Praj joins hands with Brazil firm for ethanol production

Praj Industries has signed an agreement to form a joint venture with Brazilian engineering company Jaragua Eguipamentos Industriais to foray into Brazil's ethanol manufacturing sector.

Praj will hold 54 per cent in the joint venture while Jaragua will hold the rest. Pramod Chaudhari, chairman, Praj, will head the joint venture.

The joint venture company, Praj Jaragua Bioenergia SA, will supply solutions for sugarcane juice to ethanol production, a company release said.

Financial benefits accruing from the joint venture will be reflected in the company's performance in 2008-09 (April-March), an official from Praj said.

Praj, a provider of technology and services for sugar and ethanol production, is expected to benefit from this move, analysts said.

"Brazil has a strategic importance for Praj as the country is a major ethanol producer," said Nitin A Khandkar, vice-president (research), Keynote Capitals.

The move to enter Brazil would prove positive for Praj's financial performance, he said.

Shares of Praj Industries today ended at Rs 239.45 on the National Stock Exchange, up 2 per cent from Wednesday.

In August, Praj had set up an office at Sao Paolo in Brazil with the intention to increase its global share of the ethanol technology and plant and equipment market, the release said.

With rising crude oil prices, Brazil has further increased its use of ethanol, the release said. At present, it uses 17 billion litre of ethanol and production is seen rising to 30 billion litre in 2010.