Praj Industries Limited (PRAJIND) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to the Praj Industries Limited Q1 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you and over to you, sir.

Thank you and good afternoon, everyone. A very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of Praj Industries Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call to discuss the first quarter of financial year 2026 performance. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Let me now introduce you to the management participating with us in today's earnings call and hand it over to them for opening remarks. We have with us Mr. Ashish Gaikwad, Managing Director; and Mr. Sachin Raole, Chief Financial Officer and Director of Resources. Without any further delay, I request Mr. Sachin Raole to start with his opening remarks. Thank you and over to you, sir.

Thank you, Anuj. Good day, everyone. I welcome you to Praj Industries Earning Call for Quarter 1 FY '26. Trust all of you had the opportunity to go through our results for the quarter ended 30th June 2025. The consolidated income from operations stood at INR 6.4 billion in Q1 FY '26 as compared to INR 6.99 billion in Q1 FY '25. PBT before exceptional items for the quarter stood at INR 96.09 million as compared to INR 788.8 million in the corresponding period of the last year. Profit after tax stood at INR 53.4 million in Q1 FY '26 as compared to INR 841 million in Q1 FY '25. Of the total revenue, 60% is from bioenergy, 28% from the engineering and 12% is from PHS business. Export revenues accounted for 39% of Q1 FY '26. The order intake during the quarter was INR 7.95 billion with 55% from the domestic market. Of the total market intake, 80% came from bioenergy, 12% from engineering and balance 8% from PHS business. The order backlog as of 30th June 2025 is at INR 4.45 billion comprising 62% of domestic orders. Cash in hand as on June 30 stood at INR 4.5 billion. Geopolitical scenario and uncertainty around U.S. tariff has slowed down the CapEx-related decisions impacting the order booking. Customers in domestic market are facing liquidity challenges resulting in delayed and extended project execution. Profit mainly impacted by drop in volume, increased site-related expenses because of delayed execution cycles and GenX business expenses with no corresponding revenues, it has also affected the absorption of fixed cost. It is heartening to note that there are no loss of orders or the loss of market share for Praj. Effective tax rate for Q1 FY '26 in consolidated financials is 44% because the deferred tax asset on the losses of Praj GenX is at lower rate as compared to the rate of tax for Praj Industries. In yesterday's AGM, shareholders have approved the payment of final dividend of 300% per share. With this, I now hand over to Ashish for his comments on the business performance and other updates.

Thank you, Sachin. Good day, everyone. Yesterday, on the occasion of World Biofuels Day, Praj introduced BioVerse. It's a movement to promote innovation, collaboration and additional application to further develop the Indian and international bioeconomy. I would like to go to the business updates now. First, on the domestic bioenergy business. As you know, India has achieved its EBP20 target ahead of its scheduled target of 2025-end. The current installed capacity of ethanol production in the country now exceeds EBP20 requirement. The discussions are ongoing regarding additional blending mandates. The industry is anticipating a firm announcement on the same. The excess installed capacity has led to temporary slowdown in conversion of new inquiries into firm orders and new greenfield ethanol plants. We believe this short-term situation will improve once the government announces its plans to increase in ethanol blending. Introduction of flex fuel vehicles and engines will also give new impetus. As mentioned by Sachin, despite slow orders, our market share at Praj is intact. Government of Maharashtra has made an announcement of Vikasit Maharashtra 2047. This is a positive development. It talks of bioenergy policy that promises INR 28,000 crores in investments over the next 5 years in various products derived from sugarcane. While we are witnessing slowness in inquiries of greenfield plants, we are focusing on offering plant modifications as well as solutions as core products such as distillers corn oil or DCO, rice protein, et cetera. These are gaining increasing interest from the existing ethanol producers. On the existing projects and on the execution front, liquidity challenges are resulting in extended execution cycles. In few cases, we are witnessing delays in site preparedness and precommissioning readiness due to the lack of funds. Moving on to the international bioenergy business. Despite good inquiry basket from America, there are some delays in order bookings. Some of these are due to the tariff-related developments. There is now a clarity on 45Z policy, which is a tax credit policy, contained in the new big beautiful bill. It is an encouraging development for us. However, the uncertainty regarding tariffs may act as a headwind. CBG business: there is a healthy pipeline of inquiries for projects in CBG. The success of our press mud-based CBG plant is well accepted by the customers. New opportunities based on Napier grass as the feedstock are also developing. The decision-making is delayed in some cases due to financing challenges. We have a unique offering of combined CBG and bio-bitumen plant. This unique offering from Praj improves the project ROI and payback period. We have initiated discussions with customers regarding the addition of bio-bitumen modules. Since it can significantly improve the viability of the CBG plants, we are witnessing increasing traction. As mentioned in the last quarter, we have signed a term sheet with BPCL for developing 10 CBG projects. We are in the process of finalizing the JV agreement. Services business: this business is continuing its journey on a healthy growth path with a good performance. Apart from our performance enhancer solutions, we also have a healthy inquiry pipeline for biogenic CO2 capture solutions. On the SAF business front, we have received an order for detailed engineering for commercial-sized SAF plant in the U.S.A. This is for detailed FEED engineering package. This is going to help us in capability development in ethanol to jet projects. On the policy front, UP government is expected to come up with Sustainable Aviation Fuel Manufacturing Promotion Policy 2025. This is aiming to establish the state as a leading hub for SAF production in India. In 1 more SAF-related development, Praj has entered into a partnership with IATA and ISMA to advance SAF Carbon Assessment and Certification in India. This collaboration aims to conduct a comprehensive life cycle assessment or LCA of SAF produced from Indian sugarcane feedstock using the ethanol to jet pathway. The goal is to determine an accurate carbon intensity number for SAF and establish a certification methodology suited to the Indian context aligning with the international standards. Moving on to the engineering businesses. On GenX front, tariff uncertainty and the reduced prioritization of energy transition projects has affected order booking. Several projects are either delayed or on hold. The fixed cost at GenX facility coupled with limited revenue activity has negatively impacted our bottom line. We are closely monitoring developments on the U.S. tariff front. We expect to be in a better position to comment on its long-term impact on the energy transition and the climate actions business by next quarter. Expanding application of modularization across industries and geographies is going to be the driver for capacity utilization of our GenX facility. On PHS front, we have a good pipeline for our solutions for segments of high capacity fermenters, complex injectables and blood plasma. We are also exploring opportunities in emerging sectors like batteries, solar cells and semiconductors. On bioplastics front, we have now started discussing our offerings with potential customers and the inquiry pipeline is building up. Overall, despite challenging business environment; our core fundamentals are strong, our growth vectors are intact and therefore, we remain committed to our long-term growth vision. I now conclude my remarks and I would like to thank all of you for joining our call today. We would now be ready to discuss any questions, comments or suggestions that you may have. Thank you.

[Operator Instructions] The first question is from the line of Mohit Kumar from ICICI Securities.

My question is on the domestic execution. It's pretty slow in the current quarter. I think it's around INR 3.9 billion or INR 390 crores versus INR 530 crore in the base quarter. Do you think things will improve in the next couple of quarters or it's going to be a very, very delayed recovery? And is the lack of blending mandate also impacting the execution?

Sorry, Mohit, it was little difficult to understand your question. Are you basically interested in understanding what is the scenario in the domestic ethanol market?

All right, Mohit. So certainly we need some impetus in the current domestic market as we mentioned. We would like to see a new additional blending mandate, which is probably being discussed now and of course that will give us more traction as far as the new capacities for the ethanol plants is concerned. Apart from that, we are also looking at other opportunities that can come up. One of them I talked about recently is on SAF, the sustainable aviation fuel, and the pathway that takes ethanol to SAF. So that's the other set of opportunities that we would be looking at. And the third one is also an opportunity that we are excited about, which is diesel. Today, diesel is not being blended by any alcohol and if we get that mandate for blending in diesel as well, then that will give us a pathway to increase the alcohol production in India. All of these will positively impact our order bookings. They probably may not happen in the very immediate future or this quarter. But over a period of time, certainly this is a positive trend.

And Mohit, if I may add to your question related to the prospects for ethanol in the domestic market. There are 2 ways of looking at this entire scenario. One is completely based on what is going to happen on the mandates. If there are mandates, then what Ashish was describing is going to happen. Rather there are couple of more things which have happened. Yesterday, on the World Biofuel Day witnessing unveiling of ethanol-based mobile gen sets and next gen flex fuel vehicles for both 2-wheeler and 4-wheeler. It will also facilitate additional demand for ethanol in near future. So that's 1 element based on what is going to happen to the ethanol demand. Another element from our offerings point of view, let's assume there is no additional blending mandates coming up in the near future. We have solutions of advanced technology and customized services for our customers for enhancing their capacities or their yields or their performances, which is very healthy business; might not be top line accretive, but will add to our bottom line. And in addition to that, we have started our services business in a small way in the last couple of years, but it is taking a very big shift now especially providing the performance enhancers to our customers, providing the services in addition to operations and maintenance. So there is a big bouquet or big basket of services, which are also getting provided to our customers. So that's an additional element for the domestic market, which will add on irrespective of whatever is going to happen to our blending mandates.

Understood, sir. My second question on CBG. Of course you're executing a very large order of CBG of around INR 500 crore. How has been the experience and how do you see the finalization of new tenders in the near term?

Okay. So Mohit, on CBG, I think the industry has been learning over the last few years and that learning has now at least for Praj resulted into doing these projects with much more efficiency and much more standardization. Especially for the press mud, which is a feedstock for CBG, we now have 3 successful projects which are producing CBG at capacity and that is certainly a good news. There are more inquiries coming up. Especially there is an interest in a feedstock like Napier grass and we are working on our proposals and working with the customers to see how we can take a fair share of that market as well. Overall, it is still a developing market, CBG, and it will take some time for it to become extremely stable and we are engaged with that market so we'll keep you posted.

[Operator Instructions] The next question is from the line of Atul Tiwari from JPMorgan.

Sir, my question is on order inflow. So if the extension of this blending mandate had not come beyond 20% for this year, can we still maintain about INR 800-odd crores of quarterly order inflow run rate or do you expect it to slip further from here?

Yes. Good question, Atul. You have seen that our current order booking is in that range what you mentioned. We of course aim higher based on the inquiry pipeline that we see, but the decisions can sometimes get a bit delayed. So that's what I can say at this point in time that it is fair to assume that type of a run rate.

So Atul, just to add on. While answering a question of Mohit, I was very specifically saying that if there is no additional blending mandates, maybe our top line growth will not be there to that extent. Indirectly that means there will not be a run rate of domestic order book in that zone which we are discussing right now because naturally there will be very few greenfield orders coming up in the picture in that case. But there will be other opportunities which are available to us in the form of advanced technologies, which may not add on to our top line, but that will add on to our bottom line. So you may not see the numbers on top line, but you will see a number on bottom line.

Okay, sir. And just on margins, in this quarter we have seen at EBITDA level 4.9%. And as far as I can see, it is probably the lowest over past at least 15, 16 quarters. So in this kind of environment, I mean assuming that the mandate is not extended beyond 20% and the tariff rate uncertainties continue for some more time, is this the new normal or the new normal is more like 8%, 9% or even the double digit?

So from the margin point of view, yes, you are right. This quarter happens to be the lowest one mainly on 2 accounts. There will be minor couple of more, but major 2. We have seen a drop in top line by almost INR 220 crores as compared to March quarter, which has contributed heavily on not having the margins because the fixed cost to that extent are not getting recovered; one. Two, the subsidiary of our Phoenix facility; which is completely operational, completely functioning, but not correspondingly generating revenue at this point of time. That is second one. And third one in the other expenses, we have seen some kind of spike in the site-related expenses because of couple of sites where the work was continuing. We had some challenges on getting the labor for those particular sites, which actually added into our cost. So that's the another reason. Now whether this is a new normal or new normal is going to be different. According to us, yes, new normal is going to be completely different. This is like an aberration in this quarter, which we have seen that top line dropping to this extent, cost going up to whatever extent which I mentioned. We are not expecting this situation to continue definitely. Some things might continue till quarter 2. But from quarter 3, from H2 onwards, we are not expecting this situation to continue. So the new normal, which you are expecting that can we be in a little larger single-digit EBITDA margin, I think that's what we will be looking at going forward.

The next question is from the line of Sandip Sabharwal from ASK Investments.

So I've been tracking the company for I think almost 25 years. In last few years there have been several growth opportunities that the company has talked of, which were supposed to become big starting with the 2G ethanol to CBG to SAF to bioplastics, et cetera. But all of these largely seem to be remaining on paper and the company seems to be -- the company's shareholders seems to be working for the employees of the company like the salary to turnover ratio of your company is extraordinary. So you have set up a huge new facility, which is not executing anything. I haven't seen any company ever do such kind of thing. So what are shareholders supposed to expect from it? If you actually go and listen to your company transcripts when you were not there, conference call transcripts, last 4, 5 transcripts, this sort of decline in turnover and the challenges you are talking of, these were never talked of earlier.

Yes. So first of all, Mr. Sabharwal, you tracking our company for 25 years certainly is a good thing and I appreciate your comments that you have given. See, we are also a technology company. We develop a technology. We develop that in the field of the bioeconomy and it is a developing economy. So there are timelines which are extended. You talked about 2G, CBG, SAF and also bioplastics. 2G for example, our technology is now working as far as 2G plants are concerned and we are quite hopeful and we are working towards making our first 2G plant to be operational by end of the year. right? So I think that will build more confidence and there are 2 more projects that will follow, which are already being executed by Praj after this first one that I talked about. So there is a timeline we have in mind and technologies like 2G, we are quite excited to really make them successful. Bioplastics is the same thing. It is driven by a little bit of regulation side as well. But we believe that these trends are correct and these are difficult technologies to work with. Praj has always done difficult things. Even ethanol, when you see several years ago when Praj was talking about ethanol, nobody else was talking about it. And now you clearly see the success of the way ethanol is being blended in gasoline, ethanol to jet as the pathways, et cetera. So patient space and especially in the technology field that we operate in, there is a definite reward to the patience.

I don't think you covered the aspects which I talked of, but in any case. Now Mr. Chaudhari came out with a Vision 2030 where he said that you are looking to triple turnover and I think grow profits by some levels, which I don't remember now. And immediately after that, the growth of the company has started declining. So can you just comment on that? What are the assumptions which went into giving that Vision 2030 and how you're going to achieve it?

Certainly. So first of all, the vision that was set by our Chairman, Dr. Pramod Chaudhari, we still are very much committed to delivering that Vision 2030 and the reasons for that, Mr. Sabharwal, are pretty well known. The reasons for that are the core fundamentals are still the same. Our growth vectors, which I will quickly touch upon, are also intact. And therefore, while we see some of these hurdles like the tariff that we talked about or some of the slowing down of the domestic ethanol greenfield demand, et cetera, those will be overcome when we are looking at a 5-year period. The growth vectors that we are still quite gung ho about is number one, we believe that ethanol will have more pathways for sure, right, and I touched upon a couple of them already. We also believe that CBG as a market will develop and we will have a fair share in CBG. Number three, in our growth aspirations, we are internationalizing our offerings and our services and certainly we will have opportunities to grow it beyond the borders of India. Bioplastics also although it has moved slowly, but it will have the market opportunities developing. We can see those opportunities developing as well. So when you look at the growth vectors that we are talking about both in the biofuel side and the renewable chemicals and materials side, which is how our portfolio is balanced, those are going to take off. On the equipment and the modularization side, we have had this slowness, which Sachin mentioned, but we will explore new opportunities in new industries as well as new geographies so that we are able to better utilize our GenX facility. So I hope some of your points that you raised, which are valid points, some of those are addressed by my answer.

Just 1 observation because I've covered my 2 questions that your company when it was much smaller used to have margins in the late teens or early 20%s if you go back into history. And as it's become bigger and bigger, the margins have actually declined whereas it should work the other way. So I hope that you take initiatives under your guidance as you've just taken over to improve the profitability of the business.

Certainly, sir. I think profit remains one of the top focus areas for us. And as you mentioned, we will certainly take actions so that we can maintain a certain level of bottom line.

The next question is from the line of Shivkumar Prajapati from Ambit Investment Advisors.

Sir, my first question is in the presentation we have highlighted that the current capacity exceeds the EB like ethanol blending rate of 20%. So just want to understand is the capacity marginally extra or is it something that can serve up to 25% of blending rate? And if possible, would you be able to share the split between the greenfield versus the brownfield part of the ethanol order book? And what part of overall ethanol production is being made from sugarcane, rice or say any other grain?

Okay. So the composition of sugar and grain is more or less reaching to 50-50 kind of a proportion from the production point of view. Is the current capacity good enough to take care of 25%? Bigger question mark because there are so many regional imbalances still there and because of which this extra capacity looks like to be an extra capacity, but that extra capacity so-called will not be in a position to take care of additional blending mandates. Even if it happens to be 22%, 23%; we will immediately see the capacity requirement coming up from all the farmers. So we don't think that existing capacity will be able to take care of the additional requirement because there are multiple factors which plays a role in the installed capacity and the utilized capacity and that to region by region. So I don't think that we will see that kind of a scenario. What was the other component of your question?

Sir, order book split for ethanol between greenfield versus brownfield?

Yes. So right now we have majority of our order book is coming from greenfield. There is a small component of brownfield and then brownfield, what I was earlier referring to, from the advanced technology kind of a scenario where people are looking for capacity tweaking or shift off, adding the new line in their existing sugar line with the grain line or the yield improvement. So maybe 80% will be greenfield, 20% will be brownfield more or less.

Great, sir. And sir, my next question is on GenX. So far GenX has contributed around INR 20 crores of top line. So what's the overall expected contribution from this segment given there is no contribution in Q1 so far? And if you can provide any further updates on a new audit that has been conducted and any new long-term contract that has been signed because I think 8 audits have been done and 3 contracts has been signed. And if you could also highlight the order book that we'll be able to execute in the remaining 9 months of this year given we have INR 4,500 crores of outstanding order book.

Okay. So in the GenX, it's a very peculiar situation in GenX. Let me first tell you that we also added 2 more framework agreement during this quarter for the GenX, which are basically based on the new client's inspection of our facility and then signing this framework agreement. So that's a positive news on that front. On the overall opportunity which we are looking for from the GenX in the next year's point of view, we have more than INR 1,000 crores from proposals sitting with our customers where the decision-making is yet to happen. In the last call, we had mentioned that we are working on RFQs, that is request for quotations, which we had submitted to our customers as a firm commitment and those we are waiting for finalization. The trickiest part of this INR 1,000 crore is that almost 70% are for the U.S. customers and 30% are for non-U.S. customers. Rather majority of them for U.S. customers, but the export is supposedly to happen to U.S. to the extent of 70%, 30% is supposedly to happen to the European region. So that's the mix of what I can say firm commitments which are sitting in the market from our side. What we have to see how this current scenario towards the tariff and the uncertainty towards that, which is delaying the decision-making for my customers, how it is going to span out over a period of next couple of quarters. And that is what is going to decide to what extent out of this INR 1,000 crores is going to get materialized in the order booking for us. But that's 1 segment. Is that the only segment which we are concentrating on? That's not the case. Currently we are working on multiple other requirements of the requisitions from other regions too. If you look at GenX facility is not meant for a state of customers, it is actually a modularization facility which can cater to different industries too. So our focus is now looking at what has just recently happened in the month of August especially in the form of tariff. We are working out the alternatives to utilize this capacity. Maybe it will take a quarter more time for finalization of the entire new agents or new industries for us, but that's the work which is going on. It is little premature to answer the question whether what will be the order booking for GenX at this point of time for a simple reason because that additional 25% tariff is supposedly to kick in from 28th of August. So we'll have to wait and watch for some more time to find out how this entire scenario is going to play out for us.

Can you allow me this last question, please? So basically it is on export opportunities. We will exclude the U.S. tariff impact. I just want to understand currently U.S. contributes around less than 10% to our revenue. So post this approval of 45Z and 45Q announcement, what opportunity size do we look in U.S.? And in last year same quarter, you have highlighted that we had the opportunity to convert 20 plants to low carbon ethanol plant. So is there any update on this? And plus Brazil has also raised their mandates from 27% to 30% for gasoline whereas for biodiesel, it has been raised to 15% from 14%. So just want to understand how much does Brazil contributes to us and the opportunities after this mandate update from Brazil?

Okay. I will try to answer this question in detail in short because there is a long queue of questions which are standing in the line. So answer is very simple. For U.S. 45 Z, rather this was a mixed bag for us. 45Z is very positive development because it's an extension of the credits which are supposedly to be available from 2027 to 2029. That's 1 positive. Second thing, there is a complete clarity how the credit is to be given to all customers. So that's another positive for which we were waiting actually for last 2, 2.5 years. So these are very, very positive development on the low carbon ethanol and credits available under 45Z. Only the downside which is coming up in the form of this 25% plus 25% tariff at this point of time and that may delay some decision-making till we have a clarity. And what I answered in your earlier question that tariff is going to get some kind of a clarity in a clarity zone by end of August. I think that will tell us what is going to happen on the opportunity, which is available to us from the 45Z. Second question is related to Brazil. Brazil, we believe that there is an increased blending mandate which will definitely open an opportunity for us in the Brazil market. But again we'll have to see it is not only India and Brazil. There is U.S. again sitting between Brazil and U.S. What is going to happen from the export of ethanol from Brazil to U.S., which is a very common factor. What will be impact on their export because of their tariff because they are also in a very large kind of a tariff number and what kind of a capacity expansion they will be looking at. That's again we'll have to wait and watch. So there is a very miniscule -- not miniscule, maybe 10% to 15% kind of an impact, as you rightly said, from the direct U.S. business of ours. But there are many factors which will indirectly affect us because of this kind of a scenario. So we'll have to wait and watch on this front at least for a month till we see what happens on the balance 25% tariff.

The next question is from the line of Amit Anwani from PL Capital.

My question pertains to again the GenX facility where you did highlighted the peculiar situation, which is currently there. Just wanted to understand this is prior comments that we would be winning few orders and then the execution can happen in H2. So now is that situation there? And second thing is you talked about geographical diversification and some other diversification for GenX. So in the event of 50% tariff, are we also exploring the option that since this was 100% export-oriented unit, we'll be looking for domestic orders and which other industry diversification you're talking about, if you could explain in more detail about the GenX facility in the event of tariffs?

Okay. Maybe I can take that question, Amit. Thank you for your question. Yes, first of all, we are right now heavily sort of weighing on the U.S. tariffs and that's why it is important to say that the facility, which Sachin also mentioned earlier, is not just only for U.S.A. It is certified and getting certified for multiple geographies as well and the customer base that we are trying to target is in the U.S., but also outside of the U.S. Secondly, we would like to have a proper analysis of the other markets other than U.S. so that we will be able to in the next call give you more qualified answer based on our study that we are doing because naturally like us, many other companies are also struggling with these tariffs and we will have to find new geographies to start working on. The third thing that you wanted to know was about new industries. So firstly, we were focusing in the last couple of years when there was a lot of discussion around the energy transition and climate action type of projects. They were mostly green hydrogen or blue hydrogen or green ammonia oriented and somehow those projects are either slowed down or on hold. And therefore, the other industries which can be certainly looked at and the facility at GenX allows us to manufacture these modules or equipment for them will be the non-ETCA or nonenergy transition and non-climate action type of industries and those are the ones that we would be exploring. As far as the geographies are concerned, we are looking at the Latin American geography where we already have presence and of course Europe and the U.K. as well.

Second question, sir, you talked about the liquidity challenges faced by our customers and I'm assuming this is I think we're working with sugar and then grain-based plants. So why is this arising and are we sensing any impact on our working capital? Is this challenge for the current order book? And then what is the exposure of current order book where we are facing liquidity challenges from the customer? And second, since now 1G has kind of dried up, we at the peak used to get about INR 3,000 crore order intake typically from 1G. Are we expecting less than INR 1,000 crores since there's no orders and even the EBP further mandates will take a lot of time to materialize because of different challenges? So more clarity on these points.

So Amit, your first question related to working capital. I must accept and admit that, yes, there is some kind of a strain. We have seen to some extent accumulation of inventory and receivables in this quarter, but not alarming. Rather that was the main reason we took a decision that we don't want to keep on dispatching the goods to our customers without having cash on table. That's what actually has affected the revenue coming down from last quarter of INR 860 crores to INR 640 crores of this quarter. So that was a very conscious call which we took that if we are not seeing the money on the table, we will not continue with dispatches of the goods. Let's understand what this liquidity problem is. All our customers technically have sanctioned loans from their banks. It is not that they don't have money in that sense, but they have a sanctioned loan so these cases are completely backed by financing. The problem which my customers are facing is very simple. As you know, Amit, that we generally do 40% or maximum 50% of the entire greenfield project of any of our customer. So let's assume a project size is INR 100 crores and I'm doing a project of my component is INR 40 crores. The sanctioning of the loan is for the entire INR 100 crores. What bankers are saying that we would like to see the development happening on the project across the project and not only what Praj is doing. And if there are any delays in other vendors' work which they are supposed to carry on or the civil work which my customer is supposedly to take care of, is affecting the disbursement of loan from my customer and that's the reason why we are working with them. We are helping them to figure it out how they can move forward so that our components can also get dispatched. That is what has impacted from the execution cycle point of view what we had mentioned in our opening remarks that the execution cycle time is getting elongated because of that. But your question is right, we have seen some kind of a strain on the inventory getting piled up because of the dispatches were not happening. But that is a running inventory so we are not worried on inventory and we didn't allow our receivables to go completely out of our hands and we are working with our customers for recovery of that money too. Sorry, Amit, what was the second part of your question?

Sir, second part was since 1G orders we are clocking INR 3,000 crores FY '23, '24, '25 and since there will be absence of 1G orders, are we seeing order intake drastically declining on 1G front? Since you said there would be only service orders and I'm assuming that the non-ethanol based or non-EBP20-based order would be maybe 200 crores, 300 crores more liters.

Understood. So I may not be able to exactly give what that number is going to be, whether it is going to be less or more, but we are only right now talking about domestic ethanol. We are also working in other geographies. U.S. happens to be one of that, but other geographies which Ashish was mentioning especially in the Latin American market, rather this quarter we got a big order from the Latin American market in the international segment. So we are looking at not only domestic market, but we are looking at international market. Rather let me put it in another way. We are not only looking at U.S. and India, we are looking at other geographies where a lot is happening because those countries are looking for increased mandates also. So there is a possibility of I may not be able to comment whether it is going to be INR 3,000 crores or INR 2,000 crores or INR 4,000 crores, but there will not be a drop to that extent which you are looking at. I don't think that that is the scenario which we are aiming for. We will not be getting into that kind of a zone. Only the composition of my bioenergy basket may change. Yes, there might be some drop in domestic, but it will get compensated from some other basket. That's what we are looking at.

The next question is from the line of Shivani from Monarch Networth Capital Limited.

Most of my question has already taken up, but a quick one. One is that we have already talked about bioenergy and engineering, but can you give me a sense of what we are doing in the value-added area? When we can see revenue realization kicking in? So that's my first question. And second question is on diesel ethanol blending. So although we have been hearing about it for a long time, but what is the scenario on ground, if you can give us some sense?

Sure. Thanks, Shivani, for the question. The first one is on the value-added products or core products as we call them. What we are trying to do here as a technology company is to see an existing asset and to get more and more out of that asset. So therefore, we have add-on modules to an existing plant. For example if you have a corn-based ethanol plant, we can provide what is called as a distillers corn oil module, DCO as we call it, and therefore, the producer can get an extra income by producing that distillers corn oil which then gets into various applications; one of them being the input for biodiesel. Right? So also there is something called as rice protein. So if you have an ethanol plant that is working on rice as a feedstock, then we are able to extract a good quantity of protein from that, which is human edible and also something which is very beneficial. So there are multiple such add-ons that we are working on, which will help the existing assets and get more return from those assets. So that's the first part of your question. The second part of your question

Sir, if I can intervene. So can you also talk about the bio-bitumen and bioplastic bit because we have been doing CapEx for that and when we can see the revenue realization coming in for that? I understand most of it is also in the R&D phase, but some visibility or some commentary on that.

Sure, Shivani. So for bio-bitumen, bio-bitumen comes from our CBG plants right now and therefore, this is a unique offering that Praj is developing where we are able to give a combined offering of production of CBG as well as bio-bitumen, which enhances the return on investment and also reduces the payback period for the CBG plant investors. And this is something that we want to take to our customers as a differentiator from Praj. That also is a value-added product, the bio-bitumen and its use, as you know, is in the highways and the road building. We can blend up to 10% to 15% of bio-bitumen into the fossil-based bitumen. That also helps in reducing the import of bitumen in India. So it is a good product, it's a good offering and we would like to promote it more as we go forward. Bioplastics also, it was a developing technology in the past. But now we have a collaboration with Uhde, who is a part of thyssenkrupp company and with that collaboration between Praj and thyssenkrupp, we are able to give a complete end-to-end facility for what we call as PLA, which stands for polylactic acid and this is a polymer which is a bioplastic, which is biodegradable. It can be industrially sort of degraded or composting is possible and that is available right now as a technology. We are making firm offers to some of the customers as we speak and we are hopeful that this is a market that will develop going forward.

Sure. And on the next question on diesel, ethanol blending.

Sorry. On the diesel blending, an update you wanted. Yes, we also believe just like in case of gasoline or petrol, we are able to blend alcohol and that is a very successful program in India as you know. It is completed before its stipulated time period. We believe that diesel can also have a similar blending mandate. We can blend alcohol into diesel. And as you know, the diesel usage in India is 2.5x to 3x more compared to petrol. So that's another pathway for our type of technology, which produces alcohol that can give a blending into the diesel, which is a drop in fuel as we call it. There is no necessity to do anything else. It just blends into the diesel and therefore, it can be used without any problems in the diesel engines. The other thing I would like to mention here is while EVs can be popular electric vehicles, they are for short distances. But the diesel engines, which are used in trucks for long distance freight forwarding, you don't have a very good alternative for EV and therefore, blending such as, what I'm talking about, the alcohol blending in diesel can be really helpful for our nation to reduce pollution as well as to find an alternative to the fossil diesel.

The next question is from the line of Vikram Suryavanshi from PhillipCapital India.

Just wanted to check on this multi distillery opportunities for sugar companies given their crushing days have come down. How is that panning out? Should I ask another question or...?