Praj forms JV with brazilian company

Praj Industries Ltd has announced the formation of a Joint Venture(JV) Company in Brazil. The 'New Company' is formed in association with a Brazilian Engineering, Procurement, Construction & Manufacturing Company (EPCM), Jaragua Eguipamentos Industriais Ltda. Praj will hold 54% in the JV while Jaragua will hold the balance 46%. The JV will provide Praj an entry into the fastest growing ethanol market in the world. Jaragua is a leading Brazilian engineering major.

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. With this in view, Praj had already set up an office in Sao Paolo, Brazil. The Brazilian Office, apart from pursuing business leads, has also been assessing the opportunity in Brazil as well as understanding the business models for future operations.

It is a well known fact that Brazil is a pioneer in the application of ethanol as a transport fuel blend. With the rising price of crude, Brazil has further increased its use of ethanol by introducing flex fuel cars. Currently, Brazil uses 17 bln litres ethanol (both hydrous and anhydrous). With production slated to grow from 19 bln litres to 30 bln litres in 2010, the opportunity for new capacities is a given. A large part of Brazilian growth in ethanol production is driven by growth in Flex Fuel Vehicles (FFVs - operating on both 100% hydrous ethanol and 100% petrol/gasoline).

"The formation of Joint Venture in Brazil demonstrates Praj's commitment to Brazilian ethanol market. 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, said Pramod Chaudhari, Chairman of the Company.

The Joint Venture Company, Praj Jaragua Bioenergia S.A., will supply end-to-end solutions for sugarcane juice to ethanol production - right from transportation of cane, cane preparation to juice extraction (milling/diffuser), juice evaporation, fermentation, distillation, molecular sieve (MSDH) based dehydration plant upto wastewater concentration and treatment. The solution will result in an energy and feedstock efficient plant. Backed by vast synergistic resources from the partners, the JV will reduce the delivery time considerably and enable plants to be set up faster.

"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", added Pramod Chaudhari.

The joint venture with Jaragua Equipamentos presented the best option to go forward in the Brazilian market. Jaragua is an established EPCM Company with more than 50 years of
experience in Oil & Gas, Petrochemicals, Energy and Sugar business. Based in Sorocaba, Jaragua employs more than 1000 personnel in Brazil and has one of the largest manufacturing facilities in Brazil. Accredited with ASME U stamp and H stamp, Jaragua maintains the highest standards in quality and customer orientation. Jaragua is also expanding its manufacturing facilities in north-east of Brazil in the State of Alagoas.

Praj will bring its worldwide experience in setting up energy efficient ethanol plants to the Brazilian market.

The Brazilian Joint Venture Company will operate in the state of Sao Paolo and will have 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. Praj will be the major partner and Pramod Chaudhari will be the Chairman of this Joint Venture.