is that our current business opportunities which involve sugary feedstock and ethanol, can be scaled up and extended. This would lead to ‘biorefinery’ concept which will not only produce alcohol of various grades, but value added bio-chemicals too. One such product and a couple of processes are nearing completion for commercial applications in the near future. Due to IP regulations, I am not in a position to give you any further details on the same.

Emerging economies like India stand to gain from such developments, not just because these innovations can take place in such countries, but also because they present a vast opportunity for installation of such assets.

Your Company has a strong recognition in this space which should see your Company creating distinctive mark for itself.

In our core area of biofuels, some structural changes continue to take place. While USA and Europe markets continue to attempt economic recovery, the long term biofuels projections, as made by FAO and OECD remain buoyant largely on the back of unmet mandated requirements laid down by various countries, including EU nations. The figures, which may sound very ambitious at 150 bln litres of ethanol consumption by 2020 from current 85 bln litres, are not unreachable. Technology is making good headway. Even though US has lowered cellulosic ethanol targets in the immediate future, the fact that production is targeted is an achievement in itself. As you know, Praj is also engaged in development of technology for the same.

As economies recover and environmental concerns strengthen at the back of oil related environmental damages, biofuels will momentum. In India, the mere revision of oil prices are making biofuels attractive. The true price you pay for hydrocarbons is much more than the actual cash you payout for the same. The cost of environmental degradation is usually ignored. We feel, the world is waking up to this.

We have made environment a big concern and woven this into our business offerings. Into our internal processes as well. You will be happy to know that your Company has intiated ISO 9000:2008 efforts which will enhance its environmental performance. A detailed sustainability report is already with you.

In the short term, challenges may continue. But, our core remains strong. We will be alert to opportunities. The management of your Company has the vision and strength to take the Company towards the growth path. We will continue to build upon our capabilities to sustain and take the leap into another orbit.

Before closing my speech, let me share with you our CSR initiative promoted through Praj Foundation at local city level in area of waste management. Presently Praj Foundation promoted projects are processing more than 4 Tons of garbage into high quality vermicompost each day. compost acts as perfect nutrition to soil for growing organic vegetables and other plants. We have kept samples of this vermicompost produced at Girls Sainiki School nearby – along with plants fed on the same for you to carry home - token of our commitment. Ofcourse it is no compulsion if it is inconvenient but we are confident you would like to participate in our efforts to promote Clean and Green environment around us.

Thank you for your presence and patient listening.

Pramod Chaudhari, Chairman
Praj Industries Limited
Place: Pune
Date: 23rd July, 2010.


Chairman's Speech delivered at the 23rd
Annual General Meeting of the Shareholders
of Praj Industries Limited.

9th July, 2009

Twenty Five years of Value Leadership

The calendar year 2008 till mid- year of 2009 will go down in the annals of time as the year of unprecedented changes - economically and politically. It has been a period of great turbulence which saw the economies of many countries, big and small, on the brink of collapse. The GDP growth figures were revised almost overnight, country ratings swung in the opposite direction, unemployment rates hit a new high, stock exchanges saw the bears taking over. Few months is all it took to show how connected the world is and how one event can change the fortunes world over.

We also saw how negative sentiments were spiraling out of control. It was time for bold decisions and brave actions. And, then we did see the hint of 'green shoot'.

We saw a historic change in the leadership of world's oldest democracy, USA. We also saw winds of change giving the message of stability to world's largest Democracy, India. 'Change' is the operative word.

In terms of climate and environment we saw increased commitments by some countries. The EU Parliament voted boldly in favor of GHG emission reduction by setting a mandate for 10% renewable energy mix. The US Senate voted in favour of climate change mitigation bill. This just goes to show that the world no more belongs to the faint hearted.

Back home, in the 2009 Union Budget presented recently by the Government of India, there is a move to promote use of biodiesel in petro-diesel. Some concessions are offered. This is certainly a beginning. The budget also talked of substantial increase in outlay for rural and social development.

It is also the Year in which your Company completed twenty five years of existence. Completing twenty five years in itself is not the major achievement. It is a mere timeline. But, it is the creation of value leadership, spread across five continents, which is our contribution over the years.

The year 2008 saw the single largest jump in biofuels production (year on year) largely led by bioethanol. At 81 bln litres, it defied earlier predictions of 72 bln litres that too by 2010. This was backed up by legislative support from Americas - both North and South, Europe and much of South East Asia & Far East. Mandates do play an important role in kick-starting the programs and Government buy in is an essential part of the entire exercise. We did see some disconnects in countries like India. However, the world at large recognizes the benefits of biofuels towards mitigating climate change.

In order for biofuels to become sustainable, the next step would be to create economic sustainability - non-food energy crops, robust processes, better business models, mainstreaming of biofuels, etc. As you know, Praj is already developing non-food biofuels process. It is also integrating with Agri-solutions for the same. A pilot plant for lignocellulosic biomass for ethanol production process is testing various parameters for further scale up. Algae based biofuels is another agenda being pursued at our R & D Center.

Working on biofuels has given the confidence that your Company can pace up in the area of industrial biotech. Praj has the infrastructure. It has the resources in terms of manpower and management span. Industrial Biotech offers unexplored areas of growth where Praj can add definitive value. Tough times will pass, but we should not lose sight of growth.

Water,Power,Food,Land Use and mobility will determine how nations progress. Ours is a fairly young nation. We have to think of sustainable solutions which will not only provide economic prosperity, but will also create environmental prosperity. This is where we see green and clean technologies making a mark. Industrial Biotech will help us address these areas.

In the past few years the renewable energy sector has seen a lot of interest. Over $ 120 bln have been invested for building capacities in 2008 alone. Biofuels formed around 13% of these investments. This is likely to grow ten fold in another ten years. However, this growth demands commercialization of technologies. Investment into R & D needs to be intensified. At Praj, we have already taken note of this and are pushing through R & D programs which will make a difference in the long term. We also see a potential for job creation with many more green industries being set up.

However, while pursuing these growth opportunities in biotech and biofuels sectors, we need to simultaneously leverage our expertise and strengths in synergistic areas to maximize shareholder value.

We see many challenges in the coming period. The management of your Company will make every effort to minimize the impact of the times. As we move forward, Praj will endeavour to attain pole position in responsible greentech and cleantech and be back on the growth path. This is the crux of value leadership.

Thank you for your patient listening.

Pramod Chaudhari, Chairman
Praj Industries Limited
Place: Pune
Date: 9th July, 2009.


Chairman's Speech delivered at the 22nd
Annual General Meeting of the Shareholders
of Praj Industries Limited.

27th June, 2008

Shaping the Future

By now, you have had the opportunity to go through the Audited Annual Accounts for the financial year 2007-08. I will consider them as read.

I will now proceed to brief you on the world view and perspective on your Company's business.

The Future belongs to alternative energy, that too renewable form of energy. This is not a prediction, but a reality. Going by the growth in patents filed and announcement of technology innovations made in this field, it is clearly an area which is attracting a lot of interest. Amongst all renewable energy areas, it is biofuels which has recorded the highest patents filed since 2002. The latest Economist also suggests that the next technology boom may well be based on alternative energy.

But, we at Praj do not go by predictions. We would like to bring on the changes and help shape the future ourselves.

One of the future defining 'Megadigms' - a large change - undertaken by us has been the breakthrough in second generation biofuels. In this area, our intention is to go beyond the traditional approach for delivering 'greater value'. Just as in the case of first generation technologies, where we have been lauded for our 'integrated solutions', in the second generation technologies too, we would like to assume the role of an integrated technology provider. In biofuels, every step counts and hence it is required to give equal attention to each step. Be it agronomy, pre-treatment, processing or post-treatment, every step holds the key to the viability of the system. And, in this viability lies sustainability. In order to provide sustainability to the system, we have stepped into the area of agronomy wherein we offer 'value-added' advisory services to our clients on energy crops and its integration with front end processing plant. In the present scenario, this has become all the more important.

Biofuels have become the victim of their own popularity. Like any other technological paradigm, it requires a lot of understanding and acceptance from not only the producers, but the policy makers and public at large. In the defense of biofuels, I would only like to say that policy makers in each country need to 'customize' their choice of energy in a more systematic manner so as to provide the best option to their citizens. Biofuels have the potential to create 'mass uniqueness' through choice of feedstock. Brazil is a very potent example of this 'mass uniqueness' wherein they have taken a crop which has the potential to scale up and yet be integrated into the food chain. Whilst it may be a challenge for other countries to create this version, it is worth the while, considering the fact that fossil fuels carry a higher level of risk - economically, geo-politically and socially.

Food vs. Fuel is a defense mechanism which has been adopted by all those who have ignored the criticality of investing into agricultural development over the years. It is also a wake up call. We should not get caught up in rhetorics but act prudently to balance the cycle of inflationary factors - today, the single most causal factor for food prices to climb up is not so much biofuels, but rising energy cost- energy used in agricultural equipment, processing of food and distribution of food. We need to rein in this cost at the earliest and break the cycle of upward spiral of food prices.

This is where we step in. Technology is a great leveler as well as a great challenger to the existing 'mind-space'. We moved the needle a bit when we introduced 'sweet sorghum' as a bridging crop. We need to move this needle further in order to create the 'Megadigm'- shaping the future of energy. Biofuels are the weapon to soften oil prices and we need to use it effectively. Technology can make this happen and we need to keep on working towards this end. Unlike in IT and other technologies, biotechnology led processes are 'slower' but they create a greater shift and hence their impact on our lives are greater and far more sustaining.

As a Company, Praj is poised at an interesting juncture in its big leap towards the future. We are following different models towards this. We are working with various agencies, companies and institutions in order to get to the solution the fastest. In the new space, there are no competitors. Everyone is creating their own advantages and there can be many unique solutions to the same issues. This makes the entire space more interesting.

While doing so, we are not forgetting our immediate present. As a Company, we have been adding value at different levels. In the financial year 2006-07, our topline may have grown by 15% over the previous fiscal, but our net margins were smarter by over 75%. As a Company, we have created 'Intangible quality' in terms of our reputation and our acceptance in the newer regions of the world. The recent order from Europe is just another example of our recognition as a value-added solutions provider.

We derive our reputation from 'customer satisfaction'. As a Company, there have been many 'first-of-its-kind' approaches and concepts which are now taking firm shape. Just to mention a few -

We designed Skid units to cut down on equipment erection cost. Following our first project in Australia, we have now extended this skid concept to our first cane juice to ethanol project in Louisiana, USA. Incidentally, the same unit is also testing sweet sorghum for ethanol production. The Louisiana project will also be the first advanced bioufuels project in USA based on cane.

We are setting up the first 'sweet sorghum to ethanol' plant on commercial scale

We have worked in over 18 countries on sweet sorghum trials.

We are working with non-edible energy crops for biodiesel production.

During the year, we added nearly 20 new clients to our list from different geographies amongst them around 4-5 new countries added.

It will be our endeavour to keep working on scaling up of our technologies and to rigorously implement innovation process across the entire organization. Matrix-the innovation centre has been fully equipped to deliver on this agenda for technological innovation. We expect other functions and activities in the organization to also bring in innovation into their activities. Cost and value is a related term. We would like to bring in greater value at a lower owning cost for our customers. For this purpose, we are engaged in value-engineering our offerings.

In the field of brewery plants too, the Company has introduced newer systems. Our tie up with Meura for mash filters and Holvrieka for Fermentation tanks are keeping in line with changes in the market place where breweries are scaling up in capacity and the need for technology has changed.

In our business model too, we have been able to demonstrate tremendous flexibility. Our workshop at Kandla Port in the SEZ area is already in operation, as well as our project management capabilities which we are exploring through our JV partners and other associates.

As I have stated earlier, I would like to see Praj as a powerhouse of process solutions. Our preparedness is in its final stages towards this end. We have been actively exploring other biotechnology led solutions for industrial processes. Matrix, the advanced biotech R & D centre is engaged in this new activity.

We are also bringing a new purpose to our business. We are working on various social causes and affirmative actions in line with our mission of quality of life and our commitment as a corporate citizen. We are now engaged with an ITI near Pune to accord professional inputs. Yet another activity we undertook with CII was the Finishing School wherein we sponsored students from the less priviledged society to seek vocational courses for increasing their employability. In line with our objective of promoting gender diversity at workplace, we have taken an entire batch of women professionals in our design team. Apart from our social obligation, this has also been very rewarding for our Company as a whole.

Within Praj, we are instituting new systems and processes in order to make the Company more professionally driven and more responsive to market dynamics. We would like to shape the future of Praj in different ways and I feel we have made the right moves.

As we enter into our 25th year of existence, I extend a hearty congratulations to you and thank you for your support and your encouragement. It is a milestone year for us and I can see that changes are imminent.

Thank you!
Pramod Chaudhari, Chairman
Praj Industries Limited
Place: Pune
Date: 27th June, 2008.


Chairman's Speech Delivered at the 21st
Annual General Meeting of the Shareholders
of Praj Industries Limited.

5th June, 2007

Building the Vision

At the turn of this century, we had set a vision for ourselves.Praj will be a Global No. 1 Company in ethanol technology. So, I thought it was time we re-visited our vision. In continuation of our pursuit to be Global No. 1 in ethanol technology, which we are very close to achieving, we will expand our horizons further into a newer clusters of knowledge like 'biotechnology' and blend it with our existing knowledge in 'agri processes', 'process engineering' and translate all that into viable solutions for a cleaner, greener earth.

We have developed a framework that will guide our future course of action, towards our vision. Called 'sustainability metrics', the framework consists of four elements that accord balance to the new ecosystem. The entire cycle of 'Evolution' of the Company is seen to be influenced upon as well as influencing the other three factors - 'Earnings', 'Earth' and 'Everyone'(people). Whilst earnings will continue to be an important part of our evolution, people and our habitat, planet earth will become increasingly critical. You may have noticed the same on the cover of our Annual Report.

The first step towards sustainability is a consistent and growing benchmark of performance. This year, with a topline growth over previous year of over 120% and profits growth of over 200% we have clearly shown that we can scale up in a short time. And, this scaling up is not just in terms of numbers, but also in terms of higher throughput and better solutions. This has also seen us reaching a market capitalization in which, the current BCG-BW survey termed Praj as the No. 1 value creator amongst the mid-cap Companies. This is a rare distinction. But, this also raises the bar for the Management for the future. We will continue to explore ways to enhance our performance consistently.

Another key to our sustainability has been our innovative approach. Our entry into cellulose to ethanol has demonstrated that we can match the best in the industry and possibly even surpass them when it comes to finding viable solutions. Cellulose to ethanol will come into reality in the near future, but suffice it to say that we are well on our way and on the right track. We will create a differentiation which will help us enhance our business further.

Biodiesel Technology and Plants is a new business which we introduced this year. We have always maintained that when we get into any new business or market, we must be able to create value for our customers and not just give another 'me too' product. In keeping with that, we have built some value propositions within our biodiesel solution suites which will accord a differentiator to us in time to come.

Our strategy of 'geographical expansion' has paid rich dividends. It has enabled us to create a strong presence in USA in a short time. In Europe too, our gains have been significant. We will now penetrate further while sustaining the 'territorial gains' we have made. One way is through the acquisition route wherein we have already taken 100% stake in a Company in USA, C J Schnieder. This Company is providing us greater visibility, while pursuing its own scope of work in the ethanol industry. The recently passed Renewable Fuels Standard bill which directs 35 bln gallons, five times current directive, augurs well for growth in this industry.

Yet another milestone is setting up a JV with a prominent European Company wherein Praj has a majority stake. Aker Kvaerner and Praj will create a synergy in the Biofuels industry that will bring in new paradigms. The JV will become operational by next month. The 10% blending mandate of EU will act as main driver of growth in the region.

Another market gain we are keenly working towards is Brazil. While we may not immediately go in for the acquisition route, we will create a presence through a full-fledged marketing office in Brazil, to start with. We will evaluate the opportunity and then unravel our further strategy for Brazil.

Along with promising developments in other regions, the Indian fuel ethanol programme, which has been lagging behind, seems to have got a new lease of life.

Brewery engineering and plants, our other business line, is also poised for a major upswing. We are looking at the per capita beer consumption doubling up over the next five years. Given our highly competitive position in this area, and recent tie ups and alliances with European machinery suppliers, we are sure to gain, as the market moves up.

Another sustainability tool is to create an infrastructure for better delivery cycle. The SEZ unit in Kandla is one step we have already taken towards this. One bay of the unit is already in operation. We expect that by July the entire unit will be fully operational. We are also looking at further expansion in SEZ. A new R & D centre, for which land has been acquired, is expected to be operational by end of this calendar year.

We had indicated a capital expenditure of Rs. 100 crores for all these developments. We are on target as far as our commitments are concerned for which funding is in place.

To support this growth, the most important element is manpower. We have scaled up and will continue to build the talent pool. Being a knowledge-based Company, our requirements are very niche. Our aim is to be a preferred employer, beyond our own industry. All efforts are being done to attain this status. We are casting our campus recruitment net wider, in an effort to enhance diversity. We are also recruiting more women professionals, which will create an inclusiveness while creating a larger talent pool. We have also taken steps to be in line with affirmative action.

We will pursue institutionalization within the organization. We have already put in place a re-structuring plan. Processes and systems are being re-validated. As part of this transformation and succession planning process, Shashank Inamdar , Managing Director has been inducted to lead the Company since April this year and he will be designated Managing Director & CEO of the Company from August 2007. Ofcourse, I shall carry on with the role of Executive Chairman,Chief Strategist and Mentor. As we move into the next orbit, I will be more and more on call to steer the course into newer areas.

Our preparedeness is at the peak. Our streatchability of resources is undoubted. Our ability to transform our organization into a powerhouse knowledge unquestionable.

However, it is important to take cognizance of the external challenges in the industry that we operate in - the ethanol and biodiesel industry. Some key areas of concerns have been:
  • Food vs. Fuel debate
  • Downward pressure of oil prices
  • Sugar industry re-structuring
  • Climate Change itself
It is not easy to convince the detractors that fuel cannot be at the cost of food. Empirical data shows that more grain is grown in anticipation of a better valuation. In fact, some studies by Renewable Fuels Association show that corn prices are not really much affected over the three year period when compared to some of the previous years. But, it will remain a challenge to get plenty of raw material to convert into biofuels.

We have to pave the way. The only way is to go forward and sustain the movement and to embrace the challenges and move on to the next milestone.

For Praj, the next milestone is pushing the frontiers of biofuels production technology beyond what is known today. Our dream or you may call it our technology vision, has always been - virtually no fresh water intake, virtually no new energy consumption, and no wastewater generation in our plants.

We are working on the blue print covering the next five years of our business road map. This blue print will be guided by our vision to be a powerhouse in industrial biotechnology field and continue to work towards environmental protection.

As said by someone, "We have not inherited the world from our forefathers -- we have borrowed it from our children." Let us work towards their future.

In the end, I would like to thank all our shareholders in reposing their faith in the cause and the course we are pursuing - Here is wishing you a Happy Environment Day and many more to come.


Chairman's Speech Delivered at the 20th
Annual General Meeting of the Shareholders
of Praj Industries Limited.

21st July, 2006

From Good To Great

The Year 2005-06 was a year of reinforcement/securitizing our future. We began preparations keeping market developments in mind. Then we moved on to what needed to be addressed within our organizational periphery and what could be the outcome. And so, the Year 2005-06 has led to a phase of wherein we will see Praj move from Good to Great. In the coming years we hope to make that quantum leap that we have planned. The anticipation is there and so is the preparation. We already have a fair visibility.

Some Key happening in the market prompted us to consider an acceleration in our future plans. One was the rapid development of ethanol programmes and another was the recognition of Praj's technical skills on a global platform. We knew that the time had come for us to take the Leap from Good to Great.

Just to give you an idea on the developments in Ethanol Programmes worldwide.

In his State of Union Address, President Bush outlined the importance of energy security through introduction of biofuels. This gave a fillip to not only the US ethanol markets, but the markets outside USA as well. It also provided a role model for other countries to follow. We now have the European Union which is trying to meet with its Biofuel targets.

While overseas markets have responded including Thailand and Australia, where we see some activity in terms of building capacities, India's ethanol programme has been under re evaluation and we are confident that it will be re activated in October this year, as has been announced.

Notwithstanding Government policies, Ethanol remains the singlemost dominant renewable transport fuel due to its ease of production and blending.

The interest in Ethanol can be seen by the growing number of new generation investors who are enabling the industry with funding as also a large number of developers who bring experience from other industries like energy sector for building large capacity plants. We also see integration of different sectors like oil and power, animal feed/grain/sugar and fertilizer into setting up of ethanol capacity building.

Another trend is that of sugar-ethanol-crude oil relationship. Ethanol has traditionally been following sugar economy, however, now it is also following the crude oil trend. Sugar economy is undergoing a major change worldwide. With EU and ACP countries getting used to the new regime, it will be another year till we see some clear trends. But, it is clear that ethanol will get its due from the changes.

In India, we have seen certain states promoting Sugar-Ethanol industry very actively. We have seen Uttar Pradesh implementing a sugar policy which has seen sugar production capacity go up significantly. We will see this trend in other states too.

Ethanol is at a major inflection point. Today, the renewable energy markets and particularly ethanol is growing at about 15-20% p.a. Future acceleration in ethanol will depend upon the extensive availability of feedstocks and its cost effectiveness in different countries. Not to mention its potential for job creation and environmental benefits.

And, this is precisely where our Good to Great efforts begin:

Technology Accelerator - Cellulosic Biomass is definitely a direction we will be taking when it comes to Ethanol production processes. Cellulosic biomass like straw, switchgrass, bagasse,etc are potential raw materials requiring a process which needs further evaluation in order to make it more cost effective. This would involve working with newer media in our R & D Centre and create a different set of knowledge for future commercialization.

Your Company is evaluating investment in new R & D facility which will not only extend our study in biofuels including newer technology for production of alternative biofuels other than ethanol , but also expand our vista of research.

With this investment in place, we will see R & D spend exceeding the 1% mark. Our experience with Sweet Sorghum in the past has given us hope that there is a possibility of creating newer sources of ethanol. But, it requires a lot of perseverance and conviction to chase these objectives. Praj is committed and will definitely work towards bringing in newer technologies, options and methods for promotion of ethanol.

Execution Excellence. As they say God is in the details. Any plan needs an equally strong execution. Today, we have a corpus of good orders. We have a strategy in place. We have a good market spread. Our brand name is strong. It is how we execute the plan or the orders that will make a difference to our future growth. Having realized this very early on, we have taken care to understand the nuances of executing the quantum. Our successful execution of five projects in Colombia is a testimony to our execution philosophy. But, we are not resting on our laurels. We are enhancing all aspects of our resource base. We have added to our manufacturing capacity, adding almost an equal capacity. We have added to automation levels in engineering and manufacturing. We will further augment our execution strength with two other manufacturing base and as a long term resourcing policy we will be taking up a base near the port which will reduce our time to market.

Our engineering seats have already gone up. We have added to the middle level management. We are blending the right mix of experience with youthful enthusiasm so that the energy will propel the results.

Our Companywide ISO 9000:2008 certification comes at an opportune time and will guide our continual enhancement programme. Our focus on quality has seen internal quality audits being conducted by external agencies.

One of the recent examples of engineering/execution excellence is the skid mounted ethanol plant supplied to Australia. To overcome shipping constraints and to bring down the time and on-site cost, we designed a skid unit which consisted of just nine skids perfectly meshed together.

While we do our best to rise to the occasion, there are certain areas of concern. One being the availability of raw material for construction like stainless steel and the price volatility in such raw materials. The other is that of infrastructure including power situation and port congestion.

While your Company has taken specific steps to handle such situations, it is imperative that industry works together to resolve such issues which might hamper the speed of growth.

Market Dominance: Our recent breakthroughs in USA and earlier breakthrough in UK are very encouraging. While USA and Europe both have been on our radar, the breakthrough period - from first customer contact to finalization - has been relatively short. With these orders, Praj would have moved on to the bigger capacity plants which in turn means higher per project realization in terms of sales and profits. Overall, we see project sizes becoming bigger as they would be more sustainable.

The challenges of expanding into different markets lies in scaling up in terms of resources, especially manpower. We have geared ourselves to recruit and retain the quality of manpower required to address.

Just as in Ethanol Technology, we see Brewery engineering & machinery business also expanding. Demand for building new capacities is on the rise and our new manufacturing facility will see us meeting this demand.

Delivering Value: At the end of the day, it is about delivering value. To our customers, to our various stakeholders and to our shareholders. Our quest for new technology and enhancing our resource base will help us gain new customers and retain the confidence of existing ones. Our aim to become a dominant player in the ethanol technology market will also improve shareholder value. We will also look at different business models which will further expand our volumes and spur growth.

At the end, I would like to place on record my sincere thanks to each and everyone of our shareholders for reposing their trust in us. We hope that this journey from Good to Great will be as gratifying for you, as we anticipate.