GANECOSNSEQ4 FY2022May 30, 2022

Ganesha Ecosphere Limited

8,266words
144turns
9analyst exchanges
4executives
Management on call
Manish Mahawar
ANTIQUE STOCK BROKING LIMITED
Sharad Sharma
MANAGING DIRECTOR - GANESHA ECOSPHERE LIMITED
Gopal Agarwal
CHIEF FINANCIAL OFFICER - GANESHA ECOSPHERE LIMITED
Prashant Khandelwal
SENIOR VICE PRESIDENT
Key numbers — 40 extracted
103%
307 metric ton during Q4 FY 2022 and 1,09,788 metric tons during full year, which turns out to be 103% and 99% capacity utilization on quarterly and annual basis respectively. We clocked revenue of 28
99%
c ton during Q4 FY 2022 and 1,09,788 metric tons during full year, which turns out to be 103% and 99% capacity utilization on quarterly and annual basis respectively. We clocked revenue of 287.38 cro
287.38 crore
3% and 99% capacity utilization on quarterly and annual basis respectively. We clocked revenue of 287.38 crore during Q4 and Rs. 1022.35 crore during entire FY 2022 as against Rs. 249.23 crore during Q4 FY21
Rs. 1022.35 crore
tion on quarterly and annual basis respectively. We clocked revenue of 287.38 crore during Q4 and Rs. 1022.35 crore during entire FY 2022 as against Rs. 249.23 crore during Q4 FY21 and Rs. 751.14 crore during en
Rs. 249.23 crore
clocked revenue of 287.38 crore during Q4 and Rs. 1022.35 crore during entire FY 2022 as against Rs. 249.23 crore during Q4 FY21 and Rs. 751.14 crore during entire FY 21 turning into a growth of 15.3% on quarter
Rs. 751.14 crore
ing Q4 and Rs. 1022.35 crore during entire FY 2022 as against Rs. 249.23 crore during Q4 FY21 and Rs. 751.14 crore during entire FY 21 turning into a growth of 15.3% on quarterly basis and 36.1% on yearly basis.
15.3%
Rs. 249.23 crore during Q4 FY21 and Rs. 751.14 crore during entire FY 21 turning into a growth of 15.3% on quarterly basis and 36.1% on yearly basis. The growth in revenue was achieved on the back of h
36.1%
21 and Rs. 751.14 crore during entire FY 21 turning into a growth of 15.3% on quarterly basis and 36.1% on yearly basis. The growth in revenue was achieved on the back of higher realizations of PSF and
Rs. 9218
ved on the back of higher realizations of PSF and yarn. The average realizations during FY 22 was Rs. 9218 per tonne as against Rs. 7302 per tonne during FY 2021 registering an increase of 26%. In volume
Rs. 7302
izations of PSF and yarn. The average realizations during FY 22 was Rs. 9218 per tonne as against Rs. 7302 per tonne during FY 2021 registering an increase of 26%. In volume terms, we sold 1,06,806 ton o
26%
22 was Rs. 9218 per tonne as against Rs. 7302 per tonne during FY 2021 registering an increase of 26%. In volume terms, we sold 1,06,806 ton of production against 98,893 tons during FY21, which is a
8%
e terms, we sold 1,06,806 ton of production against 98,893 tons during FY21, which is a growth of 8% on yearly basis. The slow-down in China has unfolded good opportunity for us
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Guidance — 20 items
Gopal Agarwal
opening
“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.”
Gopal Agarwal
opening
“76 crore from operations which was mainly used to fund the ongoing project in Warangal.”
Gopal Agarwal
opening
“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.”
Gopal Agarwal
opening
“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.”
Gopal Agarwal
opening
“All these factors made the implementation of project somewhat challenging and caused some delays to scheduled implementation.”
Gopal Agarwal
opening
“We are hopeful in getting this project to operate at full capacity by August-September, 2022.”
Gopal Agarwal
opening
“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.”
Gopal Agarwal
opening
“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.”
Gopal Agarwal
opening
“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%.”
Gopal Agarwal
opening
“As we expand our operations, we aim to move towards sustainable efficiency.”
Risks & concerns — 1 flagged
what is the status and how sensitive to take this regularly approval or difficult to get these approvals?
— Manish Mahawar
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Q&A — 9 exchanges
Q
Thank you Sir for giving this opportunity. Actually I kind of missed the whole logic that you were trying to explain that why Warangal would do higher EBITDA margins, so I just wanted to understand because currently our EBITDA margins are between 11% to 13% and Warangal we are expecting margins to be 18% to 20% and even in Nepal we have given a guidance of 20% - 25% kind of margin, so I just wanted to understand the whole logic are the products different or how can we have such higher margins there?
Gopal Agarwal
I would like to explain to you we are into the recycling fiber. Basically pet bottles can be converted into three products roughly number one is the recycled polyester staple fiber, number two recycled POY, FDY 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. 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. Number two we are
Q
Thank you for the opportunity. First question is if you can just help me with the total installed capacity adjusted for the loss of capacity in the Kanpur plant and what would be the potential revenue loss due to that?
Gopal Agarwal
Yes we have lost about 12000 ton capacity in Kanpur plant due to fire and the total revenue loss is about 100 Crores from this unit. So we are adding higher margin, higher realization capacity at the Kanpur plant going forward and replacement of the capacity which has been lost, so what would be the incremental revenue from the new capacity that we are adding? No we are not adding, 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 dynam
Q
Thanks for the opportunity. Sir would it able to share any capex number for FY2023 post this new spun yarn facility which we have announced?
Gopal Agarwal
We are already moving on the Warangal project and we have spent about 300 Crores by March 2022 in that facility so another 125 Crores would be spent in this Warangal facility and apart from this we would be spending about 70 to 75 Crores in the yarn facility in FY2022 and rest of that condition would be done in FY2024. So FY2024 we will see about 150 odd Crores behind this Bilaspur facility? Yes. Anything for FY2024 if you could share a little ongoing process? We are looking for a greater possibility in this recycling sector and so we are working upon various opportunities and things. Right go
Q
Thank you team thank you for the opportunity. What is the current realization for the RPSF and how has that changed versus cotton versus virgin PSF?
Gopal Agarwal
You see we are presently getting about 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. Now most of the spinning units are shifting towards the polyester who was consuming the cotton only. Prashant Khandelwal: Basically there is a switch from cotton to polyester always happens, when the cotton prices
Q
Thanks for the opportunity. Sir what would be our capacity utilization in FY2022?
Gopal Agarwal
On overall basis we are having 99% capacity utilization, but in Q4 our capacity utilization was 103%. Also what would be the tax rate going forward because I am assuming that I think Warangal facility would be having some tax benefits? Yes in the existing operations we are having the tax rate of 25.17%, but for the Warangal project and for the spinning project which we are planning we would be having a tax rate of 17%. Going forward how could we look at the working capital so how are we expecting improvement in it? We have got a lot of improvement in the current financial year, the working cap
Q
I have a couple of questions. In terms of the yarn capex, you have given guidance around 250 odd Crores of revenue and EBITDA margin of 25%-30% right, so this is incremental because this is a forward integration plan?
Gopal Agarwal
Yes I am talking about the incremental margins of spinning unit. What is the ROCE. Mr. Prashanth has highlighted at the start of the call this project? Yes, we are looking for the ROE of about 18% from this plant. In terms of new capex or look upon to expand so what is the threshold of ROE, ROCE or margins we go ahead with the capex? You are asking about the ongoing projects or you are talking about the new projects? Any new Capex if we do. Any new capex which we are now targeting we are targeting only on those projects which is having at least 18% to 20% ROE kind of business. In terms of our
Q
Sir just wanted to understand any kind of guidance on the revenue margin we have given for FY2023?
Gopal Agarwal
We are already at 1000 plus turnover in FY2022 and that will be maintained and we are expecting to start our entire project by September along with our Nepal unit, so we would be looking for five to six months production would be there in this FY2023 so we are looking about 1300 to 1400 Crores type of turnover. So additional 400 Crores the revenue, so 300 Crores coming from Warangal and maybe 50 to 75 Crores coming from Nepal right? Yes, Nepal and for south the entire plant is operational by September so in Warangal plant we may take one or two months further for ramping up the capacity, so in
Q
Just a followup. You said 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%?
Gopal Agarwal
It is because we would be targeting the products which we are not able to produce in existing facilities because of the capacity constraint, so the products which we are planning to manufacture in new facilities would fetch better prices. So currently at Bilaspur we are doing dyed yarn and what I understand is at the expansion that you are doing we will be having a premium quality yarn right what you were explaining earlier? Prashant Khandelwal: You see 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
Q
Mr. Sharad Sharma will make some concluding remarks.
Sharad Sharma
Greetings to the partners. I would like to address some of the questions asked by the participant’s regarding backward integration by customers like Arvind Mills and Vardhaman Mills, crude price movemensts and competition with regards bottle to bottle chips. We have many years of experience and backward integration by customers will take time to get that level of experience. 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 a
Speaking time
Gopal Agarwal
57
Amit Zade
18
Swechha Jain
17
Manish Mahawar
14
Moderator
10
Jenish Karia
9
Akshay Kothari
9
Nirav Savai
4
Deepak Poddar
4
Sharad Sharma
1
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Opening remarks
Manish Mahawar
Thank you Steven. On behalf of Antique Stock Broking, I would like to welcome all the participants on the call of Ganesha Ecosphere. From the management, we have Mr. Sharad Sharma, Managing Director, Mr. Gopal Agarwal, CFO, and Mr. Prashant Khandelwal, Senior Vice President on the call. Without any delay, I would like to hand over the call to Mr. Gopal Agarwal for opening remarks. Post which, we will open the floor for Q&A. Thank you and over to you GopalJi!
Gopal Agarwal
Thank you Manish. Good noon everyone and on behalf of Ganesha Ecosphere I extend a warm welcome to all of you to the Company’s Q4 and of full year 2022 earning conference call. Thank you for taking the time to join us today. We have with us Mr. Sharad Sharma, Managing Director and Mr. Prashant Khandelwal, Sr, Vice President of the Company. Start of FY 22 was not at a good note and the joy of heartening recovery during Q4Fy21 was short-lived. The financial year started with second wave of COVID-19, which proved to be a more devasting for the country and lives of millions of people were affected badly and at Ganesha we also faced the burnt in the form of production loss, disruption in supply chain and eventually sale numbers. Soon after it, a massive fire broke out to the Kanpur Fibre plant of the Company which destroyed two production lines that were contributing 12,000 tons of PSF on yearly basis. But I am glad to share that the journey here onwards got better for rest of the year on o
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