Ganesha Ecosphere - Green Earth play

ICRA RATING UPDATES

1…ICRA has placed the ratings outstanding on the bank facilities of Ganesha Ecosphere Limited (GEL) on watch with developing
implications. This follows a fire incident at the company’s Polyester Staple Fibre unit located at Kanpur, Uttar Pradesh in June
2021, which resulted in a major damage to its building, machinery, raw material and finished goods. ICRA notes that this has
affected ~10-15% of GEL’s operational capacity, with production likely to stay disrupted in H1 FY2022, till the conclusion of the
re-development process. Together with the ongoing impact of the pandemic, this is expected to affect the company’s volumes
and revenues in FY2022 to some extent. While it has adequate insurance cover to take care of the major losses resulting from
the incident, clearances for the same are awaited. ICRA will continue to monitor the developments in this regard and evaluate
the impact of the fire accident on GEL’s credit profile once the exact implications are known

2…Increased scale of greenfield project resulting in higher-than-envisaged leverage – Post the ~Rs. 100-crore fund infusion via
qualified institutional placement (QIP) issuance in May 2018, GEL had announced a sizeable capex of ~Rs. 250 crore for a
greenfield capacity expansion. With multiple changes in the scope of the project over the past two years, the estimated project
cost was initially revised to Rs. 380 crore, and now stands revised to ~Rs. 453 crore. Correspondingly, the debt component
increased to ~Rs. 325 crore, compared to the original plan of Rs. 75 crore and the last estimate of ~Rs. 280 crore. This is
resulting in higher-than-envisaged leverage metrics. Nevertheless, given the conservative capital structure, ICRA expects the
company’s gearing to remain comfortable at less than 0.75 times. Further, Debt/ OPBDITA is likely to start improving from
FY2023 onwards with the commissioning of the project, after touching an estimated peak of ~3.5-4 times in FY2022.

Disc…invested

Ganesha eco

MOATS

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Can someone throw light on the recent fire in their Kanpur plant? What is the damage, and the recovery from insurance? Thanks

Reliance Industries | The company is doubling its PET recycling capacity by setting up a recycled polyester staple fiber (PSF) manufacturing facility in Andhra Pradesh. The move is part of RIL’s commitment to lead the industry on circular economy, enhance its sustainability quotient and bolster the entire polyester and polymer value chain.

Disc…invested in Ganesha eco

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NEW BUSINESS

HDPE/PP RECYCLING
(UPTIL NOW ONLY PET RECYCLING)

=(29.10.21)
Pursuant to Regulation 30 of Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015, we wish to inform that the Board of Directors at their meeting held on
October 28, 2021, inter alia, considered and approved the reinstatement of Kanpur PSF unit by installing
an HDPE/PP Recycling Plant, subject to the approval of the shareholders and appropriate statutory
authorities.

=Recycling industry of these products are currently unstructured and down-cycling the scrap
instead of adding value. Good demand is going to be created for recycled thermoplastic with
regulatory compulsions in the form of extended producer responsibility as well as pledge for
sustainability by brands and corporates

=We are exploring this segment. Much light cannot be thrown for the margins etc, but of course
the market is much larger than the PET market. The total segment of plastic is around 100
million tonne in the country and PTE is only one million tonne out of that, so 90% is the other
plastic and what is happening is that, their recycler industry is completely unorganized and they
are down-cycling and it is eroding the value instead of adding the value, because of the
technology, because of the capital constraints and because of the unorganized sector.

Disc…invested

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In screener, data for PNL & BS show up from March 2020 onwards. Annual reports are available from 2010 onwards. Screener chart shows price vol data from 2006 onwards. Why PNL & BS data from 2010-2020 not showing in screener. Maybe I am missing some developments wrt to the company or the data. Would request senior boarders to expand if they can. @ayushmit

See standalone statement

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Ganesha employee trust and promoter buying from open market from dec 2020 till today .

Ganesha eco concall may 2022

1…PERFORMANCE

A…Export
=The slow-down in China has unfolded good opportunity for us to penetrate in export market and we made an export sale of Rs. 128.32 crore during FY 2022 (Rs. 35.84 crore Q4FY22) which is a growth of 112% over Rs. 60.53 crore export sale during FY2021.

= Contribution of export sale to total sale reached to 12.5% form earlier level of 7.5 -8%.

=We could grab the new set of overseas customers on the back of getting approved vendor status of some international brands like Target
and Inditex.

B…Though the EBITDA improved in absolute terms, margins were declined in comparison to last year because of increase in input costs as well as manufacturing cost
particularly power and fuel cost.

C… During Q1FY22, company had provided an exceptional loss of Rs 25.13 crore due to fire in
Kanpur Plant, which has been reversed in Q4FY22 in view of the reasonable certainty in getting the said loss compensated from insurance company.

D…Working capital days

=.Company also brought down its cash cycle from 105 days to 75 days during the year.

=We have got a lot of improvement in the current financial year, the working capital cycle has come down to 75 days because of so large project basket as well as the holding period for the raw material there is not much room available for bringing down the working capital cycle further
though 5% to 10% is always possible

2…WARANGAL PLANT

=. At Warangal, we have started the commissioning of the Recycled
Chips plant and it will start the production by July, 2022.

=Fibre and FDY plants are progressing well and expected to start by September.

=We faced a lot of hindrances in implementation of Warangal project due to COVID related frequent lock-downs and disruptions in supply chain of critical equipment specifically electrical and electronic parts. We are still facing big issues in
terms of timely availability of electrical and electronics parts not only from China and overseas suppliers but also from domestic suppliers as they are pushing their delivery schedules several times. Travel of Chinese Engineers for plant erection is also an issue and the Fibre plant is being
erected by us under guidance from Chinese engineers over online platforms which is taking
unusual time and delays. All these factors made the implementation of project somewhat
challenging and caused some delays to scheduled implementation.

3…NEPAL PLANT

=At Nepal, we have started the Wash line and commenced the production. We are hopeful in
getting this project to operate at full capacity by August-September, 2022.

=In Nepal facility , we plan to use
the Nepal capacity for captive consumption unless we have a better opportunity in the export market .

=we are getting the raw material cheaper by about 15% in Nepal

=tax is also lower in case in Nepal

4…HDPE PILOT PLANT

=We are going to start in the next one or two months for Recycling rigid plastics

=To seize the upcoming opportunity where demand would be emanating for quality products in
recycled rigid plastic (HDPE, PP etc.) segment to fulfil EPR liability of brand owners and manufacturers consuming plastic packaging for their products, we, at Kanpur unit, are working
on a pilot recycling line for rigid plastic which would be operational by July end.

= The capacity of this pilot plant is 300 tons per month. Post successful implementation, we would ramp up the capacity to 1,000 tons per month during current financial year itself.

=The estimated project cost
would be around Rs 30 crore which would be funded through proceeds from insurance claim
expected to be received by July, 2022.

5… SPINNING UNIT FOR YARN

@bilaspur@greenfield project@230cr capex @next 18 months

A… Medium tenacity fibre
=Between our Rudrapur facility and Bilaspur facility, later is commanding superior margins in the
market because of better quality and value added products while cost of production is almost the
same between the two plants. From market point of view, RPSF manufactured in Rudrapur plant
is categorized as medium tenacity fibre and those manufactured in Bilaspur facility (and also to
be manufactured in Warangal plant) is called high tenacity fibre.

= Given the price and cost matrix,
medium tenacity fibres may not sustain the margins in future while selling in the market.
However, with our vast experience, we are successfully running our spinning unit consuming 100% of our medium tenacity fibre and this unit is making good margins.

B… Job work agreement ends

=Further, we were running a yarn spinning unit on job work which was contributing a production of 1500-1800 annually to us.

=The agreement for job work has come to an end during March, 2022. So we are also short in market by that much quantity running a yarn spinning unit on job work which was contributing a production of 1500-1800 annually to us. The agreement for job work has come to an end during March, 2022. So we are
also short in market by that much quantity

=So sensing the future course of industry as well as to increase our margins from medium tenacity
fibre segment, we have consciously decided to put up a spinning unit with a capacity of 34,000
spindles at Temra (Bilaspur), adjacent to our existing unit. It would be a green field project with
an estimated project cost of Rs 230 crore and it would be implemented over a period of next 18
months. At optimum capacity utilization, unit would be producing around 12,000 tons of yarn
valuing about Rs. 250 crore.

= We would be manufacturing mélange and doubled/ fancy yarn,
using our medium tenacity fibre, with an estimated EBITDA margins in the range of 25-30% with target ROE of 18%.

6…RECYCLING IS FOCUS

=We would like to clarify that due to market dynamics turning adverse on medium tenacity fibres
in future, we are moving on strategically for yarn spinning unit in sustaining the margins.

=However Recycling is and will remain our core focus area and all of our future expansions would primarily
be in that direction only. It is pertinent to mention that we are very bullish about the future of recycling industry not only in India but globally.

7…BLENDING

=New regulations are being implemented globally mandating the blending of recycled products
with virgin products and responsible organizations are pledging themselves for making their products environmental friendly. In India also, regulations have been introduced whereby all the brand owners and manufacturers are required to have 30% recycled contents in their plastic packaging from FY 2025-26 and this limit would be extended by 10% every year till it reaches to 60%, i.e., by FY 2028-29.

8…SUSTAINABILITY

=As we expand our operations, we aim to move towards sustainable efficiency. To that direction,
in our Warangal facility we have equipped ourselves to recycle 90% of water required in our
operations and only 10% fresh water would be needed.

=We are also setting up an ETP plant
which would be on Zero liquid discharge principle. All of our future projects would be working
on the same set of values as well.

= Our existing operations are already meeting 17% of their
energy requirements through roof-top solar panels and we have also set up group captive power
arrangements with Amplus RG Solar in Uttar Pradesh for 17 MW. Additionally, another deal for
14MW solar is in making as we speak which will take the organization’s renewable energy mix
to more than 50% and make our power costs escalation free for a fairly long period of time

9…GO REWISE BRAND

=For capturing the demand for premium recycled products, we are launching a brand “Go
Rewise”, which symbolizes recycling wisely. The brand is being launched with the vision to
close the sustainable loop. Go Rewise is dedicated to conserving resources and establishing
sustainability supremacy by efficiently recycling waste products into premium quality products.

=The brand has been patented and we wish to make this brand a symbol of pride among all our
customers. We are in the process of being onboarded by global brands after clearing their social
audits

10…MARGIN WILL IMPROVE

=Basically pet bottles can be
converted into three products roughly

-number one is the recycled polyester staple fiber,

  • number two recycled POY, FDY (recycle poly yarn)and

-number three recycled rPET which is used for making the bottle-to bottle.

So presently we are into RPSF which is the lowest margin among all the three products

A…So in Warangal facilities we are going to make all the three products, so the margins are higher in
case of recycled FDY and the bottle-to-bottle chips that is how the margins are higher there,number one.

B…Number two we are sourcing the raw material from South where the freight element is higher in case we are transporting it from south to north. So for the Warangal plant we would
be sourcing from south itself, we will be getting some benefit in terms of logistics cost over raw
materials

C…For Nepal also we are making the washed flakes and chips there, so the margins are higher because of the lower raw material prices there because there is no recycling facility in Nepal and there is no use of the recycled material itself in Nepal, so all the material is coming to
India through illegal way, so we are making this loop formal and legal, so we will be getting the
better prices here.

11…BILASPUR V/S RUDHRAPUR PLANT.

=As far as the quality is concerned you see the Bilaspur facility is having the better technology than what we are having in Rudrapur this is we called third generation recycling plant, the
Rudrapur one is the second generation recycling plant, so the quality what we are making in

=Bilaspur plant is almost equivalent to virgin fiber, so we are fetching good margins or a better pricing from market though the cost of production remains almost similar what we are having in Rudrapur, but with the improved margin from market and all the big spinners like Arvind,
Trident and Vardhman we are very well serving those big brands with our recycled products
from our Bilaspur unit.

=we are getting Rs.3 to Rs.4 higher realizations in case of our Bilaspur facility that is about
13% to 14% of EBITDA margins in that facility as against that 10% to 11% EBITDA margins in our Rudrapur facility

12…ONLY PREMIUM YARN

=What we are doing in our spinning units we are making only premium quality of yarns we are not
working on any commodity products.

=Even in our existing facility in Bilaspur with 28000
spindles we are making only colored dyed yarns, melange yarns and fancy yarns such as slub,injection slub, etc., so these yarns are having a very good margin as compared to the commodity product of white and black yarn

=Already in existing unit we are getting a very good margin for those with specialized yarns and in the
coming facility also we will go only for these kind of premium products.

13…LOSS FROM KANPUR PLANT FIRE
=Basically the Kanpur plant was the least among all the three plants though we have lost the turnover of over 90 to 100 Crores, but on profitability front we have not lost
much.

= Now we are looking to the market dynamics and scenario we are now not going to reinstate that production lines which have lost instead we are going for putting up another
production line which is suitable for making the recycled rigid plastic chips.

=So it will be a higher realization product than the current

14…RPSF REALIZATION

=Rpsf getting Rs. 97-98/Kg which is against 110 to 115 of virgin PSF.

=The realizations have improved by about 25% in the last one year though the cotton prices have
increased multifold.

=So cotton dynamics is different and the policy dynamics is different, but one thing is that after the cotton has become so much costlier the demand of polyester has increased

15…EXPECTED REVENUE AND MARGIN AFTER COMPLETION OF CAPEX

A…Warangal we are expecting 600 Crores topline from there.

B…Nepal is about 75 Crores.

C…New spinning unit: 250 Crores from this new unit.

D…HDPE…around 90 Crores to 100 Crores.

=so close to 1000 Crores additional in topline for all these new projects and
margins you say for

=Warangal still we are maintaining this 25% margin and

=Nepal at 18% and

= yarn you have also said 15% to 18%

= HDPE@ above 20

16…MOAT

=What is stopping big companies like arvind ,vardhaman etc from doing backward integration?

A…Different products

=I would like to highlight that we are having about 500 kind of products in our basket which are available for every kind of application to the end consumer number one.

=Whenever you are coming with the different products you need to have a number of lines to be installed. So yes of course anybody is open to go for a backward integration but it would be
better to tell you that still many of the spinning units who have came up with their one or two facility for recycled fiber they are buying a lot of premium products from our company,

=So yes anybody can come with
backward integration but still they need many number of products which would not be possible in one or two lines.

B…R n D and 30yrs experience

It is a R&D over the period of last 30 years what we have done
and the products which we are making on our different lines in different plants, so it is the expertise where you are getting a good number of buyers

C…Preffered vendors
=We are on the preferred vendor list of some brands for which we are making their product, so it is also a compulsion for them to buy from us.

17…CRUDE EFFECT

=Our end product is benchmark against the virgin PSF which is a derivative of crude
and the prices of crude make some impact on the prices of virgin PSF, so indirectly we are also
impacted by the prices of crude.

18…COTTON PRICE EFFECT

=Basically there is a switch from cotton to polyester always happens, when the cotton prices are
higher and polyester prices are lower the people are looking for a better opportunity by spinning
mills especially in South of India, so now the demand is growing for polyester in most of the
cotton units where either they are shifting to polyester or they are blending polyester with cotton
to make their product sustainable, so this happens every time when the cotton prices goes high, of
course the polyester always get a benefit whenever there is an increase in cotton prices

=Fluctuation in price of crude and spinning cotton
has always been there.

19…BOTTLE TO BOTTLE

=Going forward we are sensing that our B2B chips business would be the most accelerated kind of
product in the market out of all new and old products

=In terms of these bottle-to-bottles , the regulatory approvals we need to take

=Actually there are three types of approvals are required; for the US market it is the US FDA
approval and for the European market it is the EFSA approval and for India it is a food safety and
FSSAI approval, so we are already working on the approvals from these bodies

=We have imported USFDA approved machinery for this use of recycle in plastic pet packaging so that is why we went to Europe for this particular
thing

=Bottle-to-bottle grade chips will be used by mixing this in the virgin pet chips for making again the bottles.

=It is mandated by the government also that from 2024-2025 everybody has to consume 30% of recycled material in their packaging. So yes we are in discussion with big
brands also because they want to start this from the current fiscal itself.

20…BILASPUR YARN FACILLITY

Q# Currently in the Bilaspur the spun yarn capacity is 7200 tons with an
EBITDA margin of 16% to 18% and now we are adding another 12000 tons capacity with an
EBITDA margin of 25% to 30%, so just wanted to understand that if it is the same spun yarn that
we are expanding then how would the additional 12000 tons give a higher margin of 25% to 30%?

Ans#In the existing facility we are confined to source yarn only and in the new facility we are
coming up with a capacity to produce finer counts where we would get a better realization as
well as better margins also. So the current production capacity is in the range of average 18
counts to 19 counts while in the new facility we can produce some finer counts and the average
capacity would be around 24 counts to 25 counts so that leads to a better realization as well as a
better product portfolio for getting a good margin

21…RIGID PLASTIC OPPORTUNITY

=There are several different products one is PET and one is rigid plastic
from polyethylene, polypropylene

= In Kanpur and warangal we are coming up with other rigid plastics than PET, so all HDPE, PP polypropylene

=This is a very vast field you see the rigid plastic consumption in India is about 10 times of what we are having of PET, so you can just imagine
the opportunity there in the recycling of rigid plastic, but yes we have to work harder for different
R&Ds and making a intact supply chain of each type of plastic that is coming to the facility so you can make a better product.

=There are several sort of recycling facilities where you can mix all
the plastic and make a very poor quality of product where you would not get margin more than 3%, 4%, 5% and that too they are being done in an unorganized sector across India, already there are thousands of units who are recycling those plastics but those are all unorganized sector units
so yes you have to work harder for the supply chain so that you can get a specific type of plastic
coming to your facility where you can convert that plastic into a premium product which can be
supplied back to the big brand so we are working on that because we want to create a premium
quality product out of that plastic also.

=Of course it will fetch a good margin over the period of time but yes it will need a big asset to be done in this field.

=Bottle to Bottle market in India is a developing market. In our discussion 5 years ago, I used to
highlight that whenever food grade Bottle to Bottle will be allowed in India, there will be huge shortage of Raw Materials as same plastic is used for consumption. That situation can be
witnessed today. In future when plastic bottles will be used for making Bottle to bottle, there will be scarcity of Pet bottles for fiber and spinning.
Whatever bottles will be available, will be used for premium quality only.

= The fire loss at Kanpur plant gave us an opportunity to think and enter
in other plastics. We currently sell other plastics as waste. Going forward, we plan to use it as
raw material and converting the same in value added products

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My latest portfolio

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The majority of the growth that company saw, was on the accounts of higher realisation (26% higher than previous year) and management is confident that realisations would remain at about same level because of the value added products that they are producing but do you think is it really possible? If realisations go down then it could be a problem as it will counter the growth that company may achieve because of the CAPEX.

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If we look at this Q4 and FY23 results, then “Purchases of stock-in-trade” has gone up significantly.

Now as per my understanding this is these are the goods which are bought and sold without any actual processing or it can be seen as purchases of finished goods that the company buys towards conducting its business.

So increase in this particular item indicates that the company is doing more of trading activities? What could be possible reason for such increase? And what happens when company is not able to sell such products in current quarter or FY? Does it become part of finished goods in inventory? In general, how one should look at this? Does such increase raise eyebrows?

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Any conference call happening around this time for Q4 FY23?

I have not found any exchange disclosure.

There is no notification so far.

Hi, I cannot find the latest concall on their website or screener. for Q4FY23 and full year ending FY23.

Q1-2024- concall

1…PERFORMANCE

=Textile sector is amongst the worst hit due to downturn in western world persisting since last 15
months. Exports of textile sector is constantly declining. During June, 23 quarter, shipments of
manmade products saw a 17.22% decline. Slowdown in Europe and US prompted the dumping
from China in domestic market which led to demand and pricing pressure on domestic suppliers.

=Prices of yarn and fibres slided and affected the textile industry top and bottom line .Yarn spinning sector is major contributory to our revenues, we had to face the heat, which came
to us in the form of lower demand as well as drop in prices.

=We feel that the prices have bottomed out in Q1 and so in Q2 we are not looking
for any great inventory loss.

=Due to slow down in export markets, company’s exports were also
hit and it made an export sale of 18.02 crore as against Rs. 33.94 crore during June, 22 quarter.

=Capacity utilization was at around 30% in Warangal facilities but sales volumes were at even
more lower level.

=Nepal facility was ramped up albeit at slower pace and it reached to 50% capacity utilization level during the quarter. So, on consolidated level, PAT was dropped to Rs.
3.45 crore during Q1FY24.

=Major contributing factors in drop in PAT at consol level is interest
and depreciation of subsidiaries, which could not be offset due to lower level of operations.

=In fact, we have not seen such
gloomy market environment in last several years. However, dust is now being settled and
demand and prices have seen some revival from later part of July, 2023. We are expecting to do
better in second quarter on standalone basis and in view of the festive season and other
contributing factors we are hopeful to operate at normal level from Q3 onwards as we were doing
in the past.

2…FUTURE GROWTH

A… rPET B2B business

=In Rpet B2B chips, we have finally got the much awaited order from one of the Coke’s bottler and things have started rolling out with more orders are on cards. We are also very
closer in getting final approvals from some more brands and hopeful in getting boarded with
them in coming quarter.

=One more production line of B2B chips is to be installed by OctoberNovember, 2023 and it is expected to start contributing from last quarter of FY24.

B…rPSF business

Why expansion in rPSF despite it is low margin commodity business?

B1…going forward as our understanding and necessity of the circular
economy and recyclability, sustainability kicking in, people are having greater sense of
responsibility towards the environment and so the demand of the recycled material is growing
and so we are also having approvals from some of the global brands for using the recycled PSF
Indian products so number one this trend is going to increase further and we would be able to sell
more of the quantity to the brands here we are getting the better pricing than the general
commodity product, number one.

B2…Number second we are developing some more products, some value added products like short cut fibre which we are pitching in the export market, as well as in
the domestic markets where the margins are higher.

B3…Number three, we are going into the dyed piece of segment where the margins are really higher than the normal commodity product and in
case of Warangal we would be having some added advantage in the form of logistic input as well
as output.

C…Coco cola order(B2B)

=Moon beverages order(for coco cola)
This is not a great quantity but it only from one of the bottle of Coco Cola system so we are
looking for the orders to come from other bottlers also shortly and currently we are not making
any long term contracts with the brands.

=Because just rolling on the products, we are not going for the long term contact. We will meet
long term contract when we will see more clarity from the pricing side of the things.

=Our trials and everything that is happening is happening on the global site and it handled by Coco Cola Atlanta. So once we get the approvals, we get the approval to supply to any of the partners in the CocaCola system that is number one.

=The approval that we have now got from Moon, it is not an
approval it is basically a first commercial order that Coca-Cola has lined up because apparently
they will be the ones to launch the first rPET bottle of Coca-Cola very, very soon.

=Our discussions with other bottlers are also parallelly going on and every bottler is coming up with
their strategy for using rPET in certain SKUs in certain products in coordination with Coca-Cola
centralized OUT.

=For now we are basically in discussions with all the bottlers of Coca-Cola for
starting the ramp up of rPET.

=About the volumes we cannot really disclose how much volumes
Coca Cola might be committing us for this year. They are still finalizing their strategies but yes
they are starting to commercially ramp up their rPET usage from next month onwards.

D…Recycling regulations in india

In india, From April 2025 it is compulsory that 30% of the bottles has to be coming from recycled

=Basically it is also part of the climate change strategy that we are already having in
place. If you know that the government of India has got a huge fund from World Bank for
reducing its carbon dioxide emissions and rPET, bottle to bottle chips is a big contributor to that
fact because in this polymer you are saving on your environmental impact by 60-70% and that is
the reason that it is being promoted very heavily and they are being regulated very-very soon.

E…China dumping

=Government of India has introduced a BIS standard for the yarn and fibres and the
textile products so some of them have been implemented and some has been postponed for the
next quarter. So with the implementation of BIS certainly the dumping from the cheap Chinese
material would stop.

F…Warangal plant

=Capacity utilization was at around 30% in Warangal facilities but sales volumes were at even
more lower level.

=FDY production line is streamlining and we are expecting to get better results from Q3 onwards.

=.PSF line is going to start from September end and so its operations will also reflect from next
quarter onwards.

=By fourth quarter we will be able to
utilize the full production capacity

=.In all, we are very optimistic in enjoying the entire fruits of Warangal facilities from FY25.

G…Nepal plant

= Nepal operations are also expected to be aligned by the end of current quarter where we feel to reach at 75-80% utilization level.

H…Expansion (B2B - bottle to bottle)

H1…Brown field(B2B)

=At the existing plant, we can add 2-3 more lines.At south plant, if we add three more line, the B2B capacity can increase to approximately
50,000 tonnes.

= At present ,we will be adding a line by October, November this year 12,000 tonnes and we are expecting the current capacity to be 90% utilized.
So the new capacity are we expecting full utilization of the 24,000 tonnes by end of FY2025.
.
=Second line which we are putting in, we are having all the
infrastructure and civil work is there and we are having all the utilities also so just the machine
cost is there, which is around 50 Crores for this brown field expansion.

H2…Green field(B2B)

=Here expansion with european wash line and European B2B granule line with a capacity of about 25,000 tonnes is about 225 to 250 Crores

=We will only plan greenfield expansion once we have good capacity utilization

3…COMPETITIVE ADVANTAGES

3A…Quality

=Demand
…Basically the market of rPET that is going to be created and the
demand that is coming up globally moving forward is immense.

… In India itself we are looking at
0.9 million tonne to 1 million tonne of market being created by 2028

=Quality supply

…We are talking about setting up a manufacturing capability for circular economy products like this
rPET bottle to bottle it is not easy to achieve the desired qualities that is also very practically
works good just like a virgin plastic at the performance level of the final packaging that is
something because

…When you talk about big FMCG brand , they do not want to compromise at
all with the quality of their packaging

…So definitely some capacities will come up, some of them might not work really good
because we have seen a lot of capacities failing outside as well which have come up. They are
not able to deliver the right product which is suitable for application by FMCG brands.

…We have proved that our quality and capability is better than the most so we are not facing that much of
our pressure or heat in that sense but looking at the market demand that is coming up and the
kind of capability that you need to create this kind of a product is we do not feel that we will face
any pressure from the external market

3B…Sourcing raw material network

=The most major competitive edge is is our sourcing
capability because we are currently capable of sourcing around 500 tonnes of post consumer
waste every day and that is because we have a very huge network of supply chain that we have
built over the years of connecting with small rack pickers, small kabadiwala, and small bailers in
our system and that is one of our big competitive advantages of sourcing the right materials.

=Since we have been operating in this industry since the past 30 years we have a
very good understanding and a very good relationship with most of our vendors and that is
because of which we are capable of scaling our sourcing operations as well and that is the
important part.

3C… Operational efficiency

=The third competitive advantages is that we have is operational efficiencies because the kind of
process control that we are capable of that we have already setup and because of which we are
capable of delivering a very superior quality product and with a much lesser cost levels if you
would compare to any new player coming up, these are the two competitive advantages which
will help us position ourselves much better than any other competitor.

4…FINANCIALS

A…EBITDA
=Due to the lower level operations, it might not be great in next one or two quarters, so it may be 15% plus
kind of margins you will see in the Q2 or Q3.

=Even in the down scenario

A1…in PSF business we are hopeful for getting on track by Q3 and 10%
plus EBITDA margin

A2…in Value added business ,we are looking for the margins of 17-18% EBITDA level.

B…Debt
The debt which we are currently having in our book is of 550 Crores and going forward we see
the peak debt would not be more than 600 Crores at any point of time.

C…Depreciation

= The production lines which have started depreciation is for that and going forward we would be
having the PSF line to be operational and the new B2B line is to be started so the depreciation
rate would be increasing because of that extension

=On consolidated level the depreciation level is around 12 Crores on quarterly basis so going
forward we are looking about 35 to 40 Crores depreciation level at Warangal plant and 25 to 26
Crores for the parent company so going forward it may be around 60-65 Crores on the
consolidate level.

5…Raw material availability(pet bottles)

=The regulation will come from FY2025. Of course the raw material there might be some shortage
of raw material because the raw material will first go to bottle to bottle chips and after fulfilling
their demands of the bottle to bottle chips it will be for PSF business. So going forward it may
have some pressure around the availability

= But during the growth of pet business itself which is
growing by about 9 to 10% so every year about 100,000 tonnes raw material will also be pumped
in the system.

Disc …invested

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Ganesha eco - update(future growth triggers)

Ganesha

A…performance
=Stagnant growth since 2019

B…Less growth due to
-(aug 2023)Textile sector is amongst the worst hit due to downturn in western world persisting since last 15
months

-In fact, we have not seen such
gloomy market environment in last several years.

-Pat affected much more due to high interest and depreciation

C…Future growth triggers

1…Warangal plant completed in 2022(Capacity utilization was at around 30% in 2023)

2…Nepal plant(2022)

3…One more production line of B2B chips is to be installed by OctoberNovember, 2023

4… European B2B granule line with a capacity of about 25,000 tonnes is about 225 to 250 Crores

=We will only plan greenfield expansion once we have good

5…B2B business…Coco cola order(B2B)

6…475 cr capex in 2022 and 2023

D…WATCH FOR GROWTH

Disc…invested

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PPT(Nov 2023)

FUTURE GROWTH FACTORS

A…Ganesha Overseas, Nepal:

=Started commercial production in Feb,2023.

=Current capacity utilization
has ramped up to 70% and expected to further ramp up to over 80% by end of Q3, 2024

B…Ganesha Ecopet, Warangal

=Production of Rpet Chips and RFDY started during April, 2023. Products
are under commercial trials and approvals from various brands took longer time than our expectations.

=Commercial offtake now started from October onwards. Ramp up of capacity utilization by Q4, 2024.

C…Ganesha Ecotech, Warangal:

= Started commercial production during February, 2023. However, ramp
up of Washed flakes, being captive supply to Ecopet, is dependent on Ganesha Ecopet ramp up.

=Businesses in subsidiaries suffered a net loss of Rs. 10.3 crore during the quarter due to lower level of
operations. Operations ramp up is expected in H2, FY24.

D…B2B business

=Approvals have been received from some of the leading brands for Rpet (B2B grade) Chips and
Company has started getting orders.

= Production till December, 2023 has been booked and line is now
running at full capacity.

= Export market is also improving and we have started to book exports orders too.

=Company is putting up two more production lines which is expected to be operational over next 6-8
months in two stages.

=We are expecting to get the capacity of all three production lines booked for FY 25 over next 3-4 months.

=We joined hands with Manjushree Technopack Ltd., a leading manufacturers of Pet preforms for over 50 leading brands of the country, for joint development and marketing of Rpet Chips. This alliance will
strengthen our market penetration.

=RPSF production line at Warangal is going to start very shortly and we have already started to explore
the Southern market for the same. Filament yarn capacity will be ramping up gradually

E…Core RPSF Business:

=To mitigate the slowdown in core textile sector Company has planned to shift its focus from yarn
spinning sector to non-woven and technical textile segment, where demand and prices are better
than spinning sector.

=Company is targeting to reduce present 65% proportion of yarn spinning sector in RPSF Sale to 50% over next 6 months.

F…Exhibitions
=Company has increased its presence in national and international exhibitions and expos for
showcasing its products and it is participating almost every month in any of international/ national
exhibitions. It is benefitting Company and it has explored new markets and customers. As a result,
exports started increasing which declined during June 23 quarter.

G…Govt policies

=Government has introduced BIS standards for some of the textile products to control the dumping
from China and other neighboring countries.

=Government support through policies such as approving
B2B recycling for food grade applications & mandatory
regulations to use recycled PET from FY2024

H…Go rewise

=The brand is being launched with a commitment for the good
of tomorrow. Go Rewise is dedicated to conserving resources
and establish sustainability supremacy by efficiently recycling
PET plastic into premium quality products

Disc…invested since 2021

Howevere, company is giving flat results
(flat operating profit with high depreciation and high interest expense ) since last 2 yrs.

I will wait for next 1-2 yrs before taking any decision.

5 Likes

@Pragnesh whats your exit strategy?

The company has approved the allotment of 14,49,000 fully Convertible Equity Warrants (“Share Warrants”) at an issue price of Rs. 1,035/- per Equity Share.

3 Likes