Search for the Magic Potion
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Image: Malay Karmakar
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f somebody argued ethanol is as sexy a business as building spacecraft or sequencing the human genome, you wouldn’t be faulted for suppressing a chuckle. After all, what is there to ethanol? Even the folks from the Neolithic era knew that this intoxicating ingredient in alcoholic beverages could induce a pretty good buzz. But if you indulge the irrepressible Pramod Chaudhary for a moment, he’ll argue passionately why you’ve got it all wrong. He will tell you how he and his company, Praj Industries, hope to make it the fuel of the future.
As things turn out, the founder of Praj is ostensibly in the middle of a mad race to change the world we live in. And he hopes to be the first to reach the finish line. At stake is a market estimated at 189 billion litres by 2020 according to a US government study. Chaudhary wants to take a good shot at being remembered by history textbooks as one of the men who weaned the world away from fossil fuels like petrol and diesel. Of course, it is another matter altogether that Praj wasn’t originally built to change the world.
In its earlier avatars, it indulged in more prosaic businesses like digging borewells and growing roses. A series of not-so-happy and happy incidents coupled with generous doses of serendipity pushed Chaudhary and Praj into ethanol.
Call it the audacity of an entrepreneur, but Chaudhary is confident he will have the right fuel technology within a few years to potentially replace dirty fuels. “I think we will be unique anywhere in the world. I use the word ‘world’ deliberately. Don’t get me wrong. I’m not boasting,” he says. Around the time Praj got into the business, researchers had figured the chemical holds enough potential to replace rapidly depleting oil reserves. Thanks to this promise, many governments across the world, India included, put incentives in place for anybody using ethanol or building technologies that facilitate its use.
Even as all this was happening, crude prices shot through the roof and the demand for fossil fuel substitutes hit manic proportions. So much so that the X-Prize Foundation — a not-for-profit institute that designs and manages public competitions for the benefit of humanity — announced its intention to put together a $100-million purse that will be disbursed among technocrats who figure out unique ways to break the world’s dependence on oil.
Earlier winners of the X-Prize include Mike Melville for building the first private spaceship and Craig Venter for sequencing the human genome. For the fuel-related honours, of course, Chaudhary is gearing up to be a contender.
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Image: Vikas Khot
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Pramod Chaudhary has Rs.60 crore working on second generation biofuels, but the Holy Grail is not yet in sight | |
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Vinod Khosla, co-founder at Sun Microsystems and now among the most successful venture capitalists in Silicon Valley, was early to spot the potential of Praj and invested in the company. More recently in March 2008, Tata Sons invested Rs. 343 crore on Chaudhary’s vision. Kishore Chaukar, the Tata pointsman for new businesses, sits on the Praj board.
On the face of it, therefore, Praj seems to have done well for itself. Over the last six years, it built a presence on five continents and accounts for a 50 percent market share in the Indian sub-continent, South and Central America (except Brazil), a quarter of the market in Europe and a fifth in the US. To that extent, the trust investors have reposed in Praj stands vindicated. It would also seem Chaudhary is the kind of man who takes nothing for granted. He has a team of 60 scientists and Rs. 60 crore working on second generation biofuels from ethanol. It is tempting, therefore, to imagine a world Chaudhary and Praj Industries will change. That assumption, however, is a few miles away from truth.
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In the past it came up beacuse of political patronage of sugar lobby in Maharashtra. Such companies can never compete in the real worl of high technology and innovation.
Moreover one cannot make "predictions" about whether a work of research will be successful or not.Also research is always "technically difficult to achieve".If it were easy then every tom richard and harry would have started a praj.
The company has almost zero debt and a very good return on equity running now for more than 5 years.The whole ethanol industry is in trouble.So i don't think its fair to single out Praj in the way that the author has.
More so its not fair to make a judgment and write a company off.
PS: The cap and trade bill in the US would be beneficial for Praj like companies.Short this one at your own risk.
