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
4 Likes
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
2 Likes
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
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
Feb 2024 concall
1…PERFORMANCE
A…Textile sector recovery
=Under the shadow of slowdown in textile sector, our operations were slided for a while during
H1 FY2024, but we are pleased to share that our operations have geared up in the 3rd quarter
and improved significantly over the last two quarters due to stabilization of RPSF prices as well as moderation in the prices of raw material, which improved our gross margins.
=We are more or less back on track after a subdued performance achieved during the first half of financial year 24, owing to the downturn in the textile sector due to slower export demand,
cheap imports, particularly from China, and over capacity of polyester in the Southeast Asian countries.
2…Warangal plant from 3rd quarter
=Operations of Warangal unit has started to pick up from 3rd quarter onwards.
=During the quarter, operational results of our Warangal units were also improved due to the start
of dispatches from our rPET Granules Production line and we could operate this production line in full stream during the quarter.
=We operated the existing production line at 86% capacity utilization during the quarter.
3…Capacity utilization
=Company achieved production volume of 28,447 metric tons during
the quarter by utilizing the production capacity at 107%
=rPet granules@87% utilizatuin
=ppsf@50% utilization
4…Revenue
.We registered revenue from operations of INR245.75 crores during the quarter, which is lower by 5.7% from last quarter and 9.23% from Q3 FY23
==≈=============
FUTURE GROWTH
1…Warangal plant@value added high margin products
=At this plant we have value added products like RPSF, PPSF, iB2B granules and also filament yarn.
A-RPSF @ 12,600 capacity
B-Rpet granules@3 production lines
C -filament yarn @12,240
D-PPSF @10,800.
= Because in textiles, there is a huge product range ranging
from INR75 a kg of a product to INR120 a kg of the product as well.
=We are working very, very aggressively on making a better product marketing mix for us by entering specialized products, by entering into special value-added products and even the textile segment.
=Basically, in the South
India plant, we have designed our lines in a way that we will be able to and we are focusing on much more value-added products and different kind of product portfolio than what we have done in the existing capacities. Because of that, the profitability as well as the realization are slightly
different.
=Higher margin in Q3 is due to higher realization in south plant
===========
2…rPET granules
=Basically there are three production lines we are talking.
= So, one is already up and operational and for that we have mentioned we are already operating at 86% in Q3.
= The second line of PET granules as well as RPSF is under implementation, which is hopefully to be operational by the end of this month.
=And third line is under dispatch and that is also expected to be operational by June 24.
=So, overall three production lines are there.
=Combined capacity is 42,000 tons. One line is 14,000 tons.
=, So, by June 24, our entire capacity of 78,000 tons will be operational.
=With approvals of our products from many marquee brands domestically as well as globally, and getting repeat
orders, we now have a very fair visibility of the market through targeted.
=There is a huge demand that is going to be created in the next coming
five years. Because today, the consumption of rPET granules in India is almost at 0% and it is
going to go to 50% in the next – 60% in the next five years.
= So, a market of 1 million tons of
rPET is going to be created and the current capacities are not even 5% of what is needed. So, for
the next couple of years, there is going to be a huge growth scenario, both from the demand as well as the supply side
=Beverage companies or other food companies or FMCG companies for the supply of rPET chips.
-We are working with over 40 brands right now in India as well as
globally regarding our rPET for our rPET granule market.
-And we have got around 15 approvals already and the other ones are under final stages of product trials and approvals and all that.
-So, for FY25, we see a very strong demand and fair visibility to uptake our capacity to a very good optimum utilization level
===========
3…Recycled filament yarns
=Though the marketing of recycled filament yarns will still take a couple of quarters to reach at optimum utilization levels, owing to the downturn in the textile industry.
===========
4…PPSF
=We are presently operating at
about 50% and next one or two quarters, it will be at optimum capacity utilization
===========
5…Product mixture change
A…rPSF
=Presently, most of our products, our main product is RPSF and that is for the textile value chain, be it the clothing or it is a technical and non-woven textiles or the stitching.
=So, primarily, it is for the textile sector.
B…rPET granules
=But going forward, we are going for this rPET granules.
= So this is for the packaging sector.
=Presently we are having 14,000 ton line, which is about 10% of our overall production capacity.
=But after the expansion of our two more lines from Warangal itself, it will be around 54%-55%
of the overall revenue from the Warangal unit.
=So, basically, in the next year, we would be having the total install capacity of about 79,000 ton
in our Warangal unit. So, out of which 42,000 will be for the rPET granules. So it is almost 54%-55% total.
===========
6…Realization of products
=So, in case of filament yarn, the
realizations are much more than this rPET granules.
=But in case of fiber, it is lower than the rPET granules.
=rPET chips v/s rPSF
-The margin profile currently is slightly better with rpet granules than the textile business
-Although we are working to improve our margin profile on the textile business also, but not really comment right now margin profile due to the sensitivity of the nature of the
product.
-But definitely, we are trying to improve our margin profile overall on both textiles and packaging as well.
===========
7…Capex
=Capex at warangal plant completed@600cr
=rPET granules@3 production line
=rPSF expansion
=For the fund raised from the market we are going ahead with one more production line and hopefully it will be at Warangal location.
=But we are first going for the ordering of the plant and machinery and we are looking for the suitable locations. So, we will come back to the investors
when we will finalize the location. But as of now, we are discussing on the location.
=we have raised the capital so we are not looking for any debt as of now.
===========
8…rPET use by regulations,
Not by choice
=Currently since the recycled pet market is fairly, fairly new, it is always being compared to the virgin pet market.
= If you look at the developed
economies worldwide, globally, at some point of time, there is going to be a de-linkage between
the virgin pet polymer and the recycled PET polymer.
=Recycled PET polymer is going to be in use and because of the regulations which will be applicable for usage of recycled polymer and not because as a choice to use it in the packaging
applications.
=So definitely currently there is a linkage but going forward in the coming years as we develop
and the industry matures, there is going to be a de-linkage. So it is not going to depend really on
the crude oil prices. It is going to depend on the collection cost and the recycling cost which will
be there to use the waste
===========
9…Warrents
A …To fuel the further growth of the business,
B… Rationalizing the debt levels and C…enhancing the long-term resources, we have also issued equity shares worth INR350 crores and
warrants worth INR150 crores to institutional investors and promoters of the company.
=Fundraising has been completed during first week of February 2024.
=This will help us solidify and even strengthen our strategic position in the recycling industry going forward
=after the QIP money has come in, the debt would have gone down.
===========
10…Revenue and ebidta guidance
=For next financial year, we are expecting revenue growth of about 50% from current run rates
=18% to 20% EBITDA
margin as a whole from the south plant will be achieved.
=So, the overall margins we are expecting about 15%-16% EBITDA margins on overall basis
===========
11…Raw material sourcing-Not problem
=The consumption in India itself is growing at 13% CAGR
approximately as of today. And because the consumptions are increasing at a very good rate in
India , we don’t think it should be a problem
=We already have a very good
footprint in the raw material sourcing part, and we source raw materials on a very good, very big scale today. And because of which our raw material sourcing capabilities are quite
strengthened as of today.
===========
12…Three strong moats
= Targeted marketing strategies, =Improving product portfolio mix
=Strong scrap sourcing network.
Disc…invested
1 Like
There are three major risks associated with the Ganesha :
- China dumping and how anti-fragile they are will be proven by time
- Competition getting into huge scale with rPET manufacturing.
- Realisation not reaching its full potential
The only “mild moat” is the scrap collection network.
Also brand building will be very important.
Positive surprises (wishful thinking) would be Indian government allowing import of scrap or restricting anti-dumping on China.
Overall, there is a natural tailwind and getting rewarded as well.
Additionally, Helios Flexi cap fund has entered in Feb2024
Disc: Invested
2 Likes
MOATS (Ganesha eco)
1…Economy of scale
=Leading market position among RPSF manufacturers
2…Warangal plant@Value added products
=Share of revenue
of value-added
products, 2014-15
21%
=Share of revenue
of value-added
products, 2019-20
25%
3…Big basket of products
=We are having a big basket of products with us, we are having product for every application for the customers.
= So, customer benefits because we are having ready products for them, so they prefer to buy from us,if there is not much price difference
4…Strong scrap sourcing network
5…Quality is upmost important for B2B business(bottle to bottle) in stiff competition
=Setting up a manufacturing capability for circular economy products like this
rPET bottle to bottle is not easy to achieve the desired qualities .
=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 from external over capacity.
6…New products and .Strong r nd
=Presently, we are working on development of certain specialty fibres. It is like flame retardant
fibre, antibacterial fibres and biodegradable fibres. All these fibres are specialty fibres and are
being introduced for the first time in India in the recycled fibre segment. All these specialty fibre
products will fetch up around 35% to 40% extra margins.
1 Like
Thanks Pragnesh for summarizing the moats in details.
Excited to see the recycling theme to play out. Hopefully, scale becomes a big moat (which I do not perceive it now).
India needs more economies of scale in recycling to be create high ROCE business for a long term sustenance.
2 Likes