Praj Industries - Annual Report - 2008-2009

PRAJ INDUSTRIES LIMITED

ANNUAL REPORT 2008-2009

DIRECTOR'S REPORT

To
The Members of
Praj Industries Limited,

Your Directors are pleased to present the 23rd Annual Report and the
Audited Statements of Accounts for the year ended 31st March, 2009,
together with the notice of Annual General Meeting.

Financial Results:

In the year under review, your Company has recorded a total income of
Rs.7961 million (Rs. 7183 million), Profit before Tax, Rs. 1744 million
(Rs. 1608 million) and net profit of Rs. 1297 million (Rs. 1535 million).
Considering the challenging business environment globally, your Company's
performance can be termed as satisfactory.

(Rs. in million)
2008-09 2007-08

Turnover 7719 7016
Other Income 242 167
Total Income 7961 7183
Total Expenses 6353 5439
PBT 1608 1744
PAT 1297 1535

Dividend:

Your Company declared an Interim Dividend of Rs. 1.30 per share (65%) for
the financial year 2008- 2009. To mark the Silver Jubilee Year a Special
Dividend of Re. 0.50 per share (25%) was also declared and paid out taking
the total dividend up to Rs. 1.80 per share (90%). Your Directors are of
the opinion that the said total Interim Dividend be treated as final
dividend for the financial year 2008 -2009.

Proceeds of Preferential Issue:

Out of the proceeds of earlier years in respect of preferential allotment
of equity shares and warrants pending utilization amounting to Rs.384.500
million, an amount of Rs.369.703 million was deployed towards expansion of
R & D and balance amount was deployed towards expansion of manufacturing
and engineering facilities. Accordingly, the total amount stands fully
utilised.

Credit Rating:

(a) CRISIL has assigned 'Pl+'rating to Company's short-term banking
facilities which signifies degree of safety regarding timely payment of
instruments is very strong.

(b) CRISIL has also assigned 'AA-/Stable' rating to Company's Cash Credit
facilities. The 'AA' rating signifies high safety with regard to timely
payment of long-term financial obligations.

Subsidiaries:

Pacecon Engineering Projects Ltd. (PEPL), BioCnergy Europa B.V.,
Netherlands, Praj Jaragua Bioenergia S.A. Brazil and Praj Far East Co.
Ltd., Thailand are subsidiaries of your Company and are operating in their
respective areas. During the year under review the legal formalities
regarding closure of Singapore subsidiary viz Praj Far East Pte. Ltd. have
been completed.

Your Company has applied to the Central Government for exemption from
attaching the audited accounts of the subsidiaries to the Annual Accounts
of your Company, for the financial year ended 31st March, 2009. The said
application is being processed and final approval letter is awaited. A
statement containing brief financial details of the Company's subsidiaries
for the year ended 31st March, 2009 is included in the Annual Report. The
annual accounts of these subsidiaries will be made available for inspection
to member of the Company/its subsidiaries upon request at the registered
office of the Company.

Corporate Governance:

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges,
Management Discussion and Analysis Report (Annexure 1), Corporate Social
Responsibility (CSR) Report (Annexure 2) and Report on Corporate Governance
(Annexure 3) are annexed to this Report.

Directors:

Ms. Parimal Chaudhari retires by rotation in terms of Article 83 of the
Articles of Association of the Company and being eligible offers herself
for re-appointment.

Mr. Daljit Mirchandani retires by rotation in terms of Article 83 of the
Articles of Association of the Company and being eligible offers himself
for re-appointment.

Auditors:

(a) Internal Auditors:

The Internal Auditors, M/s. Khare & Bhide, Chartered Accountants, Pune have
conducted the internal audits periodically and submitted their reports to
Audit Committee. Their reports have been reviewed by Audit Committee and
Statutory Auditors.

(b) Statutory Auditors:

The Statutory Auditors M/s. B. K. Khare & Co., Chartered Accountants,
Mumbai retire at the conclusion of the 23rd Annual General Meeting. They
are eligible for re-appointment and have expressed their willingness to be
appointed as Statutory Auditors of your Company. You are requested to
consider their re-appointment as Statutory Auditors for the ensuing year
2009-2010.

Directors' Responsibility Statement:

In accordance with the requirements of Section 217(2AA) of the Companies
Act, 1956, the Board of Directors states that

* In the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;

* The accounting policies selected have been applied consistently and
judgments and estimates made are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Company at the end of the
financial year 2008-09 and of the profit of the Company for that period;

* Proper and sufficient care has been taken for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act,
1956 for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities;

* The annual accounts have been prepared on a going concern basis.

Employee Stock Option Plan:

* During the year, your Company allotted 269,272 shares on exercise of
options under the Employee Stock Option Plan 2005 Grant I & II. Consequent
to the above, the Issued, Subscribed and Paid-up Share Capital of your
Company increased from 183,161,810 shares (Rs. 366.324 million) to
183,431,082 shares (Rs. 366.862 million) as of 31st March 2009.

* The information to be disclosed as per SEBI (Employees Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 is annexed to
this Report (Annexure 4).

Particulars of Employees:

The statement of particulars required pursuant to Section 217(2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
(Amendment) Rules, 2002, forms a part of this Report. However, as permitted
by the Companies Act, 1956, the Report and Accounts are being sent to
Members and other entitled persons excluding the above statement. Those
interested in obtaining a copy of the said statement may write to the
Company Secretary at the Registered Office and the same will be sent by
post. The statement is also available for inspection at the Registered
Office, during working hours upto the date of the Annual General meeting.

Energy Conservation, Technology Absorption, Adaptation, Innovation

Conservation of Energy:

The operations of your Company are not energy intensive as the operations
are limited to machining, metal working and finishing of a variety of
equipment. However, your Company has taken energy conservation as a major
agenda. Under the Corporate Social Responsibility charter, it has conducted
audits at two of its major locations and has gained significant savings in
energy consumption. The Company plans to continue auditing all its premises
so as to bring down the impact of energy through its business activities.

Foreign Exchange Earnings & Outgo:

Particulars regarding foreign exchange earnings are presented in Schedule
19.19 and outgo are presented in Schedule 19.20 of the Audited Accounts.
Your Company has retained its status as a net forex earner.

Acknowledgements:

Your Directors wish to place on record their appreciation towards all
associates including Customers, Collaborators, Government Agencies,
Financial Institutions, Bankers, Suppliers, Shareholders, Employees and
others who have reposed their confidence in the Company.

For and on behalf of the Board of Directors

PLACE: PUNE SHASHANK INAMDAR
DATE : 21ST APRIL, 2009 CEO & MD

Management Discussion & Analysis:

Overall Review:-

The year 2008-09 was full of unprecedented events. It was a year which has
tested the confidence of investors and the reliability of the system in
which Companies conduct their businesses. It has also put to test the true
resilience of organizations. While many a best laid plans by various
industrial houses may have come undone, it has presented an opportunity for
conducting a reality check and for undertaking course corrections, as
necessary.

The biofuels industry has also undergone structural changes. Food vs. Fuel
issue is not relevant today as food grain production has increased, but
this issue has certainly made biofuels sector far more determined and
motivated to work with second and third generation feedstocks. Some
Governments have even announced funding and positive legislations, like the
RFS-2 and the Renewable Fuels Directive in EU, to accelerate work on non-
food biofuels. Praj has launched its own advanced biofuels programme, which
has recently achieved a milestone.

Financial Review:

Your Company recorded a stable and sustained performance in FY 2008-09.
Gross Margins were up 28% when compared to previous fiscal, though EBIDTA
showed a drop of 11% post exchange loss due to unadjusted advances, over
2007-08.

Margins are tending to more realistic levels. The Company has put in place
a value engineering program which seeks to enhance value to customers,
thereby driving value for the Company.

Operating Environment & Opportunities:

In December 2008, the Company completed its 250 year of operations. Market
conditions have been challenging. Credit allocation is a factor to contend
with. Your Company has been working through this demanding situation to
ensure that viable projects move forward. In some cases, we have been
successful. Return of confidence in the system will further accelerate the
success rate.

The year also saw consolidation in the industry with a number of M&A
activities. This trend may continue for some more time. In a way, the
industry will be stronger and a better model will emerge.

Another trend seen during the year was the advent of energy companies or
oil companies investing into biofuels production facilities. This will
enable mainstreaming of biofuels along with other energy components in
transport fuels. Praj is currently engaged in a project for one such
Company, for their plant in UK.

Over 50 countries have adopted biofuels programmes and many more are
earnestly evaluating adoption of biofuels in the transport fuel mix.
Strategic Focus on Crop Sciences, Farm-to-Fuel Model

In order to strengthen the business of biofuels, knowledge partnership with
the clients is necessary. One part of the essential value chain is the
feedstock. Agriculture is the back-bone of biofuels. Knowledge
dissemination for energy crops was found to be in the interest of the
industry. Praj has already demonstrated its capabilities on sweet sorghum
and safflower where client engagements have been
undertaken.

Praj has invested into agri-services by way of setting up an Energy Agri
Solutions facility which provides proof- of concept. This facility will
concentrate on non-food crops like sweet sorghum, safflower, variety of
grasses, etc. Energy Agri Solutions group will have the facility for
breeding and testing new varieties of energy crops at laboratory scale, GPS
system for global land classification, green houses, seed processing as
well as controlled condition test beds for study of agronomical practices,
etc.

Praj is working in this area with national and international

institutes to identify and develop crop varieties suitable for biofuels,
one such global institute being ICRISAT where Praj is a member of the
biofuels steering committee.

Market Dynamics:

Lower crude oil prices have created a negative sentiment around biofuels.
Crude Oil prices and its impact on biofuels is one of the many myths which
surround biofuels. Biofuels are driven more by mandates resulting from
Government policies for climate change mitigation. The fact that global
ethanol consumption grew 38% over 2007 should be a good indicator of the
strong position of biofuels as a renewable fuel within the energy mix.
Course corrections are imminent in a new industry and we are seeing various
relationships emerge as a result of that. Government mandates have been
successfully launched in USA and Europe with specific targets to minimize
GHG emission levels through deployment of biofuels. They are irreversible.
These mandates also force the industry to look for viable answers and in
turn promote breakthrough research.

Ethanol Industry Review Europe:

In January 2009, the EU Parliament passed a package called the Renewable
Energy Directive (RED) which lays down the path for adoption of renewable
energy including biofuels.

The RED is currently under ratification by various member states.
Highlights of the package include a strong reference to sustainability
criteria, accounting for indirect land use, lifecycle GHG emission
reduction of various feedstocks and encouraging blending of biofuels upto
5.75% v/v by 2010 and 10% v/v by 2020.

Praj has the capability to deliver on the standards. With biofuel plants
commissioned across Europe, Praj has gained a strong reference base in
Europe.

India:

The Indian alcohol producers have always bucked the trend. Beverage alcohol
is the main stay in India. Even though the mandate of 5% for blending
ethanol is not implemented across the country, around 10% of the total
alcohol produced still gets blended. A stronger legislation and tax reforms
are the only answer to successful implementation of the policy.

South East Asia, Australia:

While Thailand continues its blending program, going from 10% to 20%,
Philippines has passed a law to mandate 100lo ethanol blending. Japan is
interested in partnering Thailand largely from the point of view of
imports. This should see build up of capacity. Australia persists with
ethanol plant construction inspite of no firm mandate, on a state-to-state
basis. Praj delivered its second skid mounted plant, of double the earlier
capacity. The earlier plant is working flawlessly, proving that innovation
in engineering can result in higher customer confidence and repeat
business.

South, Central America & Caribbeans:

Sugar is an integral part of South, Central America's business. Some
countries in the region are blessed with long sugarcane cultivation window,
which is conducive to biofuels. Many countries have introduced fuel ethanol
programs. Cost advantage and trade treaties give these countries duty free
access to US and European markets. This creates a double advantage for the
region.

Brazil:

Brazil is the second largest ethanol producer. Ethanol industry, which is
the core of Brazilian development, will see some short term consolidation.
Due to its inherent strength in this area, not just economically, but also
from sustainability point of view, Brazil is capable of pulling through and
getting back on its feet. Biofuels is still at a discount to gasoline.
Besides, Brazil is a leading exporter of biofuels with almost 15% of its
production exported. Brazil is also expected to benefit from the sugar
price increase, which should improve the profitability of mills.

North America: USA, Canada and Mexico:

The market is undergoing re-structuring in USA. A lot of M&A activities are
underway. The way forward is with advance biofuels. Feedstock other than
corn kernel, i.e., Sugarcane, Sorghum and Agri-residues are classified as
advance biofuels.

Opportunities are still developing. The American Reconstruction plan makes
provisions for guarantees for funding of research programs to speed up the
pace.

We are already executing an advance biofuels project based on sugarcane to
ethanol in Louisiana.

Africa:

The African continent is all set to benefit from the sugar deficit as also
the EU mandate. Some African countries have a duty concession or duty free
access to EU. Due to the cost differential, Africa is likely to emerge as a
leading trade partner for biofuels with EU. The region is still in its
infancy as far as biofuels are concerned.

Beer Industry Review:

India is the predominant market for brewery equipment for Praj. India is
also the fastest growing region in consumption growth. Last year, beer
consumption grew by 10% YOY in India. The main driver, apart from economic
activity was longer summer season.

Our value proposition in breweries lies in our ability of integrated
engineering, be it existing or greenfield brewery. This has seen us working
with many top beer producers in the country. Water and Energy are critical
components in the beer production process. We are working towards reducing
the impact of these two components to enable greater competitiveness for
our customers. Our market share continues to be upward of 50%, making us
the most preferred brewery equipment supplier.

Biodiesel Industry Roundup:

Biodiesel Plants is a relatively new business for Praj. Due to the high
feedstock cost, we were aware that biodiesel business would take a while
before we can make our mark. So, we invested our energy into creating
significant differentiators for our biodiesel offering.

Number one challenge was to address the feedstock. Majority of biodiesel is
produced from Edible Veg Oil. In some regions, this is changing. However,
to increase the pace of change, we undertook study of non-food crops,
including Jatropha and Safflower (non-edible variety). While Jatropha will
take a while to catch up, Safflower is immediately of interest due to its
shorter crop cycle and yields. We are presently working with customers on a
Farm- to-Fuel model to demonstrate its viability. We are also working on
various technologies like Heterogenous Catalysis which will improve the
efficiency. For the purpose of showcasing our capabilities, we have set up
a demo plant at our R & D centre.

Awards , Certifications & Recognition:

We have won many accolades for our performance as also our commitment to
the green space. Forbes Magazine once again conferred the Best Under a
Billion Company in Asia award; EEPC conferred the Star Performer in Exports
while DHL - CNBC TV18 bestowed the International Trade Award on us.

The Chairman of your Company will once again lead the cause of the Biofuels
Industry as the Chairman of the National Biofuels Committee, CII. The
Committee works with policy makers and other leading thoughtleaders in the
industry and all stakeholders to bring about a prudent biofuels policy in
India. It is a tough call, but the opportunity to put India firmly onto the
biofuels map is much too valuable to let go of.

Pramod Chaudhari has also been elected as the Chairman of CII Maharashtra
Council for 2009-10.

He is also elected to the council of the Association of Biotech Led
Enterprise (ABLE).

American Society of Mechanical Engineers (ASME) has certified Praj for H
stamp till 2012.

Resources:

Your Company has invested into capacity and capability enhancements. State-
of-the-art machinery have been installed for over-dimensioned equipment and
for better finish as required for breweries and pharma industry.

Special facility for skid mounted units has been created. This has enabled
us to deliver the largest size skids

The Company successfully embraced Kaizen methodology in its manufacturing
workshops. This has resulted in reduction of waste in terms of resources as
well as material. The full impact can be felt over the years.

Health, Safety and Environment Practices have been instituted at all its
locations including in Pune and Kandla, in line with the HSE policy of the
organization.

Processes & Systems:

Praj has introduced many value enhancing systems and processes during the
year.
Value Analysis and Value Engineering (VAVE) is one such method employed for
driving down cost while keeping intact or even enhancing the value of the
offering for the customer. The Company will continue to pursue this method.

To increase productivity, the Company has also developed many computer
based applications which assist in design outputs and other automation
tools.

SAP R/3 system is now fully implemented, which has helped improve operating
efficiency.

Technology Excellence:

Innovation is integral to the Company's growth strategy. The Company is
involved in upscaling the lab scale development in the area of second
generation biofuels from non-food ingredients. Patents have been filed for
the same.

The Company has jointly worked with a boiler manufacturer to offer its
evaporation system which when operated with the incineration boiler offers
a zero discharge solution to distilleries. This system is successfully
operating at a sugar mills attached distillery in Southern India.

Human Capital:

Human Capital is a key to our success. Praj is considered a knowledge-based
Company
and has created pole position for its technology and systems on the basis
of the talent it is able to deploy. In line with its growth strategy, the
Company continually audits critical profiles required in the future. The
human capital group has charted out a road map for development of talent,
including leadership pipeline, succession planning and career paths which
will make the Company 'Employer of Choice' and in turn the Company will
provide 'Quality workspace and lifespace' to people.

Our manpower count is commensurate with the long term goals of the Company.
We
have invested into this essential asset by way of training and other
developmental tools. We have undertaken redeployment to ensure that
productivity and efficiency levels are maintained while short term goals
are also addressed.

The Company is also focusing on human resource diversity. Women form a
larger percentage of workforce than before. We have seen the composition of
female employees grow to 10% from the earlier levels.

Future Outlook:

There are some signs of recovery, but the Company expects current trends to
prevail in a large part of FY2009. The Company has prepared itself for this
and is ready with a counter strategy. The Company has formed a Group headed
by Senior Management to review each of these action plans which include
waste elimination to increasing business to improving processes that will
result in hard core savings.

Your Company is also looking at expanding its share of business in a
project (wallet-share). Through its involvement in projects over the past
twenty five years, your Company has acquired knowledge of necessary systems
and services in the entire project. The customers of your Company have
complete faith in your Company's capabilities. Meanwhile, your Company has
undergone a successful learning in order to competently provide solutions
beyond its current scope of work.

Biofuels form around 5% of the transport fuel mix. A one percentage
increase in the transport fuel mix translates into a 20% increase in
biofuels demand over the current levels (80 bln litres of ethanol and 12
bln litres of biodiesel). Renewables are here to stay. Technological
improvements in biofuels production processes will enhance its
competitiveness.

Meanwhile, the Company is leveraging its strengths in manufacturing and
engineering to offer solutions to the general process industry. A small
beginning has been made. Biotechnology led solutions are the longer term
plan. The Company will explore other organic and inorganic growth
prospects.

Risks & Concerns:

Your Company has a well documented Risk Management Policy. The policy is
reviewed periodically by the Management and appropriately modified, as
necessary. Based on the operations of the Company, risks are identified and
steps are taken to mitigate the same.

The concern as regards the negative news emanating largely from USA, is
creating unwarranted adverse opinion worldwide. Countries like Brazil and
those in other part of South, Central America and Asia have a good prospect
of scaling up their programs, as biofuels are sustainable even for first
generation feedstock in these regions.

In these days of credit crunch, allocation has come under a lot of
pressure. Biofuels will have to fight for its share in the funds allocation
by financial institutions. The impact of the slow down may take a while to
return confidence in the sector.

Internal Control Systems:

The Company has instituted adequate internal control procedures
commensurate with the nature of its business and the size of its operations
for smooth conduct of its business.

Internal audit is conducted at regular intervals at all locations and
covers the key areas of operations. It is an independent, objective and
assurance function, responsible for evaluating and improving the
effectiveness of risk management, control and governance processes.

Forward Looking Statement:

Statements in this report, particularly those which relate to Management
Discussion and Analysis, describing the Company's future plans,
projections, estimates and expectations may constitute Forward Looking'
statements within the meaning of applicable laws and regulations. Actual
results might differ materially from those either expressed or implied.

Annexure 2

Corporate Social Responsibility Report:

The Management of your Company is alert to the fact that your Company's
performance is notjust related to the well being of the industry or the
economy the Company operates in, but also to the well being of the society
in which the Company exists. This led to the formation of a Corporate
Social Responsibility (CSR) charter which is facilitated by Praj
Foundation, a trust formed in 2004.

The CSR program of your Company is based on the plank of SMART-Sustainable,
Mobility (transport), Awareness, Reduce-Reuse-Recycle, Tree Plantation.

Environment is the prime agenda, especially mitigation of climate change.
The thought behind this was to build an ideological linkage to our business
(cleantech) while improving the quality of life within the society.

We also decided to move in a phased manner so that the impact could be
larger and it can be measured with greater effectiveness for quick
corrective actions.

The key programs conducted in 2008-09 were:

Employee Engagement in Social Responsibility:-

We encourage sustainable practices amongst our employees to motivate'smart
living and smart working'. To promote the concept of personal
sustainability, a Green Group formed by employees has been operating.

Right from mobility of employees, reducing paper wastage and conserving
energy to tree plantation, many programs have been given shape. Energy
conservation on Praj premises was tackled on priority. Energy Audit was
conducted at Praj House and at the manufacturing units. The Audit
recommendations are being implemented to conserve energy. Employee
awareness is being intensified to supplement the energy conservation
efforts. Significant savings have been recorded.

Extending the concept of personal sustainability to the families of
Prajiites, Green Family contestwas launched. This rewarded savings in
electricity usage through greener options including installation of solar
panels and CFL and visits to wild life sanctuary with the family.

Societal Engagement:

Environmental Initiatives:-

- Learning by Doing:

Praj Foundation has jointly implemented a project of Environment Awareness
& Conservation with a residential school near Pune. A composting unit has
been set up and the students are trained to operatethe composting unit. The
compost from the unit is being used to grow organic vegetables and
medicinal plants. A Green Scholarship has been instituted to recognize
efforts of the most environment friendly student.

- Clean City:

The city of Pune, with its fast growing population faces severe problems in
terms of solid waste management. Praj Foundation & INORA are jointly
implementing a project of Decentralized Waste Management through 8
Satellite centres located in different parts of the city. More than 480
families have started their individual composting projects under this
initiative.

- Stream of Life:

Praj Foundation & Ecological Society have partnered to undertake Nirmal
Ganga Abhiyan, a project for ecological restoration of existing streams in
three villages near Pune. These villages represent High, Medium and Low
rainfall areas of the region. These streams are being restored with the
help of school children, teachers & villagers. The project will be operated
over the next two years.

- Biodiversity Park:

A Silver Jubilee Biodiversity Park is being planned for which necessary
permissions have been received by the Company. Health Care Praj Foundation
is supporting a project to create awareness about health issues among
school children ,adolescents and women of seven villages in Mulshi Taluka
of Pune District. These villages are in close proximity of your R & D
Centre, Praj Matrix.

Education:

- Adoption of Technical Education Institute:

Industrial Training Institutes (ITIs) have been imparting vocational
training throughout the country. Recently, the Government announced a
scheme for upgradation of ITIs under the mentorship of the Industry. Praj
has undertaken mentiorship of an ITI at Velhe, near Pune.

- Endowment to IIT, Bombay:

Praj has instituted a Chair Professorship for Energy Sciences at IIT,
Bombay in order to promote the subject of Clean Energy. The Company draws a
number of senior staff from IIT, Bombay and recognizes the need to nurture
the spirit of Scientific pursuit in such institutes which will go a long
way in nation building.

- Supportive Education:

Praj Foundation is supporting supplementary education programme for
children in villages in Mulshi Taluka since December 2006 in collaboration
with Sadhana Village. The program is undertaken with a view to improve the
scores of students under formal education system by way of increasing
interest of students in curriculum through interesting teaching methods.

- Ruturang Musical Concert:

Praj Foundation sponsored a musical concert called 'Ruturang' performed by
visually impaired students from Pune Blind Girls' School. The musical
concert will be staged in major cities in India for raising funds for
creating infrastructure at school.

Praj has also participated in Clls Affirmative Action Program which
involves talent building amongst candidates from weaker section of the
society.

1983-85:

* Inception of PRAJ with entry into distillery industry in India.

* Brings Continuous Fermentation Process to India.

* Develops SPRANNIHILATOR, a zero-pollution system for incineration of
distillery effluent. The system was given an award as an innovative
concept.

1987-88:

* Receives special venture funding from ICICI Ventures. One of the first
Companies to receive Venture Capital in India.

1989-91:

* Establishes R&D Center.

1991-93:

* Develops multi-feed distillery including starch based process.

* Diversifies into synergistic fields like brewery plants and process
equipment and systems.

1993-95:

* Launches Initial Public Offering (IPO) in 1994. Issue oversubscribed
seven times. Listed on the BSE and NSE India.

* Sets up base in Singapore, as a hub for the ASEAN and the Far East
markets.

* Receives first international order from Indonesia for multi-pressure
distillation.

Incorporates the patented self-cleaning Flubex evaporator.

* Contracts major order from Philippines for multi feed plant contracted.

1996-99:

* Restructures Company's operations to achieve greater focus in its core
technologies.

* Increases focus on primary lines like ethanol technology and brewery
engineering.

1999-2000:

* Ventures into South America. Sets up office in Bogota, Colombia

* Manufacturing facility awarded ISO 9002 and the prestigious ASME U & H
stamps for pressure vessels and heating boilers.

* Fuel Ethanol gains global recognition as an environment friendly
transport fuel.

* Praj's energy saving multi-pressure distillation system becomes an
industry standard.

2000-02:

* Introduces Vapor Phase Molecular Sieve Dehydration system for Fuel
ethanol production.

* India's first MSDH plant by Praj goes on stream.
* Enters European market.

2002-04:

* Launches Matrix - the innovation center for advanced applied research in
the field of ethanol and brewery process.

* Establishes offices in Johannesburg, Bangkok and Sharjah.

* Commissions South East Asia's first Secondary Juice to Ethanol Plant in
India.

* Participates in the National Planning Commission's Policy on Biofuels in
India.

* Develops Sweet Sorghum to Ethanolprocess.

* Crosses Rs. 1 billion turnover mark.

* Receives six major orders for fuel ethanol from Colombia.

* Receives ICORE award for the leadership in Biofuels.

* Commissions a unique wastewater treatment plant in Colombia, based on in-
house developed technology.

* Announces 2004-05 as The Year of Innovation.

2005-06:

* DSIR honors Praj for exports of in house R&D based technology.

* Praj acquires worldwide rights for Molecular Sieve based dehydration
technology.

* ICRA certifies Praj as A1+ Category Company for short term finance.

* ESOP (Employees Stock Option Innovation' Outstanding Award Plan)
declared.

* Praj Chairman, Pramod Chaudhari, receives Distinguished Alumnus Award
from IIT Bombay (Mumbai).

* All five large sized ethanol plants in Colombia on stream for commercial
production.

* Breakthrough in European Market. Receives contract from British Sugars.

* Breakthrough in US market. Receives two major contracts to install corn
based ethanol plants.

* Venture Capitalist Vinod Khosla and Marubeni Corporation invest in Praj.

* Inks alliance with Meura for High Performance Brewery Mash Filters.
Expands Brewery Business.

* Skid Mounted Ethanol Plant designed, manufactured and shipped to Australia.

2007-08:

* Chemtech Foundation confers 'Outstanding Innovation' award upon Pramod
Chaudhari, Chairman, Praj.

* Belgian Bioethanol Plant & Equipment Contract for Praj.

* Forms JV Company with Aker Solutions, BioCnergy Europa B.V., in The
Netherlands.

* Commissions Manufacturing facility in Kandla (SEZ),India.
* Receives multiple orders for cassava based ethanol plants from Thailand.

* Inauguration of UKs first plant based on Praj process plant.

* Recieves order for first dedicated sweet sorghum to ethanol plant from
Tata Chemicals.

* Receives various awards for Best Value Creator, Best Under A Billion
Company from BCG Business World, Outlook Money, Forbes Asia, etc.

* Establishes a JV in Brazil with Jaragua Equipamentos called Praj Jaragua
Bioenergia SA.

* Inaugurates state-of-the-art R & D facility, Praj Matrix-the innovation
center focusing upon second/third-generation biofuels.

* Files patents for developments in second generation biofuels.

* Recieved PI rating from CRISIL for short term finance.

* Selection of Praj technology for the largest European Plant for the
largest European Plant for Vivergo Biofuels.

* Commissions second plant in western Europe (third in EU) for Anklam
Biofuels (Danisco).

* Receives Star Performer Award from Business Standard for 2006- 07.

* Second time in a row, Forbes Asia selects Praj for Best Under A Billion
award.

2009:

* Break through in Lignocellulose to Ethanol process. Upscales to Pilot
plant.

* Commissions third plant in western Europe (third in EU) for Biowanze SA
(A Sudzucker Group Company) in Belgium.

* EEPC confers Star Performer in Exports Award.

* CNBC TV-18 DHL bestows the International Trade Award on Praj.

Annexure 4

Disclosures pursuant to the provisions of SEBI (ESOS and ESPS) Guidelines,
1999:

Particulars ESOP 2005 ESOP 2005
Grant I Grant II
12th October, 28th December,
2005 2006

1. Details of meeting Annual General
Meeting held on 23rd July, 2005.

2. Options Granted (including impact of 2,759,139 2,311,500
bonus)

3. Pricing Formula At fair market At fair market
value value

4. Options vested 2,759,139 1,655,812

5. Options exercised 1,133,776 78,407

6. The total number of shares arising
as a result of exercise of option 1,133,776 78,407

7. Options lapsed/cancelled 244,589 288,384

8. Variation of terms of options Nil Nil

9. Money realised by exercise of Rs. 774.69 lakhs Rs. 72.86 lakhs
options

10. Total number of options in force 1,380,774 1,944,709

11. Details of options granted to
Senior Managerial Personnel -

V.A Datar 60,000 Nil

Berjis Desai 90,000 Nil

S.S Iyer 120,000 Nil

Ajit Lele 25,000 Nil

R.V Chaudhari 30,000 Nil

Arun Tengshe 18,000 8,100

Anil Deshpande 18,000 8,100

12. Any other employee/Non-Executive Director who receives a grant in any
one year of option amounting to 5% or more of option granted during that
year:-

Particulars ESOP 2005 ESOP 2005
Grant I Grant II
12th October, 28th December,
2005 2006

Berjis Desai 90,000 Nil
S.S. Iyer 120,000 Nil

13. Identified employee who were granted N.A. N.A.
option during any one year equal to or
exceeding 10l0 of the issued capital
(excluding outstanding warrants and
conversions) of the company at the time
of grant.

14. Proforma adjusted net income and
earning per share:

Particulars Rs.

Net income as reported (in millions) 1297.479

Add : Intrinsic Value Compensation Cost Nil

Less : Fair Value Compensation Cost (in millions) 18.120

Adjusted Proforma Net Income (in millions) 1279.359

Basic Earning Per Share -

As Reported 7.08

Adjusted Proforma 6.98

Diluted Earning Per Share

As Reported 7.02

Adjusted Proforma 6.93

15. Assumptions used to estimate the Fair Value of Options using Black-
Scholes option pricing model

Particulars Date of Grant
12th October, 28th December,
2005 2006

1. Risk-free interest rate 6.23% - 6.54% 7.53% - 7.68%

2. Expected Life 2 - 3 years 2 - 3 years

3. Expected Volatility 60.31% 61.47%

4. Expected Dividend Yield 5.56% 4.07%

5. Price of the underlying share in market Rs. 93.30 Rs. 185.86
at the time of Options grants

16. (i) Weighted-average exercise price of options granted:

Particulars Pre Bonus Post Bonus

1. Exercise price equals market price 138.08 68.99
2. Exercise price is greater than market price NA NA
3. Exercise price is less than market price NA NA

(ii) Weighted-average fair value of options granted during the year:

Particulars Pre Bonus Post Bonus

1. Exercise price equals market price 46.63 46.60
2. Exercise price is greater than market price NA NA
3. Exercise price is less than market price NA NA