India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Praj Industries
Brewing The Right Chemistry BUY
Impact Analysis of Praj Industries Strategic Partnership with Qteros to accelerate
commercial production of Cellulosic ethanol:
The Development: Praj Industries Ltd has entered into a strategic partnership with US based
Qteros Inc. for accelerated development and commercialization of Process Development
Package (PDP) for Cellulose based Ethanol ( also called second generation Bio Ethanol). Praj
will be using Qteros’ Q-Microbe enabled Consolidated Bio Processing (CBP) platform to
develop the Process Package. The companies have set 18-24 months as targeted timeframe
for successful commercialization of Cellulosic Ethanol.
How does it benefit Praj Industries Ltd?
A key advantage of Qteros' Consolidated Bioprocessing (CBP) platform is the microorganism at
its core: the Q Microbe®.
The CBP platform based on the Q Microbe delivers an ethanol production process that is:
• Highly efficient: the natural metabolism of the Q Microbe enables direct
fermentation of oligomeric sugars, requiring less severe, lower cost pre-treatment
processes.
• Highly productive: The Q Microbe ferments all C5 and C6 sugars, resulting in overall
higher conversion of biomass to ethanol compared to yeast-based processes, while
enabling fewer production steps and minimizing the addition of exogenous enzymes.
• Highly flexible: the Q Microbe is feedstock agnostic, producing high yields of
cellulosic ethanol from a broad range of biomass materials, including corn stover
and cobs, bagasse and energy crops. This broad flexibility allows producers to utilize
low-cost, locally sourced feedstocks.
• Highly scalable: process is optimized for efficient, industrial-scale production in
markets around the world.
By dramatically reducing bioprocessing steps and resource requirements, CBP platform
represents the major step-function change needed to accelerate global cellulosic ethanol
production at a commercial scale.
Our View & Recommendation:
Oteros is a pioneer in the field of Cellulosic Ethanol technology development and has been
continuously improvising on the same.
We believe this strategic tie-up is a step in the right direction. By choosing the right
technology partner, Praj has taken another step towards commercial exploitation of its work
done so far on second generation biofuels.
Though there will not be immediate gain from this strategic tie-up and significant headwinds
are there before success is achieved , we maintain BUY on Praj Industries as revival in demand
from US and SE Asia, better demand scenario in domestic market and non ethanol initiatives
like waste water treatment and customized engineering will keep the company on high growth
path over next 3-5 years.
Our 15 month target for Praj Industries is R 116, valuing the company @ 15x FY12e EPS of
R 7.72 which gives upside potential of 33%.
Production of (Bio) Ethanol requires fermentation of Sucrose /glucose which is easily decomposed to produce ethanol. Sugar Cane,
Beet etc contain sucrose while Corn, Wheat etc contain starch which can be converted into glucose for further fermentation.
In contrast to sugar containing crops, utilization of lignocelluloses as substrate for ethanol production has a barrier due to its complex
structure which resists degradation.
Ligno Cellulose consists of three main fractions:
• Cellulose (45%),
• Hemi Cellulose (30%) and
• Lignine (25%).
These three components need to go through various chemical treatments before fermentation without compromising on Ethanol yield.
This is a complex process which uses various external chemicals and adds significantly to cost of production. This leads to final product
which is commercially unviable to produce.
How will Qteros add value to Praj?
Qteros brings one of the critical factors required for successful commercialization of Bio ethanol, a highly integrated streamlined and
low-cost process. Combining proprietary science and advanced microbiology with proven process engineering, Qteros has developed an
industry-standard Consolidated Bioprocessing (CBP) platform that simplifies complex engineering operations, reduces costly production
steps and delivers low-cost cellulosic ethanol from a broad variety of non-food feedstock sources.
What are the commercial arrangements?
Both Praj and Qteros will focus on joint development of second generation Bioethanol by capitalizing on each others strengths. This is
a step towards commercial exploitation of Praj Matrix . They have set 18-24 months time frame for commercial launch of technology
for Second generation biofuel and future revenue will accrue from licencing of the technology when both the partners will share the
proceeds.
US Energy Independence and Securities Act prescribes mandatory blending of 16 bn gallons cellulosic bioethanol by CY2022. Going
by ballpark figure of USD 8/Gallon capital cost of cellulosic Biorefinery, this presents a business opportunity of USD 128 bn over
next 12 years. Even if cost comes down to half or one third still we are talking of market potential of USD 64 Bn and USD 42.33
over next 12 years resulting into annual business opportunity of USD 3.52 Bn –USD 5.33Bn.
No comments:
Post a Comment