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Founder of Praj Industries: Mr Pramod Chaudhary
innovative solutions to significantly add value in bio- ethanol, alcohol, brewery plants, process equipment and water and wastewater treatment systems for customers, worldwide.
Expertise in Bioprocesses and engineering.
It has one of the largest resource bases in the industry with over 450 references across all five continents.
PRAJ accounts for 10% per cent of world ethanol production.
CORE COMPETENCE OF PRAJ
1. Alcohol/Fue l Ethanol.
2. Brewery. 6. Agriservices.
3. Water and Waste Water. 5. Process Equipments. 4. Bionutrients .
Ruturang Musical Concert. Adoption of Technical Education Institute. Reduce-Reuse-Recycle. especially mitigation of climate The key programs conducted are: 1. . Health Care 6. Environment is the prime change. Biodiversity Park 5. Mobility(transport). It is based upon the plank of SMART – Sustainable. Environmental Initiatives 3. agenda. Awareness. Employee Engagement in Social Responsibility 2. a trust formed in 2004. 7. Stream of Life 4.The formation of CSR charter is facilitated by PRAJ Foundation. Tree Plantation.
Mining & Metals and Power Generation. finalized an agreement to form a Joint Venture Company in Europe that will be called BioCnergy Europa.MERGERS AND ACQUISITIONS September 2006 : Praj acquired 100% common stock of C. Inc (CJS experience) Purpose. global provider of engineering and construction services. 22 crores June 2007: Praj Industries. Purpose-("Aker Kvaerner"). including Oil & Gas.Having expertise and in providing detailed engineering services to the biofuel industry including ethanol plants. The value of the acquisition is Rs. The business within Aker Kvaerner comprises several industries. and Aker Kvaerner. Praj owns 60% interest and Aker Solutions hold the remaining 40%. Schneider Engineering Co. J. Refining & Chemicals. . technology products and integrated solutions. is a leading global provider of engineering and construction services.
.Due to overall US economic situation. They have the necessary technology for water treatment and Praj has been consciously trying to diversify away from its main business . Purpose. Praj Americas Inc. Meanwhile. the company has retained rights for process technology for bio-diesel in North America. Purpose-The water treatment industry is worth $2 billion and growing between 25 and 30 percent. the Company has launched a new company in US. Praj Schneider due to economic scenario in US. Nov 2010: Praj Industries made plans to buy water Treatment Company as growing shortages lead to greater demand for the life-sustaining fluid.MERGERS AND ACQUISITIONS March 2010-The company completed the process of divesting from its US-based subsidiary.
DIVIDEND PAYOUT RATIO 120% 100% 80% 60% 99% 90% 90% 72% 63% 40% 20% 0% March '07 Jan '08 Jan '09 Jan '10 Face Value May '11 Dividend Paid .
Crude price is affecting profitability of Praj.DIVIDEND PAID Reserves and surplus are increasing but at a diminishing rate. . material cost resulting in Low Sales turnover and higher decline in profits. Dividend paid is decreasing YOY.
5 1.98 1.44 1.5 0 March '07 Jan '08 Jan '09 Jan '10 May '11 .26 Dividend Per Share (Rs.) 2.) 1 0.Dividend Per Share (Rs.5 2 1.8 1.8 1.
39 512.99 Reserves .2 300 200 131.47 100 0 March '07 March '08 March '09 March '10 March '11 406.77 495.RESERVES 600 500 400 314.
Waste water treatment business will make company take few risk and possibly earn healthy returns. • • • • . No debt which is good for the company. Most of the project work for ethanol plant are on contract basis.DEBT.EQUITY RATIO • Praj is a debt free company. Zero debt even means less risk and less returns.
EARNINGS PER SHARE .
• The EPS has been declining since 2008 .EPS CONTD.. • • . A P/E of 15-17 is favorable for industries today considering Sensex at 17k Praj is trading at P/E of close to 23 which is little high. 50 % of our business comes from outside India • • Global meltdown has affected the ethanol production industry.
44 Cash 100 80 95.43 109.19 140 120 101.42 60 40 20 11.92 0 2006-07 2007-08 2008-09 2009-10 2010-11 .CASH FLOW FROM OPERATING ACTIVITIES Cash 180 160 165.
CONTD. . Increase in Debtors with decrease in sales. we can say that cash flow from operating activities is falling close to 92%. Company’s business has been impacted in the financial year 2010-11 majorly due to adverse global market economic conditions.. Taking 2006-07 as a base year.
000.718.00 2006-07 2007-08 2008-09 2009-10 2010-11 .000.813.000.137.67 710.00 8.00 6.000.84 1.529.022.398.00 sales 4.31 5.000.805.27 7.84 5.32 1.000.016.74 6.00 Gross Profit 3.74 1.00 2.81 7.000.70 1.074.00 7.00 6.GROSS PROFIT MARGIN 9.000.00 1.000.
86 10.CONTD.73 15.00 Ratio 12. Ratio 30.85 23.00 5.00 25.39 23..00 2006-07 2007-08 2008-09 2009-10 2010-11 .00 25.00 18.22 20.
more lower profit-bearing products being sold. Lower sales during the first quarter where company were not being able to sell its core product ethanol. Hence.e.. .CONTD. to increase sales company reduced margins. Company could not account the increasing effects of rising inflation in India and hence could not pass on to the customer. The gross profit margin has reduced due to the mix of sales being bad i.
9 534.813 7016.3 1297.744 6000 6022.7 1000 0 2006-07 2007-08 2008-09 2009-10 2010-11 .5 1138.84 5529.4 865.267 7000 6074.NET PROFIT MARGIN 9000 8000 7718.31 Sales 5000 4000 NPAT 3000 2000 1535.
00 21.00 9..67 5.81 15.91 16.88 20. Ratio 25.00 14.24 Ratio 10.00 18.CONTD.00 2006-07 2007-08 2008-09 2009-10 2010-11 .
However factors that influences the lower net profit margin is increase in debtors. USA. increase in interest cost and high rate of inflation leads to higher expenditure for the period. The biggest volatile has been observed in the year 2010-11 because of lower sales. Merger with Qteros inc.CONTD. inventory level because lower sales than anticipated. .. net profit margin for the company is highly volatile. As we can see in spite of gross profit margin being moderate.
CREDIT RATINGS OF THE FIRM year Ratings Significance Rating Agency ICRA 200607 200708 200809 200910 201011 A1+ Highest credit quality to short term debt Highest credit quality to short term debt Safety regarding timely repayment of banking payments Safety regarding timely repayment of banking payments High safety for repaying long term debt A1+ ICRA P1+ CRISIL P1+ CRISIL AA/Stable CRISIL .
TECHNICAL ANALYSIS .
TECHNICAL ADVICE On BSE.72/share and as per the judgment we can say that stock is sustaining itself at a point of 1 year low of 68.8. .Praj Industries is currently trading at RS.Hence. we can say that there is a support at this level and keeping this level as a stop loss we can invest in this stock for the target of 85-87 for short term.
. Choksey Securities.EXPERTS ON PRAJ Rajesh Agarwal –Fund Manager at Eastern Financers.
2011 25-30 % of growth is expected by this year.REVIEW ON COMPANY PERFORMANCE FOR Q1-Q2. . PE is still above 13-14 is not bad. Started getting orders from International customers for Ethanol.
RISKS AND CONCERNS Praj has well documented Risk management policy. the Company has put in place a forex risk management system. . Biofuels and Brewery business is governed by the legislation of different geographies served by the Company. 30-50% of the Company’s business comes from overseas markets. The Company has instituted adequate internal control procedure(s) commensurate with the nature of its business and the size of its operations for the smooth conduct of its business.
2. .Davy Power Gas. M. Tata Projects. 2. Suzlon. Uhde India.Competitors Major Competitors: 1. 3.N. 3. Technimont ICB. Indirect Competitors: 1. 4.Dastur & Co. Toyo Engineering.
•www.com •http://www.bseindia.moneycontrol.praj.rediff.com •Financial Ratio’s in business – Book by Raghu Palat. .com •www.money.net •www.