Praj Industries Limited ($PRAJIND)

Ladies and gentlemen, good day, and welcome to Praj Industries Limited Q4 and FY '26 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you, ma'am.

Thank you. Good afternoon, everyone, and a very warm welcome to you all. My name is Purvangi Jain 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 conference call for the fourth quarter and financial year ended 2026. Before we begin, I would like to 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 belief as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decision. The purpose of today's earnings conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now let me introduce you to the management participating with us in today's earnings call and give it to them for their opening remarks. We have with us Mr. Ashish Gaikwad, Managing Director; and Mr. Sachin Raole, Joint Managing Director and Chief Financial Officer. Without any delay, I request Mr. Ashish Gaikwad to start with his opening remarks. Thank you, and over to you, sir.

Thank you. Good day, everyone. Welcome to Praj Industries earnings call for Q4 and FY '26. Trust all of you had the chance to go through the results of the quarter and full year ended 31st March 2026. Our performance in quarter 4 and full year of FY '26 was impacted by several external headwinds. Despite these headwinds, we continue to progress on our strategic vision, which is aligned to the global megatrends of energy security, energy transition and sustainability. The current West Asia situation has once again highlighted the need for energy security for every nation. This will give further impetus to the production and usage of biofuels across all agri-rich countries. India's biofuels ecosystem is aptly moving from just the policy intent to the commercial market readiness with coordinated actions across different stakeholders like the government of India, oil marketing companies, automobile manufacturers, technology providers and production companies. Amid global geopolitical uncertainties and recurring energy supply disruptions, India is taking progressive and proactive steps to strengthen our energy security through higher bioenergy usage in transportation fuels. The Bureau of Indian Standards has now notified fuel specifications for E22, E25, E27 and E30 petrol blends in addition to the E85 and E100, building upon India's successful E20 program. This notification sends a clear preparatory signal to all the players in the ecosystem to be ready for higher ethanol blends and flex fuel vehicle adoption. Simultaneously, the government has shared a concrete road map of E85, E100 fuel infrastructure, that development with automotive manufacturers and OMCs. The rollout begins with 150 numbers of E85 and E100 retail outlets across Delhi, Mumbai, Pune and Nagpur within the next month. This will scale to 500 outlets across major metro regions, including Delhi NCR, Maharashtra, Bengaluru, Chennai, Kolkata and Hyderabad within the next 6 to 12 months, followed by a target of 5,000 E100 dispensing stations nationwide within 24 months. Automobile manufacturers are responding well to this policy direction with the development of multiple flex fuel vehicles as well as E100 vehicles, where commercial launches are also in the offing starting in June. Ethanol is increasingly emerging as a strategic molecule beyond transportation. Its applications are expanding into agricultural machinery and generator sets, reflecting the growing readiness of -- for diversified ethanol usage across sectors. Another major inflection point expected for ethanol usage is ethanol to jet adoption for SAF production. A draft policy on SAF is ready and the blending mandates are expected to come in 2027. Now coming to our Praj business updates. Our 1G domestic business continued to experience a slowdown in greenfield fuel ethanol projects. We believe this situation will improve after announcement of higher blending mandates. In the interim though, we experienced an increased demand for greenfield ENA plants. Praj has a clear technology edge for ENA or Extra Neutral Alcohol. We also see a growing demand for our brownfield solutions where customers are prioritizing operational efficiency improvements and value-added coproducts adding -- such as the distillers corn oil or DCO. During the quarter, we secured a good number of DCO orders and have a robust inquiry pipeline. Our fuel ethanol projects backlog execution front, the project execution cycle continues to get extended due to funding and other challenges. We had mentioned in our previous call that our technology for bio-isobutanol or Bio-IBA is ready for commercialization and scale up. We are expecting our first order in the current quarter of FY '27. As we know, the volume requirement for diesel blending is much bigger than petrol. The use of Bio-IBA in diesel blending is going to be a significant step in our nation's biofuels journey. In the international market, there are some positive developments. For example, the U.S. House has passed legislation that allows nationwide sales of gasoline or petrol with 15% ethanol blend. We are closely monitoring these developments and engaging with the customers since this will result in opportunities for Praj in Americas region. There are also positive announcements in countries such as Indonesia, Vietnam, Kenya, Panama, Argentina, Guatemala, Costa Rica and Bolivia for increasing share of biofuels in their energy mix. Praj has successfully implemented projects in these countries in the past, and we are engaged in these markets for business development. On CBG front, the capacity ramp-up of a few of our plants using napier grass and rice straw as mixed feedstock is underway. While there is a good inquiry pipeline for projects based on press mud and napier grass, there are some delays in order finalization. We are also looking at international opportunities in our CBG business based on our success in the Indian market. Amid rising crude prices, geopolitical tensions and supply disruptions in the Middle East, India's focus on compressed biogas is becoming strategically important. Honorable Finance Minister, Mrs. Nirmala Sitharaman, recently highlighted the concerns around 3fs, fuel, fertilizer and foreign exchange, reinforcing the need to reduce import dependence. In this context, CBG offers a strong domestic solution. Produced from agricultural residues and organic waste, CBG can reduce the dependence on imported fossil fuels while its core products, fermented organic manure or FOM and liquid fermented organic manure or LFOM can help lower reliance on chemical fertilizers import. Additionally, CBG can also be integrated into urban pipe natural gas networks to support domestic cooking energy needs. Maharashtra has recently approved its state CBG policy 2026 with an outlay of INR 500 crores aimed at accelerating waste to energy infrastructure, promoting circular economy models and expanding clean fuel production across the state. Our Lifecycle Services business is growing steadily with growing traction for our performance enhancer solutions as well as biogenic CO2 capture solutions. Our more than 1,000 plants using Praj technology in various parts of the world, including India and overseas, is a source of steady growth for our Lifecycle Services business. On the SAF front, we are completing the basic engineering order for one ethanol to SAF plant for our international customers. We are in discussions for the detailed engineering order for the same plant. Moving to engineering businesses. In quarter 4 FY '26, we are pursuing several opportunities. However, owing to uncertainties around raw materials cost and supply chain disruptions, we deferred the final negotiations. Some of these orders will now be reflected in FY '27. On the Praj GenX front, data center segment is coming up as a promising segment. We are in final discussions with one of our key customers for modularized solutions for the cooling systems for their international data centers. For our ZLD and PHS businesses, battery, semiconductors, solar panel manufacturing segment is opening up as new opportunity. We are pursuing opportunities where both businesses will offer joint solutions to these customers. We have closed one such order with a semiconductor company in the current quarter. Overall, we believe the external business environment is going to remain uncertain. However, our strong technology edge in bioenergy and advanced manufacturing capabilities in modularization will help us deliver improved performance in FY '27. With this, now I will hand over to Sachin for his comments on the financial performance. Thank you.

Thank you, Ashish. Good day, everyone. Let me take you through the financial highlights for the quarter and year ended March 31, '26. The consolidated income from operations stood at INR 8,445 million in Q4 FY '26 as compared to INR 8,598 million in Q4 '25. Profit before tax before exceptional items for the quarter stood at INR 15.4 million as compared to INR 582.5 million in the corresponding period last year. Profit after tax stood at INR 116 million in Q4 as compared to INR 398 million in Q4 of the last year. For the full year ended March 31, 2026, income from operations stood at INR 31,679 million as against INR 32,280 million in FY '25. PBT stood at INR 763 million as against INR 2,704 million in FY '25. PAT for '26 came in at INR 238 million as against INR 2,189 million in FY '25. Export revenues accounted for 36% for FY '26. Of the total revenue, 67% is from bioenergy, 22% from Engineering and 11% from PHS business. The order intake during the quarter was INR 6,580 million with 79% from domestic market and of the total order intake, 86% came from bioenergy, 2% from engineering and balance 12% from PHS business. The order backlog as of March '26 stood at INR 43,050 million, comprising 66% of domestic order with 78% from bioenergy, 16% from engineering and balance 5% from PHS. Cash in hand as on 31st March 2026 stood at INR 6.12 billion. The Board of Directors proposed a final dividend of INR 3.6 per equity share at the rate of 180% of the face value of INR 2 per equity share for the financial year ended 31st March 2026, which is subject to the approval of shareholders at the forthcoming Annual General Meeting. With this, I will conclude my remarks. Thank you for joining. We would now be happy to discuss any questions, comments or suggestions you may have.

[Operator Instructions] We take the first question from the line of Naveen from Emkay Trading Company.

[indiscernible]

I'm sorry to interrupt, Mr. Naveen, your audio is not very clear, sir. If you are connected to any headset, I would request you to please switch to your handset, sir, your audio is not very clear.

Is it better now?

Slightly better.

Not really.

Is it better now?

Okay. We will try to understand your question. Go ahead.

Yes. So I'm being invested from past 3 years and from past 3 years, I'm seeing a little bit underperformance in our margins and profits and other things. And even we are being an R&D company with all the innovations we are doing, why we are not able to maintain the margin and we are reducing the margin profits? Can you give some light on that?

Sure. Okay. Thanks for your question, Naveen. Yes, this is a question on several people's mind, I'm sure. So I will answer that for everybody. Firstly, as you know, Praj has had a good run when the EBP-20 program was launched and completed well ahead of its schedule. It's one of the most successful biofuels program in India. And that was the time when a lot of new greenfield plants for ethanol have come up and Praj has had a lion's share in terms of making those plants and constructing those plants. Since that time, the capacity that was required for blending the ethanol in petrol has been achieved. And so there is a reduction in the number of plants for ethanol as of now in the current steady state. However, as I mentioned in my opening remarks that there are new blending mandates, which are being talked about, and we expect that, that will have a positive impact on the new capacities to be looked at. The second thing I would say is during this time, the other business, which we have been working on is the Praj GenX business. And we have been investing into that business over the last 2.5, 3 years to make it ready for a large capacity to serve the requirements of equipment and modular plants worldwide. And because this is a large investment that takes time, there is a gestation period for the last 2.5 hours, that investment continued. We believe that during this period, we have been able to build some customer base who have approved these facilities, and we will be seeing the positive impact of that and the order books in the current year of FY '27. So yes, you are right. In the last 3 years, there was a stagnation and the profits were also affected because we were investing into Praj businesses. And now we should start seeing some uptick from FY '27 onwards.

We take the next question from the line of Aditya Mongia from Kotak Institutional Equities.

So the first question that I had was on 1G ethanol. I wanted to get a sense that for the year gone by, what would have been the level of ordering that you would have achieved in this aspect? And how does it compare to the last 3 years' average for you? Just trying to get a sense of how much the scale down has happened in that part of business?

Okay. I will give you the answer in terms of the qualitative analysis. So when you talk about 1G, it has multiple components, right? So it has greenfield projects and it has brownfield projects and it has services also that we provide to the customers. And so the amount of the greenfield projects certainly went down in FY '26 because of what I just now mentioned of the overcapacity. However, we do see multiple opportunities of smaller size for 2 things. One, which is for enhancing the operational efficiency of the existing plants, though the ticket size of those jobs can be smaller. But those are something where Praj technology and expertise comes into play. Second is our customers are encouraged to go for co-product production like the distillers corn oil for the corn-based plants. And inquiries for those and also the order books for those has also gone up. So while the greenfield has gone down, but some of these other opportunities in the 1G business have been steadily coming in. Of course, like I said, the ticket size of these jobs is smaller.

I just request if the company can start sharing specific numbers because it makes it easier then for analyst community to appreciate the business and what is changing here. But I'll leave that to the company. The second question that I had was more on the margin front. Could you give us a sense of how much of the quarterly numbers were impacted by out-of-turn price increases that had to be absorbed? And what is being done or at what pace should normalcy happen on this front and where can margins then land up?

Sorry, Aditya, you mentioned out of turn what?

In the sense that the raw material prices that have gone up in recent times, the steel in specific would have had an impact on the company's profitability. So just trying to get a sense of to the extent that you could pass it on and to the extent that you had to absorb, net-net how much was the impact on margins? And actually at period of time does it get addressed?

Understood. If you're asking specifically for the quarter, yes, on a consolidated basis, we have seen 3% raw material prices going up. But if you have noticed the other expenses have come down by 2%. So it's a composition of both because the activities which get what I can say, executed during the quarter gets reflected in the numbers of ours. Overall impact is 1%, 1.5% additional, which we have incurred. More than raw material prices, Aditya, we have the cost escalation coming up in the site execution. And the reasons what Ashish earlier was explaining on the delays in the execution has impacted indirectly in the cost escalation coming up because the sites were open, were not getting completely closed on the basis of the work, which we are supposed to do in a time-bound manner, and that has actually put a pressure on our cost to execute those projects. More than the raw material prices, I see the change has happened on the other expenses, which is mainly related to site-related expenses. If you look at YTD numbers, the raw material prices have more or less remained same. That doesn't mean that going forward, there will not be any impact coming up. We are very closely monitoring the current scenario. The current situation is a little dynamic. Rather Ashish has indirectly covered that when he mentioned that we actually deferred a few order bookings, which were supposed to happen in this quarter only because of the raw material price uncertainty and the nature of the contract which we undertake, especially on a fixed price basis. So we said that we will hold on to those contracts or rather the inquiries and we will close only when we have some kind of a visibility on the raw material prices, how they are going to shape up. In the current quarter, yes, there is an aberration which you are noticing. It is not the result of the raw material prices going up. We like to very closely monitor the scenario in the coming quarters, especially on the basis of what is happening to the disruption in the supply chain. But on the year-end basis, as I mentioned, the material prices have remained more or less in the same range.

Maybe I will round it up with this question. See, margins are critical for the business and it seems that the RM is still ahead of us. In that context, what are the steps the company is taking to make the cost structure better or to make the terms of contract more fair to both parties?

Yes. So it is contracting with the customer and contracting with the vendor. So both the aspects we are studying together and figuring it out if we are getting an order and let's assume it happens to be fixed price contract and how to lock the prices of our raw material at the same level so that we will not have any impact on that. But as I said, in the current scenario, if the supply chain is completely going to get disrupted, then the situation is going to be a little different and difficult to monitor. But from the contracting point of view, we are trying to get to the extent possible, the flexibility into our pricing. Earlier, our all contracts used to be 100% fixed price. We have moved from that 100% fixed price to some kind of a flexibility depending on what kind of a sensitivity we will allow to our raw material price changes. But we are monitoring that contracting part also very, very closely.

And maybe if you can just share the quantum of orders that have been deferred from last quarter? That will be my final question.

So it is not -- I will not call it as an order. I will call it as an inquiry basket. So this was almost INR 300-plus crores inquiries, which we didn't finalize only because of these issues.

[Operator Instructions] The next question is from the line of Amit Anwani from PL Capital.

The first question on the GenX. So earlier, you are targeting INR 400 crores, INR 500 crores possible orders here. So -- and has the deferment happened here also? That is one. And second now, what is the kind of situation with respect to the plant inspections and conversions and overall outlook for GenX? And obviously, of course, you got the data center order. So that is also would like to understand what could be the possible opportunity for GenX from data centers modular cooling system, which you talked about, yes.

Sure. So thanks, Amit, for the question. Yes, we have been investing, as I said, in GenX. And one of the investments that we are doing is for preparing ourselves for these new segments that we want to serve. So the data centers, the hyperscalers as they are called, they require these very specific cooling modular structures, which are piping, et cetera. We are already -- we have already done the work in FY '26 now. And in FY '27, we want to take those efforts into fruition by securing the orders. And these orders are not one-off. We expect that once we have the facility ready for creating these modular structures, we can continue to repeat those in every few months. So that's the way we are going ahead. We believe that, that will increase our capacity utilization of GenX facility, which is fairly sophisticated and large facility. And we, therefore, can see some positive results for GenX in FY '27. Not only just the data center, but we are also working on other sectors like LNG, which is growing, conventional oil and gas, which is also an attractive segment for us. And therefore, we will -- combination of these 3, we will be able to utilize the capacity at GenX.

Can we see the breakeven happening in F '27?

Well, yes, we would like to absorb most of the cost and the investments that we have made in GenX. In the next 2 or 3 quarters, we will have to book the orders which we alluded to. And once those are there, then we will be able to revenue those. So our efforts will be in making sure that we will go towards that breakeven.

So is this kind of like delay happening from the customer for these orders in terms of finalization?

Well, any of these customers, these are international customers, they need to certify the facility from multiple angles because this is, like I said, not a one-off order that they place. They look at the companies like Praj and then they will certify it for multiple projects that they would like to execute. This process is a long process. We started with a segment which was called our ETCA segment, the Energy Transition and Climate Action segment, which was essentially for green hydrogen, green ammonia, electrolyzers, et cetera. But as you know that in the last 2 years, that segment has become a little subdued. And so we had to pivot to the other segments where we can get our customer interactions going. So this is where the data centers, the LNG segment and the oil and gas that I mentioned come in. And so now with all of this pivoting that I talked to you, we believe that it should be a better path forward for us.

And lastly, what could be the ticket size of data center order probably in terms of per megawatt how much would be your addressable market, which you think with what you got in terms of opportunity outside? And the order which you got, is it from the client or from any OEM who is working with the client for the data center?

Yes. So for the sake of confidentiality, we will not be able to talk about the customer per se because we are bound by our obligations. However, depending on the size of the data centers, the order values can vary from as low as INR 50 crores to as high as INR 150 crores depending on the size. And as we are negotiating, I would not be able to give you exact numbers right now since this is going on. I have said that we have not booked that order in quarter 4 of last year, but we expect some good news in the first quarter of this year, FY '27.

Understood. Lastly, sir, the number on fixed overhead for GenX, how much was it in F '26, employee expense and other fixed overheads that in that factory?

So the fixed overhead run rate is still continuing at the rate of almost INR 10 crores per month, Amit.

[Operator Instructions] The next question is from the line of Shailesh Kanani from AMSEC.

I hope my voice is audible?

Yes.

Yes. Sir, a couple of questions. First of all, there are many media reports indicating about EBP mandate at various percentages. So my question is with respect to as per you and your past experience, how would things materialize? And in what time frame? If, let's say, we go to a 25% mandate, how would the TAM for Praj look like? And when would this kind of translate into numbers in terms of order booking or revenue? And what should be a key monitorable over here?

Okay. Good question, Shailesh. So first of all, it is difficult to predict the time line for the new mandates to come in. But we all -- as you said, we all read these articles and news paper, and we know that the West Asia crisis has given an impetus on a different thinking right now. As a nation, we were facing difficulties in importing the energy, overall energy mix, and it includes crude oil as well as gas. So with all of this, we believe that these new mandates will come in and not only for maybe petrol, but also hopefully for other transportation fuels as well. So that's the first part. Secondly, depending on what comes first and how much is the increase in the blending, there can be different capacities that will have to be added for the ethanol production in India. We believe that if it is just between 2% to 5%, then the current capacities may be sufficient, but efficiencies will have to be improved and the quality of ethanol will have to be really something that we'll have to look at, which is where Praj has a special edge and technologies where the purity of alcohol that is used in fuel is important. But if it goes beyond 5%, then even more capacity will have to be added. And that's what we are watching, and we are ready for that type of blending enhancement.

So just a clarification on that. So what we are saying supposing if there is a mandate for E25 tomorrow, the existing ethanol plants would need some kind of upgradation wherein Praj can help out with the technology. Is it what you're saying?

We have both types of offerings, which our customers come to us for. Number one, we can enhance the capacity and the throughput of the existing plants by doing certain technical modifications or of course, we can put an entirely new line for the additional production. So depending on each customer, their ability to fund and their overall direction, we can help them both in enhancements as well as the new capacity buildup.

So in terms of technical parameters, there are no upgradation further as such is required in the ethanol, right, for the higher blending percentages?

No, no. I think as long as they stick to the blending specifications as stated by the government and the BIS and produce that type of ethanol, that should be good enough. What I meant was that at Praj, the technology that we have, we are able to absolutely meet and exceed those specifications in the plants that we construct.

And other part of it, the way you said that if the percentage blanking is only increased by 2% to 5%, maybe you would not have new orders. But the thing slow-moving orders might have some financial closure pending, right? So that can kind of at least a onetime effect would have, right?

That is correct, Shailesh. Of course, some of our customers, they have slowed down their execution mainly because of some of those challenges that you mentioned.

Fair enough. I'll just squeeze in one more question. In terms of order inflows, right, this is the print what we have gone this quarter is, I think, 4-year low in terms of order booking, right? Now in the earlier remarks, you had mentioned that we have deferred a few of the order inquiry pipeline because of the RM thing. But how should we think about it going ahead? What would we return back to, say, a band of INR 800 crores to INR 900 crores on a steady-state basis going ahead?

Well, I think looking at the pipeline right now, we believe so. We should be in that range typically. But as we don't want to give any forward-looking statements, that is the right ballpark that one can assume.

That's helpful. Just one data keeping question. In terms of number of clients who have audited and approved Mangalore facility as on date? And what was that number, say, at the end of third quarter? If you can give some color on that?

So at the end of third quarter, Shailesh, it was around 9. And now we have moved almost to 12 to 13 clients who have cleared the facility for us.

The next question is from the line of Atul Tiwari from JPM.

Yes. Sir, so I mean, just a follow-up on the same question. So as per your own understanding and estimate, now that government has specified technical standards, what could be the likely time lines for actually rolling out the mandate to take the blending in petrol from 20% to 25% or 30%? Is it 6 months, 1 year or it could be a affair, even a few years from now?

We believe that it will be not longer than 1 year. But really to predict it in terms of exact months is difficult for us. We know lots of discussions are happening. There is a right impetus because of external geopolitical conditions. So we are hopeful that it will get done sooner than later.

And you must be aware that government has just also invited the public opinion on E85, E100 and this draft was proposed a month back. So government has already started taking right steps in the direction of going to the extent of E100 and they have opened this window for a month for the public opinion. I believe that window will get over by end of mid of June or something. So if that happens, you can fairly assume that how the government is trying to go ahead on the basis of the first step which they have taken for basically inviting the public opinion. And second one, asking the OMCs to open up E85, E100 outlets actually starting from the next month itself. So that also is an indication. Frankly speaking, we can just pick up these indications instead of actually predicting when the notification is going to be out. But it gives a fair confidence to us that it is in the offing and it should happen any time.

Okay. And sir, this E85, E100 outlets, so I mean, could you throw some more color on this? So I mean, if these outlets sell petrol with such a high level of blending of ethanol, do we have enough base of vehicles to make this at least somewhat commercially viable in the short run for the people who are opening those out?

Yes. This is a simultaneous set of actions, Atul. So that's why when I mentioned in my opening remarks that this is an ecosystem, which is getting developed as we speak. So there is, of course, government, there is OMCs who will put up the infrastructure for dispensing E85 and E100 fuel. But there is also the automobile makers, which make these different engines, which are able to consume this type of fuel. And we also then have players like Praj and the producers who will then cater to the demand that will come up. As far as we know, we are aware of a few companies already announcing their flex fuel vehicles starting June, and we've seen some of those things also. And there are also retrofit kits on existing vehicles that can be adopted to an old vehicle and it can then become compatible for E85 or E100. So there are various things that are happening in this particular space and different stakeholders are coming together as an ecosystem to make this entire flex fuel viable for India.

Okay. And sir, my last question, I mean, to rule out the mandate beyond EBP 20, say, to 25 or 30, does the government need to do some more technical studies to assess the impact of that level of blending on engine performance and wear and tear? Or are those studies already done and everything is clear from a technical standpoint?

Yes, this is a good question. A lot of studies and scientific studies have been done and all the responsible and credible agencies have very clearly come out with those reports. I think in the media, there could be some time who can come up with not very scientific and not connected to the facts type of messages either through social media or other means. And I think we have to be careful about it because you've seen other countries like Brazil being very successful as far as ethanol is concerned. And we need to learn from these countries like Brazil and Thailand who have been using this very effectively in managing their energy mix.

And these technical studies have given a green light to say what level of blending, even EBP30 has been cleared or only EBP25 as per these technical studies?

No, there are different categories of vehicles. And it is very clearly defined in the report as to which vehicles will be amenable for what type of blending. When we are talking about the new vehicles, the ones that have been manufactured in the recent times, those will be able to take the E30 also. Like I mentioned in my opening remarks, the Bureau of Indian Standards have now completely notified the fuel specifications for all categories, E25, E22, E27, E30 petrol. And then for E85 and E100, it's a different type of an engine that will have to be used in the vehicle. So these are technical details, Atul. We will be able to share those because we also follow those reports and those are done by credible agencies like AI, et cetera, in the country.

[Operator Instructions] The next question is from the line of Sandip Sabharwal from asksandipsabharwal.com.

Yes. I've been tracking Praj for many years. So we've had phases of high growth like in the 1G era, where also the company could not report very high profits because there were phases of raw material price hikes, many of the contracts of fixed side. Then the company talked of huge opportunities in 2G, ethanol, in CBG, in SAF. Now when we see CBG and SAF, we already see a lot of investment happening in India. And Praj seems to have a very minimal share in that. So how are we supposed to track this company like because you keep on making so many announcements to the stock exchanges on your technical excellence. But when it comes to orders, execution, margins, like there were talks of margins of high teens and where the margins are right now? So how are investors supposed to invest in your company when you are not delivering on things which you're also talking of? And secondly, Mr. Gaikwad was appointed as MD just last June. And now there is a joint MD also appointed. So what was the requirement for that?

Okay. So maybe I'll first take your question on 2G, CBG and SAF, which is important for us to address. And Sandip ji, thanks for tracking Praj. We really appreciate your interest for a long period of time. And time to time, when you ask these questions to us, it also gives us insights and what needs to be done in a better manner for us. So for 2G, I can assure you that there are 3 projects in the country and all 3 are being done by Praj alone. This technology is available only in Praj, right? And like any new technology, it has a gestation period. And there are challenges that we faced when we launched it, but we are now quite confident that we will be able to use the 2G produced ethanol, especially for the SAF. You talked about SAF as well. There aren't too many investments in the country, to be honest with you, Sandip Ji, which have come up. And we are tracking all such investments for SAF. There are international opportunities which are there, and we are very much plugged into it. For example, we are right now concluding engineering assignment for an international customer. And we expect that this will convert into another order for what is called as detailed engineering for construction of a plant in the time to come, right? So although SAF has been talked about for a while, but the investments have been a little bit subdued in the past few years, mainly because the strong mandates for using SAF in the aviation turbine fuel have been delayed. So we are ready at Praj. And as soon as those things come up, we will see Praj also being one of the participants in that market. On CBG as well, if you see Praj is quite active in that market. We've got technology for different feedstocks that can be used for production of CBG. And we will continue to, therefore, participate in that market. So that is the first question that you asked. Second question you asked was about the margins. So let me give you an overview of those margins that you talked about and why they are subdued. Especially for FY '26, I can share with you that our investments in Praj GenX continued. And therefore, any investment which has a long gestation period, we had to be a little patient about it. So we continue to invest in that. Second thing was we did experience some escalation of cost in our execution. And that, of course, impacted our profitability because our revenues remained flat, but the cost of execution went up. And I think Sachin explained that to another question that was asked to us. And the third thing was we did experience some onetimers, which were nonbusiness related in FY '26 and they impacted our bottom line. So going forward, we would like to learn from these and therefore, work on the profitability for a better result in FY'27. On the MD and joint MD I think it's essentially because our work has expanded and there are multiple areas in which the company is working on. So it is more like we both taking on all those work fronts where management oversight and management intervention is required so that we make the company ready for the next 5-year plan. And that's the basic intent of elevating Sachin to the joint Managing Director position and therefore manage the bandwidth that we both have.

You were CEO of a much larger company, Honeywell and that company also doing very as all of us know. And so my limited point at the end is that engineering companies in general in India, are doing extraordinarily well like the majority of them. In Praj as we -- around for a long time and there is [Technical Difficulty] so I think ultimately the management needs to work for the shareholders...

Sandip it is very difficult to understand. Sorry Sandip your voice is cracking. And little difficult to get you what you want to say.

Mr. Sandip are you on your headset, sir. May I request you to please switch it to handset. Because your audio is very low, sir. We can't hear you clearly.

Can you hear me now?

Yes. We can hear you now.

Yes, so what I'm saying it that, Praj -- engineering companies in general in India are doing very well at this stage. And Praj has invested in lot of technologies and right now it seems that the company is working more for the employees because of a kind of investment you've done in the GenX plan. So the result for shareholder are not coming. So just hoping that...

We're not able to hear you again, Sandip ji. I don't know if your line got dropped off. Moderator, can you hear us?

Yes, sir, I can hear you. I think there's a problem with Sandip's line. His line is disconnected. We'll take the next question from the line of Vardhman Lunia from Trisula Capital.

Ashish I just have one question. In terms of capabilities, what exactly is the synergy between our bioengineering business and what we are doing for data centers? Am I audible?

One second. Sir, can you hear me? Ashish sir, can you hear me? One second, we've lost the line for the management. Please remain connected participants while we rejoin them. Ladies and gentlemen, we have the line for the management reconnected. Vardhman sir, please proceed with your question we have the line for the management connected.

Yes. I just have one question. So in terms of capabilities, what exactly is the synergy between our bioengineering capabilities and what we are doing for data centers?

Okay. So this is a good question, and it gives us an opportunity to position this correctly. As you know, data centers which are coming up, especially because of the growth in artificial intelligence demand in various sectors, these are the energy guzzling infrastructures. They take a lot of energy for the compute power that needs to be provided to the customers. And it generates a lot of heat. And that heat needs to be managed properly so that the data centers can perform their tasks. Where Praj in the short term is working on is to provide the infrastructure that goes into the cooling systems for the data centers, right? And this is especially designed with special material of construction type of skids or the modules that go into the server rooms of the data centers for cooling the server cabinets. So that's what we are focusing on in the short term. In the long term, our vision is that we can expand into other areas of the data center and provide technology. For example, because the energy requirement for data centers is large, it may be advisable that we use renewable energy for such data centers for medium-sized or large-sized data centers. And that is where we believe that the bioenergy can be one of the options for the data center operators to be used because it's a renewable energy. So that's where we are also looking at opportunities in the future.

Understood. Understood. That's very clear. And great things happening across the board, and I'm sure we'll do very well over the medium to long term.

Thank you very much.

The next question is from the line of [ Arun Jawar ], an individual investor.

Can you hear me?

Yes. Yes. Go ahead Mr. Arun.

Yes. What is the R&D spend which is done in last year, sir, FY '26?

In FY '26, total spend is almost INR 65 crores, INR 66 crores. Out of that, around INR 20 crores will be on CapEx and around INR 45 crores, INR 46 crores will be on the OpEx.

I'm asking R&D sir, research and development.

I'm talking about R&D expenses split into 2 parts, where we have spent on the building up our lab, additional equipment which we have taken worth of around INR 20 crores. And on the OpEx side, where the demo plant is running, the people who are working in the R&D are there, we have almost 100 scientists working there. We keep on testing different feedstocks. So I'm talking about that expense is almost around INR 45 crores, INR 46 crores.

Okay. This INR 45 crores, INR 46 crores is already sitting in our other expenses, right, sir?

Yes, that's right.

Okay. Sir, when we come to the Q4 margins, so do you think that worst is over in terms of margins or still worst is left behind?

No. So to be very frank with you, what reason which we were talking about for the drop in the margin in the last quarter and overall in the entire year of FY '26, mainly the execution challenges which we face. We believe that those challenges are actually getting completely over for a reason because the execution cycle for the projects which we are right now executing, the cycle times are a little less. They are not very big cycle times projects because from the greenfield, we are moving to brownfield. And the sizes of the projects are also very different. So we believe that the execution challenges are definitely taken care of. And the focus for FY '27 from our side is also going to be more on the operational excellence, and we are completely geared up for that. So I think to a great extent, the worst is over.

Okay. Sir, another point like other investor also mentioned, we are lagging in terms of performance in revenues, top line, margins since last 3 years. So would it be fair to tell that management can do a buyback to just give some value to the shareholders and then rather than giving a dividend and then give some bonus or a split to the existing share value?

This is a Board matter, Arun, but we will definitely take this feedback to our board.

As there are no further questions from the participants, I now hand the conference over to the management from Praj Industries Limited for closing comments.

Yes. So thank you, everyone, for your time today. In case you have any more questions, feel free to write us at [email protected], and we look forward to you, meet you again in the next analyst call. So thanks a lot. Have a nice day.

Thank you, sir. On behalf of Praj Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.