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Chairman's AGM Speech |
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Chairman's Speech delivered at the 22nd Annual General Meeting of the Shareholders of Praj Industries Limited.
27th June, 2008
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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.
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