PUNJAB-BASED Beckons Industries, an erstwhile manufacturer of continuous printing stationery, is aiming it big in the energy sector by developing a novel technology to produce oil from algae. The company is in the process of setting up its first pilot plant in Goa for measurement, modification and validation of its technology before commercialising it in the next couple of years. The oil extracted from the algae could be converted to bio-diesel, while the residue can be used as animal feedstock.The company, which is trading at a market capitalisation of Rs 25 crore, posted a net profit of Rs 10.9 crore for FY10, which translates in a price-to-earnings multiple of 2.3. However, majority of the company’s revenues and profits came from trading activities that are likely to get discontinued in near future once the algae based oil production gets commercialised.
The book value of its equity for FY09 was higher than its current market capitalisation at Rs 28.4 crore. The company, which launched a GDR issue in July 2008 to raise Rs 20.5 crore, was carrying cash balance in excess of Rs 21 crore as on March 31, 2009. It is likely to deploy around Rs 10 crore for the pilot plant in FY11.The company has already developed and successfully operationalised the prototype of algae plant and is now planning to put up a pilot plant using flue gases emitted from coal burning. Eventually a commercial plant could be set up alone or jointly with some company emitting flue gases.Once successful, the company will also explore opportunities to licence out its technology to companies generating huge carbon dioxide such as thermal power industry. Such arrangement could also earn it carbon credits.
For investors with risk appetite this company holds the potential of becoming a multi-bagger if it succeeds in commercialising its technology. Although the valuations appear cheap at present, the first revenues from the novel technology remain months away and profits in its current trading business will remain unpredictable.
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