Biofuels technology company Praj Industries has finally made the big leap into Brazil, the country that pioneered ethanol as an alternative to fossil fuels.
It will hold 54% in the venture and Jaragua Equipamentos the rest
MUMBAI: Biofuels technology company Praj Industries has finally made the big leap into Brazil, the country that pioneered ethanol as an alternative to fossil fuels.
Pramod Chaudhari, chairman, Praj Industries, said: “We are in Brazil for the long haul and will work closely with Brazilian customers to enhance performance of ethanol plants and their return on investments.”
He said in the joint venture with Jaragua Equipamentos Industriais Ltd, a Brazilian engineering, construction & manufacturing firm, Praj will hold 54% and Jaragua the rest 46%.
Chaudhari, an IIT engineer and a first generation entrepreneur who has been pursuing an opening in Brazil, has spent years developing ethanol plants in India.
While Praj is the undisputed leader in the segment in India, with a market share over 50%, the company has been eyeing huge opportunities that are available in the US and Europe.
Brazil has made big strides in the usage of ethanol as an alternative fuel to power automobiles, power plants and even aeroplanes. Other countries, including developed nations, are playing catch-up with Brazil.
“A JV in Brazil is fine. But Praj has to have the scaleability and a lot of understanding of the Brazilian market,” an analyst said.
In Brazil, there are plants that process one billion litres of ethanol annually, the analyst said. In comparison, Praj makes ethanol plants that can process a lakh litres at the most. However, with Chaudhari’s panache and the way he has attracted majors like Aker Kvaerner for an European JV and investors such as Vinod Khosla, touted as an ethanol evangelist, and the House of Tatas, it’s only time that Praj achieves ability to make ethanol plants with huge scale.
Chaudhari has an answer to the analyst. “Praj understands that Brazil has a very different model for production of ethanol. A large part of its ethanol is produced directly from sugarcane juice unlike in other cane-producing countries. However, the technology paradigm is shifting, given that Brazil will produce more and more ethanol than sugar. Energy and Feedstock yields are becoming more critical, so is the fact that wastewater management is assuming greater importance,” Chaudhari said.
The scaleability of Praj’s plants will come sooner than later as it treads into bigger and more advanced markets. In the US, Praj acquired C J Schneider Engineering, a detailed engineering company for ethanol plants. Observers say this could be a big driver in the future.
The Brazilian JV will see a number of Brazilian nationals on its role including in the top management. It will truly be an amalgam of Indian and Brazilian expertise in technology and presents a powerful choice to Brazilian and Overseas investors in the ethanol industry.
The Brazilian joint venture was in the cards for some time now. A team was posted in Sao Paolo, Brazil to bring this to fruition. At the beginning of FY 2007-08, Praj had announced its intention to enter the Brazilian Market to enhance its global share of the ethanol technology and plant & equipment market. Praj’s office, apart from pursuing business leads, has also been assessing the opportunity in Brazil as well as understanding the business models for future operations.
With the rising price of crude, Brazil has further increased its use of ethanol by introducing flex fuel cars.
j_satish@dnaindia.net
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