Ladies and gentlemen, good day, and welcome to the Praj Industries Limited Q2 FY24 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touchtone phone. 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. Good morning, everyone, and 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'd like to thank you all for participating in the company's earnings call for the second quarter and first half of financial year 2024. 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. Now, let me introduce you to the management participating with us in today's earnings call and hand it over to them for opening remarks. Firstly, we have with us Mr. Shishir Joshipura, CEO and Managing Director, and Mr. Sachin Raole, CFO and Director-Resources. Without any further delay, I request Mr. Joshipura to start with his opening remarks. Thank you, and over to you, sir. Sorry to interrupt, but the lines of the management have got disconnected. Please stay connected while I reconnect the management. Ladies and gentlemen, thank you for patiently holding. We now have the lines of the management reconnected. Over to you, sir. Hello? Yes, sir, Good day, everyone. I welcome you to Praj Industries earnings call for quarter two and H1 of FY. First, all of you have the opportunity to go through our results for the quarter ending 30 September 2023. The launch of Global Biofuel Alliance at G20 Summit in September 2023 is a very significant event for sustainable global development of biofuels. The alliance is anchored by India, the United States, and Brazil. 19 countries and 12 international organizations have agreed to be part of it. This alliance is committed to facilitate access to technology, fostering an ecosystem to support biofuel production and consumption, and initiating policy interventions and operations in the Global South. India's leadership across the ecosystem development benefit the larger world and help include Global South in this important journey. We applaud leadership of G20 for this landmark development. Coming to business performance in the second quarter, business activity continues its build-up along the momentum established over the last couple of quarters. This quarter, international order booking was 59% of the total order book. The share of international order booking is, in overall H1, 32% as compared to 13% in H1 of FY 2022. Our domestic bioenergy business, Food Corporation of India's ban on issue of rice to ethanol distillery, led to a brief period of reduced activity. However, with upward revision of rates for grain-based ethanol from ONGC restored the confidence for the ongoing and proposed projects. The GST Council's decision to reduce GST on molasses from 28% to 5% will have positive impact on project viability. Overall, we see continuity in order book for both starch and sugar-based ethanol plants. On the international front, low carbon ethanol opportunity in the United States, though significant, is moving at a slow pace owing to unabated clarifications on certain provisions in the Inflation Reduction Act. We are pleased to announce receipt of our first order for low carbon ethanol, even as discussions are moving positively with several other potential cases. Our solutions business is receiving good traction in both domestic and international markets, especially Brazil. We are in the process of establishing a strong distributor network in chosen markets to offer entire suite of solutions comprising of enzymes, yeast, and performance enhancers. On the 2G front, the IOCL plant recommissioning has begun last week as the feedstock availability has commenced. In an agreed two-stage program with IOCL, we will establish the performance of the plant over the next six-month period. In the CBG business, positive developments in addressing the ecosystem challenge, strong focus from larger players in establishing capacities augur well for growth momentum in this business. We are moving forward with execution of the first project, even as the modus operandi for the balance project of the 5 that we announced last quarter is moving forward. We are witnessing positive development on overall inquiry pipeline in this segment. Energy transition is taking roots, and our solution basket is finding favor in the market. Demand emergence in the ETCA segment, coupled with repeat orders from our key customers in other served segments, is building a strong order book for execution. ETCA segment has a significant share of 52% in the overall order book for the quarter of our P&E business. We have commenced the work on setting up integrated manufacturing facility at Mangalore for Praj Gen X, and execution plans are underway to start manufacturing in fourth quarter of FY 2024. Our PHS business witnessed development of strong order book and has crossed INR 100 crore order book for the quarter. Continued development in fermentation-based drug production is a positive business driver for both of high-purity business. Potential on semiconductor application is yet to materialize, and we are keeping a close watch on the development. Zero Liquid Discharge and brewery business segments are expecting, are experiencing healthy inquiry inflow, and we expect positive business development in near future across both these segment as well. Overall, the business outlook continues to be positive for all our businesses. Before closing, it gives me immense pleasure to inform you that Dr. Pramod Chaudhari is elected as a Fellow of the prestigious Indian National Academy of Engineering by the Governing Council, in recognition for his distinguished contribution to professional engineering and technology. Further, Dr. Chaudhari is conferred with a lifetime achievement award by the Indian Institute of Chemical Engineers. This award is testimony of Dr. Chaudhari's contribution to the field of chemical engineering. With this, I will now hand over to Sachin for his comments on the financial performance. Thank you, Shishir. Good day, everyone. Let me take you through the financial highlights for the quarter and half year ended September 30, 2023. The consolidated income from operations grew to INR 8.80 billion in Q2 of FY 2024. EBITDA has increased by 29% and grew to INR 848.121 million in Q2 FY 2024, as compared to INR 667.327 million in Q2 of last year. Similarly, profit after tax grew by INR 623.627 million in Q2 FY 2024, as compared to INR 481.28 million in Q2 FY 2023. For H1 FY 2024, income from operations was INR 16.19 billion. EBITDA grew to INR 1.62 billion in H1 FY 2024, as against INR 1.2 billion in H1 FY 2023. PAT of INR 1.21 billion in H1 FY 2024, as against INR 893.91 million in H1 FY 2023. Export revenues accounted for 16% of Q2 FY 2024. Of the total revenue, 79% is from bioenergy, 15% from engineering, and 6% is from PHS business. The order intake during the quarter was INR 10.63 billion, with 71% from domestic market. Of the total order intake, 68% came from bioenergy, 22% from engineering, and 10% from PHS business. The order backlog as of September 2023 is at INR 39.6 billion, comprising of 74% of domestic orders. Cash in hand as on September 30, 2023, is INR 6.87 billion. I now conclude my remarks, and I would like to thank you all for joining us on this call. We will now be happy to discuss any questions coming from suggestions you may have. Thank you. Ladies and gentlemen, we will now begin with the question and answer session. Anyone wishing to ask a question, may please press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment to call the question queue generally. The first question is on the line from Amit Anwani from Prabhudas Lilladher Private Limited. Please go ahead. Hi, sir. Morning. My first question on, sir, on the domestic versus exports. Now we are seeing that, export is gaining traction and contributing 25% for this quarter and last quarter also, there was an improvement. And I think this is, if you would like to highlight, going forward, any target on this front and, any breakup of domestic versus exports in, in engineering, high purity and bioenergy, which you would like to highlight? So Shailesh, thank you very much. Good morning. What we have been we have said two or three drivers, and I think that's important to understand what's going to drive the business in this core market. And let me start, A, on the bioenergy side, we talk of low-carbon ethanol went out of United States at the back of the IRA provisions on the plant production capacity creation. As I mentioned, there are some clarifications required still on the tax treatment side, but they are expected soon. But in absence of that as well, we have now received the. So order book actually includes for the quarter, the first order we have received on the low-carbon ethanol front. It will be a project to have worked in existing corn ethanol, 1G ethanol producers, and help them reduce the carbon score, so that becomes, quote, unquote, feedstock fixed for cell production. We have also talked about the energy transition and climate action as a big segment, under which we also announced the entire GenX formation and setting up of manufacturing facilities on the core CapEx. All of that is coming from the fact that there is a clear push globally for investing in the energy transition scenario now for green hydrogen, green ammonia, waste-to-energy projects being set up there exclusively. And that's the segment that this business is itself. So that's the second one. So, and we believe that these two are big drivers. We are also started to push in Brazil, as I had mentioned in my opening remarks as well, both for our service business as well as equipment business. So there are several markets in which the drivers are there. We are positioning our solutions, which will lead to an improved position for us, as far as the booking is concerned, and that's what you see reflected in the last two quarters as well. Sure, sir. My next question again, sir, on the order intake prospects. So if you would like to highlight on 1G, you did mention that you're seeing a healthy pipeline for Starch-based, which is ongoing. So if you would like to highlight 1G, what is, you know, the pending opportunity, and as well as for CBG. Last time you did highlight that at least, you know, 5 projects are under progress of either awarding or you're executing from a large corporate, and many opportunities in CBG. So I just wanted to understand the order prospects for CBG over the next 12, 18 months, and also for 1G, which you might have worked out. Yeah. So, so let me start with the second part. So CBG, as we had mentioned, we had, we've been awarded a contract for 5. In the order booking that we reported, there are other issues like land availability, project type finalization, and some registration, et cetera, et cetera, which are happening from our customers, and as soon as they are released, we will be in a position to move forward with execution. So those contracts are not included in the order booking numbers that we have given. We also see some other movement from other corporates. We've seen OMCs announcing projects, so we are working with Indian Oil, as you are aware, and other OMCs as well. Overall, I think there is a momentum building up in the CBG market for establishing capacities across the country, and that should hold well for the development of this business in a very, very positive way. Therefore, I think it's very important that we keep our ear to the ground on this opportunity as it develops. We are reasonably positive that this will go into a very positive direction from here onwards. At what speed, et cetera, some other factors like land availability, feedstock tie-up, et cetera, are required, but I'm sure that that will happen as well, because the people who are putting up the project are obviously very, very large professional organizations, so they know how to go about these issues to be solved. In terms of opportunity for 1G, we, as I said, that we remain confident that with this small blip that happened in the second quarter because of the change in the feedstock policy, it did have an impact both for order book as well as for execution during the quarter because the period was too short. But obviously, very quick actions were also taken by government to correct the price portion, at least, so that sort of goes back to enable a different supply chain establishment for these projects. So we will see. We believe that these quick actions from the government also indicates a strong, unwavering commitment to the EBP20 program and furthering the cause of biofuels. So both this and the gas are in good space right now for development. Sure, sir. My last question on the- Mr. Anwani, may we request that you return to the question queue for a follow-up question? Sure. Yeah, thanks. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in this conference, we request you to limit your questions to two per participant only. The next question is from the line of Lokesh Maru from Nippon India Mutual Fund. Please go ahead. Thank you. Congratulations, sir, on excellent set of numbers and our first order received from U.S. So two questions from my side. Madhu, may we request that you use the handset mode while speaking and not the speaker phone? One second. Am I audible now? Yes, a little better. Please proceed. Yeah. So, sir, two questions. One is on the order received from U.S. What the quantum would be of this order during this quarter? Right, 29% is the order intake from exports, so how much would this be? And another question is on if we are able to deliver 43%+ gross margin, and we had challenges on execution during the quarter, as we enter Q3, Q4, if you maintain these gross levels, isn't it, you know, safe to believe that we will be able to do 14%-15%, or at least 13%+ EBITDA margins, going forward? So in the order book, we, we are giving the bifurcation between bioenergy and the engineering and construction. We are not right now giving the bifurcation within the individual segments of bioenergy. So during this quarter, you have seen the order intake of INR 10.63 billion, and 68% from that is from the bioenergy. On the margin side, can you please repeat your question? Because you are not audible, Lokesh. Can you just be little louder? So my question was, if we are able to do 43.5% gross margin that we did this quarter, just because our top line was somewhat, execution was somewhat short during Q2, isn't it safe to believe that as we get on track with higher, better execution, improved execution from Q3 onwards, our EBITDA levels should improve much higher from here, like 13%, 14% from here? I will not be able to talk about exact numbers, but your observation is right. You have already seen that even though the half-yearly top line is more or less flattish, but there is a margin expansion which has already been witnessed of almost 2.2%. Yes, if the execution is on a higher side, there is a possibility of some kind of expansion of the margin. I will not be able to comment whether it is going to be 13%, 14% or 15%, but yes, there is a scope on the basis of higher execution, which is going to happen in the next H2. Sir, one related question, if I may ask. So could you please help understand the challenges on execution that we faced in Q2? Sorry, sorry. Again, your...? Sorry, Lokesh, you need to repeat your question. Sorry for that. Sir, I was just checking, could you please explain the challenges we may have faced during Q2 on execution side? Yes, yes. So, the execution challenge was not from the capacity side at all. We have all the capacities that we need from our supply chain, from a production basis, engineering basis, so those were not the challenges. The bigger challenge came from the fact that, because of the announcement on the policy from the FCI, that they will no longer issue rice for production of ethanol during the quarter, that led to a very quick situation of A, two things actually. A, customers that were in the process of ordering their projects had to halt and say, "Hey, what's going to happen?" B, projects that are already under execution also put to a halt because the banks also, the banks that are funding these projects, and as you know, all these projects are largely funded by banks. The banks also put a halt and say, "We need to understand the impact of this, action on the viability of the project, whether we should go ahead and commit further funds," et cetera. That was the second thing. And then when the price correction happened, and it was very quickly announced by the government. But in all this process, you know, start, stop, re-negotiation, clarification and restart, almost 8-10 weeks on a 12-week quarter, you lose 8 weeks onto the most significant section. And as you're aware, that over the previous period, a large section of the order booking on ethanol was coming through the turnkey route. So a lot of projects were impacted, both even the new ones that are being built as well as the ones that are in the execution. So that was the biggest challenge. But that seems to have sorted itself out, and now we are returning back to normalcy. Understood. Thank you. Thank you so much, sir. That's all from my side. Thank you, Lokesh. Thank you. The next question is on the line of Shailesh Kanani from Centrum Broking. Please go ahead. Good morning, everyone, and thanks for the opportunity. Sir, I'm aware that we faced some challenges in the bioenergy sector during the last quarter. However, I'm seeing a decline in the engineering revenues for the quarter and the first half as well, whereas our order inflow has been very robust in this segment. So can you explain what is happening on the engineering side, revenue booking front? So engineering order book is definitely picking up, but it has its own execution cycle challenge. So there is no reason to believe that there is a decline in the engineering revenue, but engineering revenue will have its own cycle because the execution cycles are very, very different for that business. Because major business is naturally going to come up from ETCA segment, where the cycle is going to be anywhere between 12 months to 15 months. So it is going to be of a very different nature, and that's the reason why you are seeing a different execution, which has happened during this quarter. Otherwise, there is nothing else which has happened in engineering business. So after order booking, there is no delay as such in execution or the pick of the order. Is that a fair assessment? There is nothing, there is nothing. The orders which we have received in the recent past has been little larger scope on the engineering side, which has taken more time, because naturally, that was the time which was required for completing the engineering activity. The manufacturing activity will follow now, and that's the reason we are seeing little lower on the engineering revenues at this time. Okay, sir, fair enough. Sir, second, my second question is a two-part question. Yesterday evening, ISMA has revised their sugar production estimates downward due to declining yields, and a similar situation is observed in the rice industry as well. So given this development, I'm interested in understanding how EBP program is expected to perform in the near term, especially as we approach an El Niño year next year. So, while I recognize that EBP program in general, long term, is promising, but I appreciate if you can throw some light on strategies in near term to maintain our growth strategy. So I think from the EBP20 program perspective, this sugar season is important because this will also—we know already, because we are working with several customers, that their projects are now getting commissioned on the syrup route, which produces much larger quantities of ethanol. So a lot of projects are under commissioning right now, so we will see a very different kind of push on in terms of availability of ethanol. I think already, ONGC has gone to the tender for 850 crore liters. And we will see that a lot of new capacities will come into the marketplace. We're commissioning speed of the plant has really gone up in the last quarter. It's really picking up speed now as we go start the sugar season in this quarter. So on EBP20 perspective, I think we are correct, we are on the right track. In terms of sugar production coming on, et cetera, in production, we still have sugar surplus. So from the perspective of feedstock, I think we don't have a problem there, because even if the we still even after we divert all the current all the capacity that's being put up right now on the sugar-based ethanol, we will still have surplus sugar, and we consume all the sugar that we need with all the safety stock, et cetera. As a country, we will still have positive surplus. So, I'm not worried about the feedstock side on the side of sugar. On the rice side, I think the dynamics have changed a little bit. And, what's going to happen is, and we also see already happening in the field, is there's a shift taking place from rice-based plants to maize-based plants. And that is likely to lead to. And maize, there's an abundant availability right now. It does have some other challenges in terms of stabilizing the plant, et cetera, but that's not a—we do that for a living internationally, every year and for many years now, so we are very well aware of what needs to be done. But that's where we are. There may be a shift in supply chain, but other than that, I don't see a problem. Okay, sir. Thanks a lot. So just one clarification, if you can give, on CBG front. Mr. Sachin said that only one order is good, so INR 100 crores is booked in this order inflow of CBG, and INR 400 crores is still L1, as on first November, today. That is my understanding, right? That is correct. Okay, sir. Thanks a lot, sir, and best of luck. Thank you. Thank you. The next question is from the line of Vikram Suryavanshi from PhillipCapital. Please go ahead. Yeah, good afternoon, sir. Just on the employee cost, is there any one-off during which you are added into one employee cost, sir? So Vikram, our increment cycle starts from the July and not from the April month. So the yearly increments and all that stuff takes into account in the quarter of July, July to September. So that's one action. Second thing, we have started working on building up our employee stream for GenX now, where the new employees for the new facility are getting rolled in right now. So that's another reason, which has come up into the picture. So there is no one-time kind of a scenario, but because of the increase in the employee count for GenX and the increments, which have been announced in the month of July for the next year, are the two main reasons because of which we are seeing the increase in the employee cost. Got it. And in case of high purity, we have seen really good traction, and I think sir was mentioning about that we are still yet to see the impact of opportunity in semiconductor side. But I guess there will be opportunity even for a green hydrogen, where which will require pure water. So what kind of opportunity landscape we can look for, say, 2-3 years down the line for high purity? So Vikram, the high purity segment, water treatment is one, industrial water treatment. Maybe if it's a sea-based plant, we'll see water RO. Those are normal industrial water treatment. The PHS segment is slightly different. This is ultrahigh purity water. And if the applications call for ultrahigh purity water, PHS will for sure benefit because they've been in that field for quite some time. I had also mentioned that for PHS, one big driver in the market that is changing for them is that a lot of large fermentation-based capacities are supposed to be set up in India over a period of time as we go forward. And that bodes very well for them, because fermentation is key strength of the parent company, starch. Hygienic manufacturing around those is the key strength of PHS. You combine the both, it become a unique proposition for these companies that are setting up their factory. We already seeing some traction built on that. That will become the second driver for PHS business. Okay, got it. Yeah. So just I missed that, cash balance. I think 6 point something you said, which I was not able to hear. Sorry, could you please repeat the question, Vikram? I just was not able to listen that cash balance, which you said. INR 6.87. INR 6.87 billion. Okay, thank you. Hmm? Thank you, sir. Thank you. The next question is from the line of Levin Shah from Motilal Oswal AMC. Please go ahead. Yeah. Hi, sir. So, firstly, on the execution front, so like we have even in the previous calls also, we have highlighted that we will have H2 heavy execution. But if you look at now with this some impact we had because of this whole grain based plants. So how do you see execution in H2? Will there be even more bunch up now that some of Q2 would also spill over to Q3, and anyways, we have H2 heavy execution cycle? Sorry. So we, we stand by our comment that we made earlier, that H2 execution is likely to be larger in size compared to H1. I also said that we are seeing the return to normalcy for the grain disturbance that happened in the market. We are not seeing any reason right now to change or revise what we have already committed to you. So we, we stand by the fact that H2 is likely to be better than H1. Sure. And sir, in terms of our supply side readiness, because it will be very heavy as compared to H1. We are ready with it, right? So that supply side, we won't face any issues. Yes. On the execution side, in terms of preparedness, so that supply chain, our manufacturing facilities, our vendor base, our engineering capabilities, we do not have a constraint. Sure. Sir, and another question was on the U.S. market. So like, firstly, congratulations that we have got the first set of orders, and we have been awaiting this opportunity since some time now. So this whole clarification that the players over there are awaiting from the U.S. government, where is that? How long will it take, and where exactly is this stuck? How long do you expect before orders, a few more orders start flowing in? Well, so the way this is happening now is that, we are, the customers have engaged with us. They are continuing to engage with us to say, "Okay, let's keep us prepared." So the detailed feasibility study that we need to do for each plant, and that is now, underway. There's almost 8 projects now where we are either completed or are doing that right now as we speak. The part on the clarification is the U.S. government action. I'm not an expert to predict when exactly they will do it, but from whatever we know, it is expected that by end of the quarter, the clarification will come. And as and when that comes, that will start to show the right direction for these projects. Okay. Sir, and my last question is to Sachin, sir, on the margin. So, obviously earlier, you explained this, but if you'll see, our gross margins for this half versus the previous half, the previous year, there has been a significant uptick that we have seen. And now with exports, becoming a larger portion of our order backlog and incrementally also, order inflows from exports will be higher, do we see that, there would be a significant change in the margin trajectory, what we have seen last couple of years, where exports were small, and we had this, impact of, raw materials, also significant impact so? Yeah. So within this, I, I think in the earlier question also, I had mentioned the same thing, that there is a definite scope of improvement based on what kind of export orders will get executed over a period of time. Naturally, raw material prices, the way it is there right now, if, if they remain in a similar kind of a zone, I think there is definitely a scope for margin expansion. I cannot only tell you whether it is going to be 11%, 12%, or 15%, someone was asking about 15%. So I can't comment on that, but yes, there is a scope for improvement. Got it. Sir, just, a follow-up on that. If you look at our other expenses also for this half, despite, specifically for this quarter, despite the weak execution, the other expenses have gone up by 25%. So is there any one-off element? Because generally, they are linked to our execution cycle, right? So no. So the other expenses, this I will not say there is one-off kind of a thing, but if there are certain, what I can say, the execution related only, but site related expenses, if they are coming up there, then naturally that increase will be there. I will get back to you if there is some specific reason. I don't see if there is any specific reason or one-off kind of a scenario. Sure. Or is it that some of the projects we would have incurred some, site-related expenses, but the execution will pick up in H2, and hence, that will balance out for full year? No, not necessarily. So let me, let me specifically, give you an answer. We can, we can discuss this separately also. But right now, I don't see anything which is kind of extraordinary thing which is sitting there. Sure. Sure. Thank you, sir. Thanks a lot and all the best. Thank you, Levin. Thank you. The next question is from the line of Dhaval Jain from ASK. Please go ahead. Hi, Dhaval Jain from ASK. Just a couple of questions. One is, in your annual report you mentioned- Sorry, I can't hear you. Mm. Okay. Sorry, we are not able to hear you, sir, at all. Hi, can you hear me now? Yes. Yeah, hi. This is Dhaval Jain from ASK. Just a couple of questions. A, in the annual report, you mentioned about bioplastics. Any update regarding what's happening on that front? Because I believe, that is also a big opportunity with the amount of single-use plastic there is. So Dhawan, as we had mentioned, that we are setting up a pilot project now to demonstrate our technology, and that project is currently being set up and it's we expect to commission this in the last quarter of this financial year. Once that is set up and we demonstrate, then we will be able to in a position to speak about the business that emanates out of that. Okay, sure. And sir, secondly, this CBG opportunity, what are the IRR that customers are looking at? And are they using this as a, like how sugar ethanol people are using, because they use it in manufacturing sugar. And then they... What is the profile of the customer who's looking at setting up CBG plants? Any color on that? Well, there are different segments, so different kind of customer profiles. There are ESG funds that are the customers for the project. There are large, actually every large oil marketing company, both private and public sector, they are looking at this as an opportunity. The sugar mills are looking at it as an opportunity. There are a few independent players as well, who are thinking of setting up a project. So it's a very varied cross-section of people, number one, green funds. On the other hand, the IR question, tough to answer for the simple fact that everybody has a different cost of funds, everybody has a different expectation of ownership structures, what the next activity to the project? So many dimensions, so there is not a plain one answer. But every one of them, what's happening is, with the developments that are taking place, the CBG projects are now in the realm of reality in terms of meeting those IRRs for many people. And as the technology develops, and we put a few projects on the ground, I'm sure there'll be further positive developments on the IRR building side. But now, as things stand, I think it is, it's moving in the right direction from different perspective, different stakeholders. And a few of them because there are other considerations like cost of carbon reduction per ton of carbon reduction, what the cost per ton. So there are many dimensions to which these projects are being put through, and we are seeing very constructive development on that side. Okay. But then, let me follow-up question: Is there raw material, like, is there raw material in terms of abundance and how would that look actually? Sugar had not worked well because there was a lot of abundance in sugar. Is that something similar to CBG? So if the sugar mill-based, with sugar mills, they have got press mud. The way they've got molasses, they also have press mud. So for them, that's very easy and very simple logistics for feedstock. If for the agri-based feedstock, I think, yes, there is a need to... And I think a lot of work is happening in terms of establishing of sustainable supply chains from that dimension, as well. As you probably can surmise, this has to be done a year in advance of the project, so we can see a lot of activity that is happening in that space as well. Okay. And, lastly, sir, what would be CapEx for this year? The CapEx plan for this year? Yeah, total amount. So totally, we are looking at, because of the GenX coming into the picture, of INR 100 crores, but entire INR 100 crores will not get spent in this year. Maybe INR 60 crores will be in this year and INR 40 crores in the next year on account of GenX. Okay. There will be some routine CapEx, which will be happening for other facilities and for IT. That should be in a range of another INR 15-20 crores. Oh, yes, and I need to mention that two pilot plants which we are putting up, one is for the PHA, and another one is for the PLA. That should be another; in this year, the CapEx will take to the tune of around 40 crores. So all put together, INR 180 crores for this year. 60-80? Ah, okay, and another 20. INR 240 crore and INR 120 crore. Oh, perfect. Thank you, sir. Thank you. Thank you. The next question is on the line of Sagar Dhanani from Valuequest Investment Advisors. Please go ahead. Yes, hi, thanks for taking my question. So just to go a little further on the gross margin, sir, so what led to the improvement in the gross margin? Just to understand the drivers of it, because in the last two quarters, we've seen significant improvement in the gross margin. So if you can just talk about, give some color on the, drivers that led to the improvement in the gross margin. See, for gross margin, there are two, three drivers. One, definitely what is the raw material cost, but also the composition of my revenue. If my composition of revenue has one, an element definitely which is on the export side. And secondly, if there are only engineering orders, so we are not supposed to supply equipment or take care of any execution side of the things, that builds up the margin on a very positive side. So the gross margin is defined in the three ways. One, what is the composition of sales? Second one is the element of international sales, and third one is the pure engineering services. So it's not, I'm not talking about engineering business, but I'm saying services. It is like soft services which we provide to our customers. For example, the audit which we are conducting in the U.S., we'll not have any supply and installation activity, but that, that can give a higher margin because that is only the services which we are providing. So these three elements are the major contributor to define what kind of gross margin which we can have. Okay, got it. Just a follow-up on this. What could be the services portion of our sales in as a percentage right now? Sorry, your voice, I'm not able to hear it properly. Yeah. Sir, is it better now? It is better. No, it's not clear, but yeah, it's not clear. It's loud, but not clear. Okay. Sir, just on the services please, wanted to understand what percentage of our sales are currently coming from services? Sales are coming from? Services, services segment, sir. Sir, services should be out of today's INR 880 crore around the services which I mentioned should be in the range of INR 10 crore-INR 15 crore. Okay, got it. And on the GenX facility that we are setting up, sir, by when do we expect the commissioning to be completed of this new facility for GenX? For GenX, we are expecting the commercial production will start in the last quarter of this financial year. So by February, March, we should be having commercial production happening in GenX. Okay. Last question from my side: What is the kind of pipeline that we are seeing, inquiry pipeline on GenX side, especially for the new plant? If you could just quantify that please. So inquiry basket is definitely pretty big. We generally don't talk about inquiry basket number for any of our businesses. But it is good enough and gives us the confidence that we can start our production in the last quarter of this financial year. Got it, sir. Thank you so much. Thank you very much, Sagar. Thank you. The next question is from the line of Sagar Kapadia from Anvil Shares. Please go ahead. Hello. Yes, Sagar. Sir, congratulations for getting the big order from the U.S. What is the size of this order which you all have got? ... We generally don't talk about order by order query, but it is good enough- Approximate size you can just tell us about? Hey, oh, you know, there are other people listening this call, so we don't, we don't want to, we don't want to talk about order by order number. Okay, sir. Then what will be your- Please talk about it. Okay, sir. Sir, 2-3 years from now, so what will be your expectation from the order size from the U.S. market and from the Brazil market? Sorry, could you repeat the question? Yeah, I'll tell you. 2-3 years from now- Hmm. What will be your, you know, internal order expectations from the U.S. market and Brazil market, where you are deploying resources? Three years from now, maybe we can look at... Yeah. Anyway, we are looking for changing the trajectory between exports, that is international orders and domestic- Hmm. from the current ratio of 20:80 to at least 30+ for international orders. And, out of that 30%, maximum will come from US. Some portion will come from Brazil, but maximum contribution, because the US is going to contribute for bioenergy business and the GenX business both. Yeah, got you. U.S. is going to be major contributor in that sense. I cannot give you an exact number. Okay. From the visibility point of view, the change in the dimension for international is going to be definitely on a higher base, and the maximum number is going to get contributed by U.S. and then by Brazil. Okay, sir. Okay, sir. Thank you. Thank you. Thank you. The next question is on the line of Kunal Sheth from B&K Securities. Please go ahead. Hi, sir. Thank you for the opportunity. So my first question is around the international business. You know, we've seen share of international business grow meaningfully over the last 2-3 quarters. So which are the end markets or, you know, which are contributing meaningfully to the order inflow from the international? We just got our first order from the low-carbon field, so that has just started to contribute. But which are other steady-state, you know, products or end markets that are contributing to this order flow, international order flow? So, as Sachin was mentioning earlier, for both bioenergy business as well as for the business of GenX, that we talked about, energy transition and climate action, markets are United States and Europe, for both of them. Depending on, of course, U.S. low carbon ethanol is entirely United States right now, but we expected that will also start to move in Europe within a very short period of time and other markets of the world as well. Because as SAF production starts to take priority, low carbon ethanol will be a key, key requirement. So that's, that's one clear directive. As of today, it's more United States-oriented, but we expect that as we move forward, Brazil, Europe, et cetera, will get added into a significant portion. When the GBA kicks in over a 3-5-year kind of horizon, as I was mentioning, we expect a lot more business to flow in from many other nations of the world, especially Global South, island nations, which are all looking for solutions to decarbonize their economy, and I think that will, that will further change the complexion of the export business. Sir, currently in the bioenergy, is it largely 1G driven orders what we are getting? Yes. For export, it is 1G. We are not. We have not got any orders on 2G yet, or CBG. We are not taking it outside India, but when that happens, we will see that as well. Okay. Sir, and my second question is around GenX. So what exactly will be our offering in terms of scope, in this? I mean, like, you know, in our bioenergy business, we also supply, supply equipment, right? So in GenX, what exactly will be our scope of offering? So for the GenX business, they will serve the segment of energy transition and climate action, which is more around green hydrogen projects, green ammonia projects, waste to energy projects. But within that broad segmentation of the industry, what they will be offering is, A, equipments that are required for those projects, plus more, more important than anything else, they will be offering modularized plant solutions to these projects. So they will have a look at the process that is being deployed by different process licensors and convert that to a modularized plant, and then offer the plant itself. Okay. Okay. Got it, sir. Sure. Sure. Thank you so much, sir. Best of luck for the future quarter. Thank you very much. Thank you. The next question is on the line of Abhijeet Singh from Yes Securities. Please go ahead. Hello, am I audible? Yes, Abhijeet. Good afternoon. Sir, my first question is on the export side. Similar to the previous participant, so how do you look at the export opportunity going forward? Like, now, we have started penetrating into the U.S. market. We have done a few FEL studies and have received an order in this quarter. But as we talk about the overall market size in U.S. and similarly in other geographies, how do you quantify it? Is there a way to quantify it in the next 2-3 years? What will be the overall market size there in terms of the opportunity that arises from SAF or other low-carbon opportunities in the economy? So let me put it like this. So for under the IRA program, there's a goal to achieve 3 billion gallons per year of SAF production by 2030. And that, based on the feedstock, dynamics, etc., it looks like it's almost of this 3 billion, the first 1.5-2 billion will come from a different route, which is the HEFA route. But after that, since there is no feedstock on the HEFA side, further, that last 1 billion+ all the future capacities will come from what is called alcohol-to-jet route. And that is where, so almost 1 billion gallons of SAF will come through SAF route by 2030. That would mean 2 billion gallons of ethanol will have to be low carbon ethanol in the United States. So that's the size, and 2 billion gallon of ethanol has to be decarbonized over a period of between now and 2030. Typically, U.S. plants have a size of either 55 million gallon per year or 100 million gallons per year, the two capacities in the United States for different plants. So we can run the math to see that in order to reach 1 billion, how many of them will have to actually convert, and go through the solution stages. We had also explained the past. I'm not going to take up too much time on this call, but it's a three-step process, and each of the step involves, you know, one after another, and each plant eventually will have to take all the three steps. The contract that we're talking about right now is, is only for the step one. So that's that on the U.S. side. In general, the drivers for ETCA, the green hydrogen, green ammonia movement, the low carbon ethanol movement, but the third one, very critical, is what happens on a middle to long-term basis on the GBA platform, because that is a very, very important platform that is being developed. And that will include many nations which today do not have... They have the capability, they have a possibility to be a biofuel producer, but they're not looking at it from that perspective. But I think many, many countries are now beginning to get aware of very differentiated benefits to their economies from biofuels. So, so we are seeing a lot more new countries walk into these dialogues of establishing biofuel capability. We'll talk about it as we go through the year and the future period as well, but we clearly see a very positive dialogue developing there as well. Sure. Thanks a lot, sir. That, that's it from my side. Thank you. Thank you. The next question is from the line of Yash Shah from Elara Capital. Please go ahead. Good afternoon, sir. Can you hear me? Yes, we can hear you very well. Good afternoon. So can you just provide the status of the IOCL JV that we are going to proceed? So what are the expectations, what are the opportunities on the JV, and if you could, that's only from, that's all- We couldn't follow what you're asking. Can you hear me now? Yes. Can you just provide some opportunity on the what is the current status of the IOC JV that we had signed recently? What is the status and what are the opportunities? Have you decided, have you locked on it or something like that? If you could provide some color on it. That's all from my side. As we mentioned in the last quarter also, that IOC JV formation is in the still working progress. The JV is basically for entire biofuel segment, and within that biofuel segment, discussions are right now related to SA F and CBG. We are not yet, what I can say, finalized any specific project or something, because first the JV has to come into the picture, but parallelly, we are discussing on these two fronts, in a very active way. And we will see some action happening, once the JV is formed, that what kind of projects can come up under this two umbrella. Like, this is... The JV is basically meant for covering the entire basket of biofuels, and it is not restricted only to one biofuel. So we'll see some action when the JV is in place. Follow-up to that, when will the JV come up? By Q4? Yes, the plans are actually to get this JV formed up by Q4. We seek the approval from DIPAM and NITI Aayog, which is the process that is undergoing now at IOC. Okay. Once those approvals are in place, then we can go forward. Yeah. Okay. Okay. Thank you. That's all from my side. Thank you. Thank you. The next question is from the line of Manan Mundra, private analyst. Please go ahead. Manan, your line is unmuted. Please go ahead. Hello. Yeah, hi. Thanks for the opportunity. Yeah, so sir, my, my first question is, regarding the retention ratio of our projects. So, during the last 2, 3 years, the projects that we have executed, have we seen any% of our retention ratio being forfeited by, by our clients? You are talking about the retention? Yeah. No. So we have not seen any forfeiture of any of our retention till date. There can be delays in the release of retention for various reasons, but there is no question of forfeitures of our retention money, maybe because of, we are not providing services or we have not completed the project. No, we have not seen any of those instances. Okay. If you can share, who are our major competitors in the market? So there are many players in different segments of the sector. For biofuel, there are different set of people who are working in ethanol segment, different people who are working in CBG segment. For bio-CO2, there's a different competition. For brewery business, there is a different competition. So yeah, there are many, depending on the competitors in the market for us. Okay. Okay, okay. Understood. And last question, sir, we have seen an expansion in our margins. So is it majorly due to reduction in the commodity prices, or is it also an improvement in the execution efficiency also? According to me, around 75%-80% is on account of raw material, because our execution is doing fine. But we have seen some upside because of the large volume execution which we are doing. But major contribution, according to me, is on account of raw material prices. Okay. So going ahead, we can expect if the execution volumes increase, we can expect more efficiencies to come in? That's possible. That's what I was earlier also saying, that there is a scope for that kind of an improvement. Okay, okay. Thank you very much, sir. That's all from my side. Thank you, madam. Thank you. The next question is from the line of Naushad Chaudhary from Aditya Birla Sun Life AMC. Please go ahead. Thank you for the opportunity to clarification. Sorry, Naushad, we are not. Please, please speak little louder. Yeah. Thanks for the opportunity. Hope I am audible now. Yes. Some clarification, firstly, on the U.S. opportunity. So, can you talk about the competition here? Can you give us some specific name which compete with you on this opportunity? And are these tender-based opportunity, or how, what exactly do we pitch to the client to get these orders? So, Naushad, what happens is that there are about 200 grain-based ethanol plants in the United States that are... and about 150 of them are operating right now, 150, 150 some, some number. And they are not all of them, but the people who are wanting to produce SAF under the new program that I mentioned, they are looking, obviously looking for their feedstock, which is low carbon ethanol. So there are what I would call it, dialogues that are taking place between the SAF producers and the ethanol producers to see if there's a possibility for them to come together and work together. That's one dimension. The second is, we also have a presence in U.S., where people know that we have solutions. We've been talking in seminars, we've been talking, making our presentations in industry forums. We have customers who talk about us. We've been meeting customers to tell them what—how they can reduce the carbon intensity from where they are today to, where the desired, level of the carbon intensity reduction is. Three, we have a unique solution that is patent protected right now and, also covered through an exclusivity agreement, so that we are able to offer a very unique way of reducing this in an existing project. There are alternatives, not that we are the only game in town. There are alternatives, but we believe that ours is a very, sustainable, proven kind of a solution, so that it's not something that is, experimental at all in its nature. That's the second part. Third is, we are also participating in different forums, even with USDOE, USDA, to educate customers on their platforms with them, to see how this could be developed further, because very clearly, this is a requirement as a feedstock. This is already existing for them. And the third thing is that in United States, the projection is that because of electrification, the feed, the overall, ethanol demand may go down, and the only way for it to be bolstered up and even build more capacity is by positioning it as a feedstock for SAF, and that is where this whole effort of low carbon ethanol is made right now. Can you name a few competitors here? Can I name a few? So it depends on what technology pathway is chosen. So for example, if customers say we will go down the carbon capture and sequestration, CCS, through a pipeline route, then that also achieves a similar objective. However, pipeline routes are long-term because you need to get permissions, which are not easy to come by. You need a wellhead locator, which is not easy to get today. So that's a very long-term prospect. And there are lots and lots of what I would call logistical challenges to be overcome on that route, but that's definitely good. There are on the side of low-carbon ethanol, as I said, it's a three-step process or one step. I also believe that we do not have an equivalent, equivalent competition. People are trying to find different routes to solve the problem. On second and third stage, there are so companies like Fluid Quip, ICM, these are other ethanol, equipment manufacturers in the United States, also would like to offer solution. Understood. In terms of the efficiency, ROI point of view, from the client point of view, do you think our solution is better than the peers here? Or where do we stand? Yes. The stage one of solution that we are offering is very, very, very, very effective for them. Okay. Second clarification on the similar, or some other opportunity we were talking about in Brazil, and at some point of the call, we had mentioned like the 14,000-15,000 kind of crore rupees of opportunity we see- We are losing you here, Naushad, we can't follow. After Brazil, you couldn't follow world? ...On the Brazil opportunity also earlier, we used to talk about it's a INR 14,000 crore-INR 15,000 crore kind of opportunity we see here in Brazil, because they are shifting to-- they are targeting for corn-based capacities by 2027-2028. Is there any development there? What exactly we are doing here, and where we can see the orders from the Brazil for these opportunities? Yes. So, first of all, I don't recall having said the number that you mentioned, not, definitely not there. We think that's large. But, yes, Brazil is moving in direction of creating capacities from alternative feedstocks apart from sugar feedstocks. And as that development takes place, there are some elections there, all these things are now settled down. There's a much longer time than many, many other economies to overcome the impact of the COVID on their economy. So now we see some constructive developments that are taking place in that market, and we'll keep you posted as the developments move to a definitive stage. All right. Thank you so much, and all the best. Thank you. Thank you. The next question is from the line of Prathamesh Sawant from Axis Securities Limited. Please go ahead. Good afternoon, sir. Sir, two questions from my end. So just more clarity, I know the earlier participant mentioned, but is there any one-off item in the operational cost with respect to setting up a new GenX facility, or it is just in general hire for some reason? Prathamesh, there will be some costs which will be sitting in the employee cost and on the other expenses also related to the employee, because the new facilities which is coming up, naturally, the costs have started getting built up in the system now. But it is not one time, because Praj GenX is going to be there. Only the revenue right now is not reflected from Praj GenX, which will start happening hopefully from the quarter four of this financial year. Okay. Okay. And secondly, sir, on as you were talking about competitors in the U.S. market, so I just wanted to understand, are these local players over there or even those players are who, someone who are exporting to U.S.? In the U.S., ethanol and- They are local guys. They are local guys. Okay, okay. We'll have certain margin advantages given, you know, our low cost with to them? More than a margin, it's a technology advantage. Of course, there will be a number which will be attached to that, against the technology. We, our position in United States market is not, is actually not in any market for that matter, of a low-cost solution provider. We are very clearly saying we are best-in-class technology and therefore back on it. Okay. Okay, sir. Sounds good, sir. Thank you. That's it from my end. Thank you. Thank you, ladies and gentlemen, that was the last question. I now hand the conference over to the management for the closing comments. Thank you everyone for your time today. In case you have any more questions, feel free to write us at info@praj.net. Again, thanks for your time today, and wish you a great day and Happy Diwali. Thank you. Thank you, members of the management team. Ladies and gentlemen, on behalf of Praj Industries Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.