Praj Industries Limited (PRAJIND) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to the Praj Industries Limited Q3 and 9 months 2020 Earning Conference Call. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Sandip Bhadkamkar from Praj Industries. Thank you, and over to you.

Good afternoon, everyone. We welcome you to this conference call organized today is Praj Industries operating performance and financial results for Q3 and 9 months FY '20, which were announced yesterday on February 4. I have with me Mr. Shishir Joshipura, Managing Director and CEO; and Mr. Sachin Raole, CFO and Director of Finance and Commercial on this call. Before we begin, I would like to mention that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. Documents relating to our financial performance were e-mailed to you. These documents, along with quarterly results presentations, have also been posted on our corporate website. I would like to hand over the floor to Mr. Joshipura for his opening remarks.

Good afternoon, ladies and gentlemen. I welcome you to Praj Industries Earnings Call for Q3 and 9 months FY '20. Before we start, let me wish you all a very, very happy New Year. It's a pleasure to connect with all of you to cover industry developments and quarterly business updates. Following this, Sachin will take you through the financials. Recently, the World Economic Forum has published a report on The Global Risks in 2020, in which the first 5 out of top 10 global risks are related to climate change. There is dire need to adopt renewable energy sources so as to minimize the greenhouse gas emissions in order to battle the adverse effects of climate change. Our Business solutions aimed at sustainable decarbonization through circular bioeconomy addresses this very problem at the core. Outbreak of coronavirus in China and its rapid spread all around the world is identified as one of the challenges to the global economy in recent times. As the people movement and trade around the world adjusts to this new reality, the exact impact still remains to be seen. We are also monitoring this issue closely. The quarter gone by saw a broad-based slowdown across sectors. Headwinds in the domestic and global Markets have translated into sluggish consumer demand and tepid investments in the market. The industry is subdued with CapEx plans progressing slowly. While projects are being planned and evaluated, the implementation has been considerably slower. Earlier this week the Union Budget 2021 was presented by Honorable Finance Minister, and it is heartening to note that under the aspirational India, the government is laying additional focus to agriculture, specifically furthering concept of Annadata, the giver of food; can also be Urjadata, giver of energy. This augers well for bioenergy business as farming community remains an important industry stakeholder by way of sustained supply of feedstock of biomass, agriwaste, etc. The union budget aspires to bring more farmers under this concept, which will not only give the additional revenue stream for them but will also help nation environment conservation and energy security. Coming to the bioenergy sector, in the domestic markets, we are witnessing improved interest on the back of initiatives that have already been announced by the government. The Cabinet declared that no separate environmental clearance is required by sugar mills to produce additional ethanol from B-heavy molasses as it does not contribute to the pollution load. Government has also categorized compressed biogas plants under the white category so that they will not require any consent from Pollution Control Boards for setting up their operations. These decisions will definitely expedite the setting up of the plants and production of ethanol through B-heavy molasses as well as give impetus to CBG. The oil marketing companies, under the Sustainable -- under SATAT scheme, till December '19 have issued over 500 letter of intents to developers to set up compressed biogas plants across the country. However, the firming up of the business model and related finance closer is taking longer than expected and as such, we see a slowness on relation of these projects on ground and as I speak with you only handful of them have started to go on ground. In September 2019, OMCs have floated a tender for 511 crore liters of ethanol requirement and against this, the tendered quantity was only 156 crore liters. The huge gap in demand and supply was due to lower cane supply following erratic monsoons and flooding in Maharashtra and Karnataka. Now the OMCs have floated a second tender of 253 crore liters for ethanol supply between the period of 1st February to 30th November to support the ethanol-blending program. In order to meet these revised targets, it is imperative that ethanol production grows significantly in the country. We believe that key government measures like price visibility over a medium term, continued push for blending program, push for advanced biofuels and interest subvention should help in building up the production capacity. Last month during visit of Honorable President of Brazil, Mr. Jair Bolsonaro to India, both Governments entered into an MOU on strengthening bioenergy cooperation, where they agreed to closely work together on research and development of Renewable energy as well as in the field of second-generation biofuels. Let me now recap the key events and segmental updates at Praj during the quarter and nine-months ended December 31, 2019. Despite the challenging external market environment, our domestic bioenergy business witnessed traction in inquiry inflows as well as order inflows. In spite of reduction in volume of order finalization, we are able to improve our market share in excess of 75%. Our competitive advantage continues to be commercialization of new technology solutions that optimize energy and utility footprints by maximizing throughput. During this quarter, we have seen inquiry flow begin also from the Brazil market on the backdrop of our association with Dedini. In addition to Brazil, we also see movements from LATAM markets, especially from Paraguay, Bolivia and Peru for both Greenfield and Brownfield projects. Asian and African markets have also started to show gradual pickup in inquiries for both capacity expansion and modernization. On the 2G front, the work on our 4 plants is progressing well as per plan. On the international market, increasing inquiries from the European market have started to -- have augured -- started augur well and they show a clear path forward for the 2G business expansion. On CBG front, OMCs have guaranteed off-take price of INR 46 per kg for a period of 5 years. And after the 5 years, this price will become the floor price for the next 5 years, and this is a very, very good sign, which now indicates a price visibility for over 10 years to the developers, which should help them to tie up their financials in a much, much better way. We see CBG business beginning to show traction and interest is both from both the SATAT and non-SATAT scheme players that includes multinationals from autos and FMC sectors as well. As part of commercialization of proprietary CBG technology, we are also setting our demonstration plant to showcase end-to-end capabilities to our prospective customers and to demonstrate performance of our technology on different feedstocks. Our brewery business continues to strengthen its position in the domestic market with the market share in excess of 80% for FY '20. We are experiencing enhanced interest levels from international markets in Africa and Southeast Asia by way of some firm inquiries as well. The critical process equipment and Skid's business continues to establish strong relationships with key MNC customers. We've just successfully completed hydro testing of the largest equipment ever made at Praj, for one of our major customers in the United States. Water and wastewater treatment business has been receiving healthy set of inquiries for ZLD systems, mainly from customers in specialty chemicals, in addition to marquee customers in metals and pharmaceutical segment. Recognizing need of our customers, we are further expanding our offerings by adding plant operation and maintenance service to our customers. Praj HiPurity business leverage strong customer relationship and performance have recorded to build and defend its market share. We are successfully maintaining healthy order inflow consistently over the last 4 quarters now. So as to leverage advances in digital technologies and create competitive advantage for our technology solutions, we've undertaken an ambitious digitization program at Praj to leverage the growing opportunities presented by advance of IoT and Big Data analytics. On the whole, we remain reasonably positive on an improved -- and an improved execution in quarter 4 and quarters going forward. We believe Praj is well-poised to capitalize on the emerging opportunities, both in domestic and global markets where we leverage our technology leadership, deep customer relationship and a very strong record. I now request Sachin to give his comments on the financials.

Thank you Shishir. The consolidated income from operations stood at INR 300 crore in Q3 FY '19. PBT was INR 24.33 crore. Profit after tax stood at INR 20.67 crore as compared to last corresponding quarter of INR 22.43 crore. For these nine months, income from operations was INR 806.08 crore, PBT stood at INR 51.46 crore, PAT at INR 45.57 crore, showing considerable growth over the corresponding period of the last year. Export revenues accounted for 30%, which is equivalent to INR 89 crore for this quarter as against last corresponding quarter of INR 105 crore. EBITDA excluding other income, INR 24.99 crore for the quarter, which is at 8.3% against the corresponding last quarter of 8.4%, and 9 months period, it is 6.2% against previous corresponding period of 6.3%. The effective tax rate has seen a reduction of almost 5% during the quarter because of decrease in the MAT rate from 21.54% to 17.47% and deferred tax asset recognition on lease liability. And for this year, by end of March, we see that it should stabilize at an average rate of MAT. Of the total revenue for the quarter 53% is from bioenergy, 34% from engineering and 13% is from PHS business. The order intake during the quarter was INR 327 crores, with 84% from domestic market. Of the total order intake, 57% came from bioenergy, 31% from engineering and balance 12% from PHS business. The order backlog as of December 31, 2019, stands at INR 1,157 crore. The cash and cash equivalent position as of 31st December is INR 300 crores. I now conclude my remarks, and I would like to thank you all for joining us on this call. We would now be happy to discuss any questions, comments or suggestions you may have. With this, I will conclude my remarks. Thank you for joining.

[Operator Instructions] We take the first question from the line of Manoj Bahety from Carnelian Capital.

In fact, my first question is like if I look at the kind of regulatory changes or the kind of a push which is coming from government for ethanol blending and if even if we see the economics like sugar vis-à-vis ethanol and also it gives like complete flexibility to sugar companies like between sugar and the ethanol. So, with this kind of economics, just wanted to understand like what is stopping from order flow, like what is stopping from the guys to have like more ethanol instead of sugar, and why it is not translating into order flow? Is liquidity the only reason? Because like there are other sectors also wherever there are attractive opportunities, there liquidity is flowing, financial closure is happening, why it is not happening in this segment?

Thank you. I think that's a very, very good question. You're right that the policy environment is extremely conducive. There are continued signals that there's a demand and the supply and there's a big gap between the demand and supply. So the natural question has -- and the business is very profitable, so it's very natural that one would ask the question saying, so, "Hey, so why not investments flowing in the direction?" And I think that as I was mentioning that there was a -- there is a requirement of liquidity to put up the projects and get the loan sanctioned, et cetera. And the companies that are building these projects are obviously evaluating the different risks that they would perceive for the project. In our dialogue, what we have understood is that companies -- the prospective companies and many of them have been in this business already, so they are not only looking at expansion. I think what people are looking at is the multi feedstock strategy that has now been introduced and allowed by the government to be used in terms of juice versus molasses B or molasses C. I think the industry is looking for some kind of better understanding of the pricing mechanism that moves forward in terms of its stability of how this will be viewed as we move forward in the year, although the current year pricing are very clearly visible. I think the banks are also evaluating their own exposure to the sector and how they will go about laying the financial outlay for the programs, which is, as I said, it's sort of stretching the decision cycle little bit. We're saying that what would have probably taken an earlier time frame, 3 to 6 months for a decision, it's probably now taking more like 9, 12 months kind of a decision making. So there are lots of dialogues that are currently on in terms of capacity bill. It's just that they are taking little longer to close out on different fronts of pricing and risks and funding, et cetera, which is stretching the decision-making cycle. I don't see any other issue there at all.

Okay. So if I understood it rightly, is like the requirement from the financial institutions who like who will be willing to do financial closure, is it something like certainty in terms of long-term pricing? Like, just wanted to understand how it is working right now? It is like a short-term pricing, which is an assurance from the government? Or -- and if it is short term, for what duration this kind of pricing is assured from the government?

No. I think what's important to understand is, if the risk perception of the capital being deployed or the person who is disbursing the capital or sanctioning it. And they are, with increased awareness in the environment, I think the questions that are being pushed -- or posed are to better understand the risk. So if the pricing changes then what happens? If the feedstock changes, then what happens? The industry also witnessed an unusual year of drought and monsoon both playing out together to create a different kind of a supply situation on the feedstock side. We are already clearly witnessing this from the fact that for a tendered quantity of 511 crore liters, we've only got something like 167 liters (sic) [ 167 crore liters ] tendered already. So there's a second tender out just now for another 250-plus crore of liters. So the point that I'm trying to make is that there are different risks for which I think a higher degree of mitigation is being sought and this is what is stretching out the decision-making cycle.

Okay, okay, okay. And my second question is like if you can give some more color on CBG front, like in terms of visibility of order flow and how you are seeing like short-term and medium-term opportunity in this space? And how, as a company, you are preparing to grab this opportunity?

All right. So let me start out on a little higher universe. So 5,000 plants proposed to be set up, 500 EOIs already issued -- received and LOIs issued by the oil marketing companies for setting up these projects. So, that's the universe that is out there in terms of prospective people wanting to put up these plants. On the other hand, there were a couple of issues on the policy side that needed resolution. I think one of the big steps that has come forward is, is the price visibility now for 10 years, and I think that's been a fantastic step forward to improve both the risk perception of the project as well as viability of the project. So I think there's a 2 -- that's a very positive step in the direction. We also see a whole universe now developing around, my first point that I'd mentioned on, climate change. So, several multinationals are now beginning to think in terms of how they will go about mitigating the risk of -- or reducing the carbon footprint and CBG is a very, very constructive and positive way of making that goal achieve. So they are opening up a very new segment, especially in automotive, paint shops and applications like that. So we see good traction building up on CBG, and we expect that as we move forward, we'll start to see good news flowing in from that front as well.

Okay. Okay. And lastly, in terms of price visibility for 10 years, can you elaborate on this? I think you have covered in the opening remarks, but like what was there earlier and what is there now in terms of price visibility?

So earlier when the scheme was announced, the price visibility was for 3 years from the date of announcement, 1 October 2018. So up to 21 September, the prices were declared at INR 46 a kilo for CBG. Now, by the way the whole process went and by the time people finalized, there was hardly any time left for one to recognize or realize the INR 46 per kg because of the total cycle involved in terms of designing, defining, setting up, selection, operation of the project, there was hardly any time left for October 21. So obviously there were questions around saying, "So hey, what happens post 21, and that was an uncertainty hanging on the feasibility of the project, and therefore, funding. Recognizing that all marketing companies have now announced that up to 31 March 2014. The price will be at INR 46 a kilo -- 2014 and -- 2024, sorry. My mistake, sorry for that. 2024, March 2024 and then beyond that period for next 5 years that is up to March of 2029 INR 46 will become the floor price. That means, no price will be lower than INR 46. Whatever prices happen beyond that period will be above INR 46. So for the next up to March 2024, INR 46, beyond that minimum INR 46, that is the policy that has now been announced. So that clearly gives a very good visibility on the pricing of these projects.

Next question is from the line of Vikram Suryavanshi from PhillipCapital.

Sir, if you look at our export share used to be like almost 50% and then now we have come to revenue around 30%. But if you look at our order book it is around now 17%. So how do we see that scenario in terms of export out of getting? And it will be great if you can update on our JV with Gevo. How things are shaping up for aviation fuel? And this another order which was supposed to be for working with the sugar companies for 2G order in USA?

Okay. So several set of questions, Vikram, in that one question. Thank you so much. Let me start from the end -- last question that you asked by answering that first. So, the dialogue, in USA the Omega Energy Project that we announced is progressing on its required course. And right now, we are expecting a visit from the key developer -- the lead developer of the project to our demonstration plant during this month to build the dialogue further. There's already been a lot of dialogue between them and the oil company and the sugar companies from whom the bagasse will be sourced. So that has progressed very well, and we expect that, that will continue on its course. And we expect that over the next 6 months, we should see positive development in that project. Coming to the aviation fuel part of it with Gevo. We have had a dialogue with the Defence Ministry, Indian Air Force and they have asked for a sample to be submitted. That has been given -- brought in and given to them, and we expect the final test results in terms of their acceptability, especially for the eastern part of the fleet as it is called be available by end of February and then we can take the next steps on that one. We are also progressing well on our relationship with Gevo. So that was the question around Gevo. Then coming to the export part of the order book and execution, yes you are right that we have seen a higher traction in India on the back of all the policy announcement that came. So we saw positive -- or much rapid -- much more faster development on the domestic inquiries as compared to export inquiries. But that does not mean that anything is going low on the inquiries of export front. There was a bit of a change in the market space that Europe because of the change in policy. The 1G potential in Europe has sort of gone down, whereas the 2G is taking a little time to build up. So there's a bit of a time gap, if I can use that word, that got created. What also happened positively though for us is our tie up with Dedini in Brazil, and we are already receiving some very encouraging leads in the market and we are very sure that we can start moving through this calendar year, we will see very positive development on that front and in Latin America as well.

Okay, sir. And sir, just to -- I would like to have your views as a methanol as a biofuel and how competitive it is compared to other biofuels? Or how it is manufactured or if you want to have -- just wanted to get your views on that aspects of methanol as a biofuel?

So we are working on development of methanol on the bio route. As of today, what's available is not on the bio route, but we are working on a program now to develop it on the bio route. And maybe on a separate meeting we can discuss the merits or demerits. It's obviously where it is available, but there's a whole yard to be covered on development on the biological route for methanol. On the coal route, it doesn't solve the environment problem at all.

We take the next question from the line of Bharath Subramanian from Sundaram Mutual Fund.

So just on the ethanol projects in India, you said the financial closures are a bit delayed. In terms of some of the measures, in terms of waiving of environmental clearance for distillery expansion, does it -- has it seen any impact in terms of intent or project proposals from a market perspective? Have you got any feeders on that side? And second on CBG, in terms of you gave an opportunity landscape in terms of what could be the potential size, but in terms of our scope and that what would be the scope of Praj, say, in a project, if you can give some examples on that, that would be helpful, sir?

So Bharath, very clearly, on the ethanol side of your question, the environment clearance is a very, very important step before any project developer or a customer would commit themselves to any financial numbers. But without that no approvals on the financing side will happen. So this step is a very -- and this was a time-taking process to get the environmental clearance. And I think these 2 steps that are taken to declare CBG into the white zone and to allow molasses B-based expansion of ethanol without any additional clearances. I think these 2 will definitely expedite the cycle of finalization. So from that perspective, it will shrink the time of projects going on ground. So that's 1. Number 2, we're also seen some good traction build in our inquiry base now over the last couple of months as we see them flowing in, and we expect that the pace of finalization will start to pick up with the aid of these measures that have taken place as well. On the CBG front, as I was mentioning, the overall universe for governments program on such a scheme is 5,000 plants to be put up over the next 5 years. They also have now issued 500 LOIs, which means 500 people have expressed interest to set up these plants. What has still not happened is to see these 500 translate into real projects on ground yet. And in fact the -- I think only a couple of them and we are building the first big real Greenfield kind of a project on this one in Uttar Pradesh that I'd mentioned in our last call as well. So that's what is happening. Now each plant the scope depends on what feedstock, what are the conditions of the site to what state it is co-located, et cetera, et cetera. But each of these could vary in value between INR 20 crore to INR 50 crore depending on these variable for us to build these plants.

We take the next question from the line of Venkat Subramanian from Organic Capital.

In your opening remark, you talked about inquiries coming from Europe. Can you give us some color in terms of the quality of orders and what quantum's it can be? Because that, that can probably change our outlook and landscape altogether.

So Venkat. Thank you for your comment and good wishes of changing landscape. Yes, you are right. So the inquiry that I was mentioning, so Europe was traditionally our first-generation ethanol market and because of the change in the policy directive there now, all the future plants will come up for the second-generation technology. By very nature, the second-generation plants have a longer development cycle because you have to tie up the supply chain and many other dimensions. The technology is relatively new to the world. So the project finalization cycles are on a different timeline compared to say, a 1G project. And we are now seeing that there are increased traction in inquiries inflow on 2G front from Europe so. So we are -- so if I had like couple of inquiries to work with to start with and then couple got added and now we've seen a significant number more getting added to that landscape. So that is what is happening now.

So, when you say it's longer in terms of possible closures, et cetera, what time frame we are thinking in terms of?

So, typically 2G projects are looking from the time of let's say I get an idea in my head to the time that sort of concept in my head to actually starting to produce out of a 2G cycle, then we are looking at a pretty long cycle of maybe around 48 months from the day I get the production, but before that -- so 12 months before that plant has to start and -- so we are looking at a cycle between -- from our perspective between -- anything between 2 to 3 years of a developmental cycle through which -- go through different.

That is for us to get a possible LOI or an order inflow from starting today?

Yes. That's correct. Now this is also a stage-wise process. So you have to do a detailed feasibility report, you have to do a basic engineering package, you get the funding. So it's a very different process compared to setting a 1G ethanol plant. Because the capital outlays are very different, the processes is -- the supply chains are different. So this is a much more detailed and entailed work to be done for setting up a 2G plant compared to a 1G plant.

Next question is from the line of Saket Kapoor from Kapoor & Company.

Sir, firstly, sir, if you could dwell the reasons why, sir, on the consol level, there is a dip in profits?

You are comparing with the last year's quarter?

I'm comparing 9 months, sir. I'm comparing 9 months figures. Sir, if you take 9 months as a totality, we have -- we posted a revenue from operation of INR 698 crore on a standalone and I think so the INR 800 crore as a consol numbers, but the profit goes -- the PBT level goes down by INR 7 crore to INR 8 crore.

Yes, so, when we were discussing about the composition of the sales, which has definitely contributed to the dip in the contribution level, mainly on account of lower exports as compared to the domestic sales. So we did more on the domestic side as compared to the exports. Exports gives us the higher margin as compared to the domestic. That's the main component for the lowering of a contribution.

No, sir. What I was asking was when we take your consol number, there is a dip in profit.

Consolidated number of 31 December '19, which is -- yes, that's what I'm explaining, as of 31 December '18, consol profit was INR 22.43 crore and the current 9 months is INR 20.67 crore. So I'm explaining this drop only that because of the composition.

Shall I repeat my question again?

Are you asking about consolidated results or standalone one?

Sir, I'm deriving the difference between the consol PBT and the standalone PBT. If we take the consol PBT for 9 months, it is INR 51.46 crore, whereas the PBT for standalone stands at INR 58.5 crore, so there is a negative, to the sense of I think to INR 7 crore. So I was just trying to make -- what result into it, sir?

Okay. You are talking about the composition. Because -- see, this is having the consolidation of our execution companies and other subsidiaries based out of the country. So all the profit and loss on a consolidated basis is reflecting this number. So on the execution side, there was no profit on those sides. That's the reason why this consolidated number is lower than the standalone number.

Right. Sir, currently, sir, as the Government has mandated for ethanol production directly from sugarcane juice, so, sir, what kind of CapEx are needed, or modifications are needed in the existing distilleries that would make it possible for them to opt for going for ethanol directly from sugarcane juice?

So on sugarcane juice, what you have to understand is that -- as you know, sugar crushing season will last for maybe 90 days, 110 days, 120 days that kind of period, maybe in some cases 150 days. So for -- you need to store this juice for the balance part of the year, right? And depending on the distillery capacity and configuration that you have, you can choose to produce part on molasses, part on juice. So there are different combinations that come to work. But clearly, if you want to go on juice for the whole year and only on juice then customer needs to create a possibility for storing this juice for an extended period of time. And you can't just store it in a tank. You need -- there are certain conditions to be met otherwise, the sugar inversion happens, and you lose the potency and potential for conversion to ethanol. So there's a whole technology at play in preservation of this juice. You have to concentrate it to higher level and then preserve it and then bring it back to the process. So all those actions are required to be taken by them. But the more important thing that is for any producer to decide what's going to the mix for his -- is he going to produce on juice only during the crushing season and what does he do with the post crushing season or he wants to produce juice right through. So there are several questions to be answered before we can arrive at a number on that.

Sir, in that sense just to have a layman understanding, it is then advisable to go through this molasses route only and then doing the ethanol so in that framework no further CapEx is needed, no storage comes into play and the end result for production of ethanol is also met with allocation to the chemical industry in the form of molasses also? Is it a win-win situation for sugar producer? Or should the other way around would be better? Because if they do directly from the sugarcane juice, then sugar production is also going to fall, so just wanted to understand, sir...

Saket, you actually are very correct on that one. If you go from direct only -- let us say company decides that instead of -- from sugarcane juice to sugar and molasses and then molasses to ethanol, I'll take a route of juice directly to ethanol, and let's just compare these 2 cases, right? And in which case, very simply speaking, if they choose to go from juice to ethanol, obviously there will be no sugar production and every mill has to decide its own strategy on how much for sugar production, how much for ethanol, what mix they want. And I think in the previous question also this was asked saying, if this flexibility is now being given, how is the industry reacting to it? So I think every producer of ethanol and/or sugar has to find their own golden mean. The technology is there to help them make that decision. By itself, if you just -- you have to look at your capacity of the distillery that you have set up, the process that you have got, the sugar production that you want to do, what kind of cash flows that you are willing to manage. So there are several questions that need to be answered before one can decide this or that.

Correct, sir. But optimally -- to conclude, optimally the distilleries which are currently producing ethanol through this molasses route, they need to do some configuration so that they can directly consume it, apart from the storage part any more modification or CapEx that is needed to be done at the distillery level?

Yes, yes. You need to...

And what kind of ballpark figures, sir, can you give and what kind of business opportunity are we going to avail if a distillery, say, 200 kilo liters per day, wants to convert from directly sugarcane juice to ethanol? [Foreign Language]

I'm sorry, but the engineer in me does not allow me to give you the answer because there are, what I would call as, variables that need to be answered. Just to help you understand this. So when you go from molasses C conversion, let us say you produce 1 unit per unit ethanol of molasses, if you put 1 unit of juice, then you will not produce 1 unit of ethanol, you'd probably end up doing something like 6 to 7 units of ethanol. So one has to find a balance between -- because you must have distillation capacity for that. How much juice? That's what I'm saying define the mix of how much juice you'll produce, at what moment in time, what molasses. So it's not a very easy question to answer. This needs some detailed discussion before one can arrive...

And it needs a lot of CapEx also, sir. If it is not easy then one can conclude [Foreign Language] if they want to move from that...

I would not say lot of CapEx, I would say this is -- the whole thing gets decided on how viable or feasible it is. And I think the technology today is available that makes it very viable to do it.

Next question is from the line of Sagar Kapadia from Anvil Share & Stock.

Sir, in this quarter, how many orders have we received for this CBG plant?

No. There has not been any CBG order in quarter 3 of financial year that went by. This policy that I was talking to -- but on the pricing front has just come about now. So that was a 1 big problem to be solved for gas because you know the gas cannot be stored. So, that policy was required to be out there, and it is now out there.

So probably in the March quarter, we do expect some orders to flow in from the CBG side?

Yes. Sure. Sure, we do.

We take the next question from Levin Shah from ValueQuest Capital.

Sir, firstly, What are the orders that we have received for 1G in this quarter? Is there any order that we have received from domestic 1G in this quarter?

Oh, yes. Many, many orders for 1G. 75% order book is 1G -- 67% of our order booking is 1G.