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Ganesh Benzoplast the cash generating chemical storage/tank farm king

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The stock is seeing hectic accumulation in the last few days. As mentioned earlier, the Covid-19 is unlikely to have any negative impact on the financials. On the contrary, it is quite likely to bolster the numbers as port storage capacity is limited & logically the storage demand is more than likely to go up during such times.

With the Co. continuing to pare debt, the already high return ratios are going to get more interesting going forward.

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But sir what is the status of Goa gas terminal? If we go by local Goan media it has created some Naphtha storage controversy and locals were protesting even it got some political angle in it.
No update or info on capacity addition in LST business and no update on demerger strategy.
If any info or link please share.

For the moment I suggest ignore Goa as it is hardly contributing to the bottom line. Lets further assume that the de-merger also doesn’t come about anytime soon. The Company is generating cash profits of about 50 crores annually at its current level of operations & if the mgt. so desires, it can easily become debt free in the next 12-18 months. The nature of the business is such that the earnings visibility is not an issue. Going by the high return ratios, the high operating margins in the business the valuations look misplaced. This is the core of the investment thesis.

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Sir I agree with you but how to get the revenue guidance for next few Quarters? As per my readings from AR and some earli reports JNPT is running at almost full capacity and Kochi port does not have that volume and earnings. I m very much convinced with its low valuation and good cash but future lookout is not looking promising. Management is also not distributing cash. At one point and I think it is near revenue will be stagnant or low growth. Increase in rental income per year is also not guided by Mnagement. As u said they may increase hight of tanks but I couldn’t find any reference to ur findings. Could u please share that info here. Can we assume that the huge change in fixed asset from Fy18 to Fy19 has some hints. Fy 18 fixed asset purchased 19 Crore Fy 19 fixed asset purchased 28 crore ( source

Disc: No holding

As per the Limited Review September 2019 results , company has not repaid borrowings instead they have taken fresh borrowings during the half year ended Setpember 2019 as reflected in statement of Cash flow.

Attached ROC charge report, which clarifies that Ganesh Benzoplast has created a charge on amount of Rs.53 cr from Union Bank of Indian on 28th June 2019 .

Further ,Company has released charge on the borrowings taken from Oriental Bank of Commerce in September 2019 on Rs.45 cr (balance as on 31.03.19 - 23.4 cr).

Borrowings of Rs.30 cr (53-23) should be used for further expansion .Eager to watch coming quarterly results which should clarify the usage of funds.

There is Capital work in Progress of 15.4 cr as on Sept 2019.

New Borrowings might be one of the major reason for promoters pledge being reduced from Sept 2019 quarter (76.8%) to December 2019 quarter (65.45%).
Ministry Of Corporate Affairs - MCA Services.pdf (91.6 KB)

**One Major Concern of GBL seems to be getting resolved slowly and gradually: **
**High amount of contingent liability as compared to net worth of 112 cr as on 31.03.2019 **

Contingent Liability as on 31.03.2019 as per Annual Report
Particulars Amt (in Millions)
1 Claims by different parties 134.51
2 M/s Avron Chemical Private Limited 90.06
2 Morgan Securities and Credit Pvt Ltd 15
4 The State Trading Corporation Ltd (STC) 242.64
5 Marmugao Port Trust (MPT) in Arbitration, Amt Indeteminate
6 Income Tax demand 40.97
Total 523.18

1.Avron Chemical has been settled at Rs.28.50 million and impact of the same has been taken in December 2019.

2.State Trading Corporation has been settled at Rs.21.88 millions vide order NCL order dated 13th Feb 2020. Order attached herewith. The impact of the same can be seen in Quarter March 2020 results mostly…CP 1975 OF 2018 STC vs. GBL NCLT ON 13.02.2020 DISPOSED FINAL ORDER.pdf (444.5 KB)

Contingent Liability of Rs.332.7 million has been settled at 50.38 millions in the FY 2019-20.

Contingent Liability was the major reason why the Demerger was not getting kicked off.Complaint letter-from-BSE_4.7.2019.pdf (122.1 KB)


Well done @Pranshinv! Some great bit of scuttle butt!!

Contingent liability of Rs. 24.26 Crs pertaining to STC settled at Rs. 2.18 Crs.!

This is extremely relevant as contingent liabilities which were largely a legacy issue were affecting the valuations of the stock. With this settlement, the contingent liabilities will stand reduced to under 20 crs which given the scale of the company’s operations & cash flows is very much in the comfort zone.

The other factor affecting valuations have been the issue of pledged shares. This too should be resolved in the coming months. We already know that Covid-19 has had a very positive impact on the Co.'s numbers & there is a strong buzz that the Co. has already prepaid the term loan of Rs. 20 crs that was due to be paid by September end 2020, leaving only the other term loan of Rs. 28 crs due. This too stands reduced to about Rs. 20 Crs given the regular installment payments. At this rate the Co. should soon become debt free in the next 12 months or so should it decide to. That will take care of the issue of share pledging.

The stock is available at an earnings multiple of about 6 times trailing EPS. Given the predictability of earnings, the high operating margins & the still higher return rations, given the loan repayment, we could see a growth in both the EPS as well as the earnings multiple going forward.


GBL and Himadri - Only Listed Player to Produce Benzoic Acid in India

Market Research Future (MRFR) has announced a new release on the global benzoic acid market. The report predicts the global benzoic acid market to exhibit a sturdy 5.92% CAGR over the forecast period (2018-2023), rising from a value of USD 868 million in 2017 to USD 1,219 million by the end of the forecast period in 2023.

Benzoic acid is a carboxylic acid with the chemical formula C6H5COOH. It has various functional properties, including antifungal and antibacterial properties, which have made it popular in a number of end-use industries. It is naturally found in a number of fruits, including plums, prunes, cranberries, and raspberries, and is primarily used in the food and beverage, chemical, and pharmaceutical industry.

Get a Free Sample Now@

The growing use of benzoic acid in personal care products and cosmetics is likely to be a major driver for the global benzoic acid market over the forecast period. Benzoic acid and salicylic acid are often used in conjunction to counter the threat of fungus, as they both have excellent antifungal properties. The increasing demand for well-crafted and effective personal care products, especially in developing economies round the world, is likely to be a major driver for the global benzoic acid market over the coming years.

Growing demand from the food and beverage industry is likely to be a major driver for the global benzoic acid market. Benzoic acid and its sodium, potassium, or calcium salts are used as a food preservative due to their effective antifungal property. The growing demand for preserved and packaged food from the global consumer demographic is likely to drive the demand for effective natural preservatives such as benzoic acid.

Plasticizers derived from benzoic acid, i.e. benzoate plasticizers, are also likely to be a major fruitful channel for the key players in the global benzoic acid market. While phthalates are widely used as plasticizers at present, the environmental impact of the same has been adverse. This has led to a renewed interest in finding alternatives that don’t hurt the environment and still fulfill the important functional criteria. Benzoate plasticizers are likely to find increasing demand in the global plastics market over the coming years, driving the demand from the global benzoic acid market.


The report segments the global benzoic acid market on the basis of application, end use, and region. On the basis of end use, the global benzoic acid market is segmented into food and beverage, chemicals, pharmaceuticals, and others. The food and beverage industry registered the strongest share in the global benzoic acid market in 2017 and is likely to grow at the highest growth rate over the forecast period due to the growing demand for packaged food and beverages. It is expected to exhibit a robust 6.3% CAGR over the forecast period.

By application, the global benzoic acid market is segmented into sodium benzoate, potassium benzoate, benzyl benzoate, benzoate plasticizers, alkyd resins, benzoyl chloride, feed additives, and others. In accordance with the dominance of the food and beverage industry in the global benzoic acid market, sodium benzoate, the derivative of benzoic acid used as a preservative in the food and beverage industry, is likely to remain the dominant contributor to the global benzoic acid market over the forecast period. The segment accounted for 32% of the global benzoic acid market in 2017. It is touted to exhibit a strong 6.64% CAGR to reach a size of USD 406.9 million by 2023.

Regional Analysis:

By region, the global benzoic acid market is segmented into North America, Europe, Asia Pacific, Latin America, and the Middle East and Africa. Asia Pacific dominated the global benzoic acid market in 2017 and is likely to remain in the lead over the forecast period due to the growing demand from the emerging economies in the region. The Asia Pacific market accounted for close to 47% of the global benzoic acid market in 2017 and is likely to rise to a valuation of USD 588.9 million by 2023.

Europe is the second largest regional segment of the global benzoic acid market and is likely to reach a valuation of USD 312.5 million by 2023 at a CAGR of 5.53% during the forecast period.

Competitive Analysis:

Leading players in the global benzoic acid market include Wuhan YouJi Industries Company Limited (China), Spectrum Chemical Manufacturing Corp. (U.S.), Hemadri Chemicals (India), Avantor (U.S.), Tianjin Dongda Chemical Group Co. Ltd. (China), Alfa Aesar, Thermo Fisher Scientific (U.S.), MP Biomedicals LLC (U.S.), GFS Chemicals Inc. (U.S.), Emerald Performance Materials (U.S.), Eastman Chemical Company (U.S.), Navyug Pharmachem § Ltd. (India), Ganesh Benzoplast Limited (India), and Choice Organochem LLP (India).

It should also increase the Margins of the Company.
Company has Production capacity of 150 MT/month of Benzoic Acid ,Sodium Benzoate and 225 MT/month of Benzoate Ester.


I m just attaching two permission from Maharashtra pollution control board which i m not able to interpret fully but expect board members to explain me also ganesh 2017.pdf (336.8 KB) Ganesh 2019.pdf (2.8 MB)

When we go to GBL infra website the mentioned capacity is 250000 KL means 250000 meter cube only.
but here in these two documents capacity is increased from 52558 to 65675 meter cube.
Are they doing expansion slowly slowly in first letter there are 14 tanks and in second there are 22…it may means they are expanding so we can also see a good jump in topline and bottom line.

GBL has two plots in JNPT Port i.e Plot No.7 and Plot No.13

GBL has Plot No.7 since inception of his infrastructure division in which they has 1,37,700 MT storage capacity as per MPCB consent order.ROC -tank-10.09.2012.pdf (330.0 KB)

MPCB orders shared by you are related to Plot No.13 , in which latest order 2019 clearly states in point no.10 that it overrides 2017 order.

Date Plot No. Existing Expansion New
10-09-2012 7 1,37,700 5,300 1,43,000
14-03-2017 13 52,558 13,117 65,675
1,90,258 18,417 2,08,675
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Shareholding Pattern by GBL has released …
New Shareholder - Nirmal Bang Securities Pvt Limited can bring new major shareholders in the company as it is one major Broking houses in India.
Vishanji Dedha and Nirmal Bang securities Pvt Ltd has purchase shares in the April - June Qtr.

Name Jun-20 % Holding Mar-20 % Holding
Vishanji Shamji Dedhia 14,15,000 2.73% 13,90,000 2.68%
Anil Vishanji Dedhia 5,95,996 1.15% - 0.00%
Nirmalbang Securities Pvt Ltd. 6,28,200 1.21% - 0.00%
26,39,196 5.09% 13,90,000 2.68%

For the Quarter ended 31st March 2020, Profit before Exceptional Item is Rs.13.85 crores as compared to Rs.8.80 crores in quarter ended 31st Mach 2019. There is substantial increase of 57% in Profit before exceptional item. Results attached herewith Limited Report March 2020.pdf (4.1 MB)

Key Statements from Management
1.Chemical Segment of the Company is showing better performance in terms of increase in revenue
as well as profitability as compared to the past years. PBIT (before Exceptional item) of chemical
division for the current year is Rs. 6.1 crores as compared to loss of Rs.2.89 crores of previous year.

2.In view of Outbreak of Coronavirus pandemic (COVID-19) globally and the business operations of Chemical Division of the Company was temporarily distruped for about six weeks, due to the Initial lockdown imposed by the Government of India and after that the operations are running at its normal capacity levels. There was no impact on LST division of the Company.

Current Quarter
Chemical Division
For the quarter ended 31st March 2020, Revenue from chemical division is Rs.35.3 crores and EBIT is 5.86 crores. The EBIT margin is 16.7%. In previous quarters the margins were negligible whereas now this division is also started adding to the bottom line. It is an good sign for stock to get rerated .

From Six weeks of disruption in chemical division due to Covid 19, 1-2 weeks have already been factored in current quarter and rest 3-4 weeks impact will be there in coming quarter.
LST Division
For the quarter ended 31st March 2020, Revenue from LST division is Rs.31.5 crores and EBIT is 10.30 crores. The EBIT margin is 33 %.In Previous quarters the EBIT margin was 46% .
The Reason for decrease may be Fabrication work. In AGM we can expect some highlights on Fabrication work performance.

Further there is no impact of Covid 2019 on LST division .We can expect some good results in June 2020 quarter .

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Thank you for summarizing and helping through the details! @Pranshinv
As you mentioned, the chemical division is showing promise which complements the LST division perfectly.
I had a couple of questions regarding the contingent liabilities. I understand that the exceptional losses reported is due to the payment towards STC and Avron. Do you know as to how much of the Liabilities is still pending as of June 2020?

We have to wait for the Annual Report to get more clarity on Contingent Liabilities as on 31st March 2020.It should be below 20 cr mostly.

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For total or remaining contingent liability u can refer AR and as per last year AR it was total 523 million. Very well explained by @Pranshinv
My take on financial results is:

  1. This trading thing have become regular. Management should let us know what is this new trading thing is happening and how it is affecting balance sheet.
  2. Job Work segment is very old segment they have mentioned it few times in their AR but nothing more on it except it’s mention in AR and now suddenly it crops up as significant revenue stream.
  3. Now its looks that Chemical division will be responsible for future growth in bottom-line at-least for time being.
  4. No news on expansion or acquisition of LST biz is disappointing.
  5. Their should be some management commentary on biz segments it gives confidence to normal retail investors like us.
  6. No growth in pure LST as most of the incremental revenue is of trading and job work and if we compare YOY and remove trading and job work the profit has gone down in LST.
  7. No significant reduction in borrowing as compare to last year.
  8. In this hard times if company is trying to do something different from their core competency and blocking capital is not good in my opinion.
  9. One more thing we have to consider that company is still not paying taxes once it will start bottom line will be significantly low.
    Disc: Holding

Infomerics Rating Press release dated July 06,2020 on Ganesh Benzoplast Ltd has given the shape of Strong Buzz into Reality .Long term Debt from 40 cr stands to Rs.25 cr as per press release.PR_Ganesh_Benzoplast_06_07_2020.pdf (467.9 KB)

Forward Looking Statement to justify Growth.
The company’s topline, although increased from INR 170.40 crore in FY18 to INR 212.60 crore in FY19 due to an increase in the manufacturing division, continues to remain modest. The company has achieved INR 179.80 crore in 9MFY20, owing to the increase in demand for storage containers arising from the oil production crisis which saw an overproduction of oil due to disputes between Russia and Saudi Arabia as neither of the countries could come to a common standing on pricing of oil which lead to over-production as demand was cut due to the coronavirus pandemic leading to excess supply and a drastic decline in oil prices.

It is an indicator that LST division profits should be better than earlier.

Press Release also clearly states that Crude Oil Prices is directly related to the Raw Material prices of chemical division of GBL . We all are aware that crude oil prices were lowest which should further improve profitability.

It is strange that the Rating agency does not consider to take note of other two revenue verticals Trading and Steel tank manufacturing, is strange. Manufacturing of any type would create pressure on working capital and will affect profits if it is of low margin and no growth in cash producing LST.

The Co. came out with a superb set of Q4 numbers. The chemical segment has turned around & how! The heartening part is that this turnaround looks sustainable. The raw materials are linked to crude & its prices have come down. The finished products were priced based on the landed price of imports, mainly from China. This is where the Co. has benefited enormously. With uncertainty around Chinese supplies in the forseeable future, the importing firms will never fully depend on them. The net result is that the chemical segment which was a laggard not so long ago, has also started contributing handsomely to the bottom line.

The LST division continues to do well on the whole. The trading income was more of a one time thing spread over two quarters. Q4 of 18-19 & Q1 of 19-20. The margins in this are negligible & perhaps this was done more to accommodate an old client. The Works contract (largely Steel fabrication) business is only now gaining momentum & perhaps the Co. could treat is as a separate segment going forward. Perhaps it is better not focus too much over the nitty gritty as it could lead to a missed opportunity.

The LST division will continue to be the main money spinner for the Co., but currently its capacity is fully utilized, & any top line growth is linked to rate increase. I believe that is something that is currently playing out due to limited Port storage space & high demand. The capacity increase is limited to increasing the height of the existing tanks. What the current year will do is to improve the quality of the balance sheet with largely reduced debt levels. In addition, the Co. could increase earnings decently in 2020-21. Frankly, it looks like an attractive investment opportunity at current levels.

Disc: Holding & added after recent Q4 results.


Most awaited Information - Release of Pledge Shares

Extract of Disclosure to BSE
We hereby inform that the Union Bank of India has released 1,42,85,418 (99% of total pledged Shares of Promoters i.e 1,44,85,418) Equity shares of Ganesh Benzoplast Limited held by Promoters and Promoter group Companies, pledged towards collateral security, for the secured term loan availed by the Company. Release of Pledge Shares 04.08.2020.pdf (872.6 KB)

Promotor Pledge and Huge Contingent Liability - Two major concerns seems to be getting resolved.