Ladies and gentlemen, good day and welcome to the Ganesha Ecosphere Limited Q2 and 1H FY2026 Post Results Conference Call. As a reminder, all participants' lines will be in a listen-only mode, and there is an opportunity for you to ask questions after the presentation concludes. If you need assistance during the conference call, please signal an operator by pressing Star, then Zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Manish Mahawar. Thank you, and over to you.
Thank you, Operator. Good afternoon, everyone. I'm pleased to host today's earning call of Ganesha Ecosphere. We have a leadership team represented by Mr. Gopal Agarwal, CFO. I hope I'm audible, Operator.
Yes, to your audible.
Yes. We have a leadership team represented by Mr. Gopal Agarwal, CFO, Mr. Prashant Khandelwal, Senior Vice President, and Mr. Yash Sharma, Director, Ganesha Ecosphere. Without further ado, I would like to hand over the call to Mr. Gopal Agarwal to move in command, both of which will open the floor for Q&A. Thank you. Over to you, Gopal, Ji.
Thank you, Manish, and thank you, the audience. Mr. Yash will deliver the opening remark, yeah.
So, am I on?
Yeah.
Yeah. Hello, hello, everyone. Good morning, everyone. Good afternoon, everyone, and thank you for the introduction, Manish. A warm welcome to all the participants to our Q2 FY2026 earnings call. The Q2 FY2026 continued to be a challenging period for us. Despite our best performance, we concluded overall on an adverse note, with return margins increased to 6.1% and net profit turning slightly negative. The first quarter of FY2026 was characterized by a very high volatility in raw material prices, with very sharp fluctuations happening over a brief span. Prices pushed from 50%-45% to around 45% before retreating very sharply back to 40% levels between March and June 2025.
Due to this elevated government cost during this March to May period, the average carrying cost of raw materials was at approximately 50% by the end of the June quarter, while the prevailing market prices had declined to 4.5%. Given our typical inventory levels, which we maintain of around 19-20,000 metric tons, these costs mismatched to a significantly higher consumption cost, which resulted in compressed gross margins during the quarter. Elevated inventory costs adversely impacted the gross margins across both our legacy as well as rPET businesses. Raw materials is a theme for both the businesses as well as post-consumer sectors. Additionally, the MOEF issued a draft notification on the 3rd of June in 2025, which proposed a relaxation for the usage of recycled materials.
According to the draft, any shortfall in meeting the requirements of mandatory plastic recycling for usage within the year could be offset over the following three years. This draft notification is yet to be finalized after incorporating all the stakeholder opinions, but this is the draft notification. The MNC industry is calling a few, either reduced or postponed their purchases of recycled materials. In particular, deliveries of rPET granules, and we could deliver only 70% of our production made during the quarter. The resulting under-deliveries led to elevated inventory levels and possible declining profitability. Average sale prices have also dropped by about 2% across the business, contributing further to lower margins. These factors significantly affected our performance during the first half of FY2026. However, some long-term predictions are also emerging alongside.
Our legacy business, which had seen a very decent performance in the last couple of quarters, is now almost back to strong out of those and rising demand for both RPSF as well as yarn segments. Notably, despite initial concerns about the impact of the FY2026 in the textile industry, the FY2026 market has remained resilient, supported by firm prices, robust delta, and strong demand. Additionally, the stabilization of the GST structures across the textile value chain has contributed to revival in the industry demand. Backed by firm sale prices and healthy ordering flows, we anticipate improvement in additional margins to the 7%-9% range during the December and March quarters in our legacy business. In the rPET segment, deliveries are expected to remain below expectations in the December quarter as well, pending release of the final MOEF notification.
The rPET plants are also operating at reduced capacities right now due to the typical seasonal slowdown in average demand during the last quarter of the calendar year. This combination is likely to result in further moderation of the uptake. However, due to recent industry interactions and government instructions, we anticipate a recovery in demand and deliveries beginning in 2026. As far as the uncertainty surrounding the draft notification is concerned to the current year only. Furthermore, the regulatory mandate to increase the recycled content for the next year combined with the FY2026 protocol will significantly add to compliance requirements. As a result, it has become unlikely for the industry to continue lifting mandatory consumption. In response, we have also begun receiving customer commitments for recycled deliveries starting from 2026, enabling us to optimize the utilization from the last quarter onwards.
The brownfield expansion at Warangal is on track to be operational by March 2026, adding an additional 22,500 tons of rPET capacity. Though there may be some delays in the greenfield expansions, while the financial performance in the first half of 2026 is short of our expectations and the inherent potential of our business is fundamental to remain strong, we believe that the worst of the headwinds will be behind us with the revival of our legacy locations and the long-awaited emergence of demand in the recycling segment, which is now slowly materializing as anticipated. Also, the delay of nearly nine months. With improved demand, regulatory support, and operations ticking, we believe that we are well positioned to deliver stronger performance going ahead, specifically from the March quarter onwards. Once again, thank you everyone for joining us today, and now we are ready to dive into your thoughts.
We may now open the line for any questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question can press Star and one on their touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press Star and two. Participants are requested to use handset when asking a question. Ladies and gentlemen, we will take a warm welcome to the question queue assembly. The first question comes from the line of Prakash Kapadia from Kapadia Financial Services. Please go ahead.
Thank you. Thanks for the opportunity. We've seen a sequential decline in sales and profitability this year alone, as well as the subsidiary businesses. Until Q1, we were fairly confident of surpassing FY2025 financials. So this has come as a shock. So what has changed so suddenly, and what are we doing to bring profitability to our business? Shouldn't we communicate this to investors in a better manner, saying, "This is the kind of volatility we are seeing," or, "This is the government notification"? So how do we plan or look at the business as investors or potential investors? How do we get a sense of what is going to happen from here on?
Thank you, Prakash. Prakash Ji, the main reason for the dismal performance of the rPET was because of the inventory losses as well as the blocking of the notifications, because of which we could not deliver the quantities which we are anticipating in the market, especially the B2B segment. So the margins were flattened. Given the developments in the market, and especially the regulation is in effect, and this notification impact is limited only to this current year only. It is not going beyond this current year. And from next year onwards, the mandatory use will increase from 50% to 30%. So the demand is visible, and we are also getting the commitment from the buyers from January onward deliveries. So we are looking at the scenario now is more clear from January onwards.
I get from this way, your muted voice could be over, and things could improve. I understand that from Q1 to Q2, at least we should have given some sense of this kind of volatility or government changes or the global scenario that will just help the cause to investors. The bad news and such a bad scenario where we went from a profit of five crores and we are a loss-making company today, does it showcase good governance and predictability to our business? So that's my only mismatch. Because till Q1, we were very confident of surpassing FY2025 financials. So in that context, this kind of scenario would not go well with investors.
So as we move towards the quarter and as the government MOEF notification comes, maybe now communicating that or telling investors about what could go and what direction we are heading on the positive side would be appreciated. That is all I have to say.
Yeah, please go ahead.
Yeah, no, absolutely, sir. You are absolutely right on your part. So this time was a bit of a double whammy effect that really happened on the overall financials of the quarter. So the regulatory part was overall a very much a shock for us also because it was expected based on the discussions that the regulatory notification would be very positive because the notification had come out in June, and they had given a period of 40 days to issue the final notification, which actually ended in the first week of August. It was expected that in August anyways, the regulations should have been done finally, but it was getting delayed.
So even we did not expect that this kind of huge delay of about four-to-five months would happen from the government side, which led to even a lot of miss, or I would say a shock for us also on the B2B side. On the inventory side, yes, obviously we have learned our lessons from what happened this year. Obviously, we have now put in place systems to be more vigilant of what is happening in the markets, which led to this sharp, very, very sharp decline, which even we did not predict at that time as to this would happen, which led to a decrease in finished goods prices also. But the overall inventory levels, which we were maintaining, which we have across all our operations, all of them suffered a huge price loss because of that.
You can imagine that the drop from 55 to 43 is a huge percentage drop in the overall inventory cost, which came as basically a double whammy for us on the overall line of financing.
Totally. I totally appreciate and understand running a business and dealing with this volatility is not easy. Now I'm just trying to understand how do we bring back predictability and sustainability to our growth? That is all what I'm trying to understand. If this is maybe a long-term discussion, we can take it offline.
Absolutely. Absolutely, sir.
Fine. I will connect offline on this with you. Thank you.
Thank you. Thank you. Thank you. Reminder to all the participants, you may press Star and one to ask a question. The next question comes from the line of Deepak Shore, and IGE India. Please go ahead.
Yeah. Inventory, the price reduction is in a way, it is good for long term. What's your view there and how now the price trend is there for the raw material?
Yeah. Absolutely. The price, which has gone through 55, was not good for the industry at all. Now the level is very, very good for the industry where we are getting a good sales too also sales and raw material prices.
Yeah. On the capacity addition side, how the overall industry capacity is coming up and, meaning, how confident we are when we are starting the commercial production. It is like next year we are targeting or first January onwards we will start the commercial production.
Yeah. So last question regarding the industry capacity. So as of now, about 200,000 tons capacity is operational as of now. And since the capacity has been announced, it will take time to have different. Next year it will be operational. There's a lot of PET expansion, so we are already under implementation, and it will be commercially operationalized by March 2026.
Okay. Thank you.
Thank you. A reminder to all the participants, if you may press Star and one to ask a question. The next question comes from the line of Deepak Babu, an individual investor. Please go ahead.
My questions are all answered. Thank you.
Thank you. The next question comes from the line of Mehul from O3 Capital. Please go ahead.
Hello, sir. Thank you so much for the opportunity. I had a question about the MOEF. Whenever the notification is issued by the government, would there be an update on the stock exchanges?
Yeah. So it is a draft notification. It has not been finalized yet. So information sent to the trust and then there is a notification which is issued finally. It is only a draft notification.
Yeah, sir. My question is that once it's finalized by the government, would there be updates to the exchanges?
We would be updating the exchanges and the investors.
Any targeted time frame which you think that it may get finalized, I mean, if it all is away?
So let me explain this in a different manner. You see, the original mandate for using any recycled plastic issued in 2022, followed by a final notification in 2024, where government or MOEF has mandated that use of recycled content will be compulsory from the year 2026. That's 30% in the first year, 40% in the second year, 50% in the third year, and 60% in the fourth year. And onwards, it will be 50%. Later on, I think the user industry, the packaging industry, the brand owners, they have gone to the MOEFCC and presented their side that this much of quantity would not be available in the first year itself. So it should be implemented in a slightly slow manner. Looking ahead, a hard hit on the regulatory mandate may lead to disruption in brand owners or packaging or FMCG like this.
The presentation has gone there. So looking to avoid the hardship on the packaging side, the overall concept is still same. You have to use recycled content in the packaging. But just to remove the hardship on the brand owners, MOEFCC has come with a draft notification. Okay, if due to non-availability of the material, any shortfall is coming in the first year itself, there will be a carryover only. There is not leeway. It is a carryover for next three years for the shortfall quantity. So let's say you are completing 50%. Instead of 30%, a brand owner is completing 20% mandate only. The rest 10%, he can carry over for next three years, keeping in mind that there will be a compulsory mandate for next year also, 40% and 50% and 60%.
What happened in the industry itself is that after this notification, the draft notification came for the public comments for 60 days. This has been issued in June. By August, the final comments from the public side have been submitted to the MOEFCC. As a part of the stakeholder, as an industry affected by the notification, we with our association have also presented this that after this draft notification came to the picture, the brand owners go slow, looking that there will be a carryover. We have asked them to clear the mandate percentage, which can be carried over. We had several meetings with MOEFCC government officers as well, along with brand owners.
Not only the recyclers, but the brand owners have also participated in those stakeholder meetings where we have clearly asked MOEFCC, and they are in the final set of data collection from the industry what should be the mandate percentage. So what will be, there will be a minimum cap on the carryover this year. So we were expecting this to come in October itself. Okay, still, I don't know. There are some procedural delays in the MOEFCC. So we are very hopeful that in the next one month, from today, in the next very month, it has to come. Even not only MOEFCC, there is MOEFCC, FSSAI, BIS, and even PMO is also in line. And I hope in the next one month, the mandate will be clearly come on the picture.
Thank you so much, sir. Appreciate your detailed answers.
One follow-up question also, all our industry players are also affected in terms of what issues which we have faced became a challenge they are facing?
Yes, everybody. Everybody. So for sure, you see, when brand owners have slowed down their recycled content uses, it has affected not only PET. It has affected all recycled plastics, even polypropylene, HDPE. You can see the price of the polypropylene and HDPE is lowest in years. The level of price for the recycled scrap, polyolefin, is at present. It is lowest since last year.
Okay. And sir, can I assume that this notification and the challenges which you explained just now in the follow-up to the earlier question as well, this affects 100% of our revenues or it is affecting some part of the revenues?
Affecting some part. So you see the bottle-to-bottle segment where the mandatory requirement is primary for the demand of the material. The textiles is not affected. So textile is working very well, which is the initial business of the company. So the bottle-to-bottle food, the granules installed in Warangal is only affected with this mandate.
So sir, how much is the contribution from textiles revenue contribution?
Presently, about 60%, 60%. Our legacy business.
Textiles is legacy business is 60%?
65%, yes.
65%. Okay. And 25% is the PET business?
Yes. Yes. Yes.
Okay, sir. Thank you so much. Appreciate your questions and detailed answers.
Thank you. Ladies and gentlemen, a reminder to all the participants that you may press star and one to ask a question. The next question comes from the line of Devendra Kumar from Spark Capital. Please go ahead.
Hi. This is Devendra. Yeah. My question is the inventory side. We assume half of the inventory to 200%. Have you seen the high-cost inventory which has been promoted to being over 50%?
No. No. We have assumed the entire inventory to the high cost. Now, as of the 30th of September, our value of our inventory as well as the market price is almost.
Okay. Got it, and the second question would be regarding the MOEFCC section. From the industry, if it's possible to let us know the limits in the capacity. What are the chances that 50% or 60% would also be that much of the capacity that is right now? So there can be a requirement in the capacity to have a high-class, right?
This is solely depending on the progress of the first year itself. So even in the last meeting, MOEF has clearly mentioned that if, let's say, let's assume a position because we were asking what is the clarity on using the post-consumer content or recycled plastic content. One of the officers has clearly mentioned that if, let's assume a position where we don't issue any new notification, then in that case, the existing 30% mandate is prevailing for the current year itself. So don't wait for any notification. They have clearly given their consent that you have to use 30% till we issue any new notification. So earlier notification will prevail if any modification of the notification does not. And for the next year onwards, 50% will be. You see, a lot of capacity, even Ganesha has also increased the capacity.
I don't think that there will be much shortfall. There might be a shortfall of 5%-7% in the second year. Ultimately, you have to start. This is very clear. This drive is a long way. It's not a one-day drive that everything came in the picture. It has been established in 2016, followed with 2018, 2022, and 2024 mandates. I think it has to be implemented. There might be a 5%-6% shortfall in the second year. That will be very well taken care of by the department, how they are dealing, whether they will charge the penalty from the brand owners who are not fulfilling 50%, or they will give some leeway for that shortfall quantity. That will be decided in due course.
Okay. Got it.
Thank you. Before we take the next question, a reminder to all the participants to limit your questions to two questions per participant. The next question comes from the line of Nilesh from Western Resources. Please go ahead.
Hi. Am I audible?
Yeah. Yeah. You are audible.
Yeah. Thank you for this opportunity. So I wanted to understand this business from a supplier side. So as you know, the security of supply is a very huge challenge in this industry. This is why we are able to fund this business, and it is very difficult for a new player to come in to have a vast takeover for suppliers. However, as this year, there will be a dearth of orders whereas the demand will keep on increasing year over year, will the supplier have more pricing power? Maybe if we are selling at 5% margin this year, as an example, they will start charging 7% because them who actually have the ability to give us an organized plastic to us and an organized way the distributors and all.
Do you expect them to have more pricing power over the years, or is it going to stay the same, or how is it going to pan out according to you? More clarity on that would be helpful.
So the supplies of PET scrap would be dependent upon the demand and supply. So certainly, when the demand is high, the prices are going up. When the demand is moderate, prices are coming down, or prices are stable. So it is entirely dependent upon the demand and supply. And as of now, there is enough quantity available in the market for recyclers.
Understood. And.
Also, to add that these scrap suppliers, basically, you see that they are not very, very large organized companies. They are the maximum ticket supplier today, like in India, would be probably if it comes to the procurement, the supplier would be probably giving us 1%, 1.5% of our total volume. So also that since the suppliers are so many in number and they only collect the local waste and that in hand, it's not that they have a very high volume impact which they can themselves just create. Obviously, the demand plays a larger role over here.
Understood. And we don't see any more. Do you expect any more volatility in the supply side because as you have said in Q1 that the exports of wash itself are due to some changes in European norms, which is why there's a sharp fall as well. So do you expect the prices to be normalized for the coming quarter, or how do you see it pan out from here?
Yes, so basically, you are right. After the notification, the exports of flakes from India have dropped drastically, and we think that due to the huge shockwave had come down because the volume was really, really huge. It was almost 10-15x the volume that had grown of exports in a couple of months from February to April, which had caused that, so we think now that after the new regulations which are in place, in the last six months, there has been no uptick in the not any major uptick in the export volume of flakes, and we think that unless there is a regulatory change, it's going to remain the same because ultimately, recycling has to be a domestic phenomenon. You have to recycle your local waste and use it basically in the local economy itself to establish a circular economy application.
We think that it should be like that going forward as well.
Yes. Just one final quick question. What has been our percentage of revenue from exports this quarter and for HDPE as well?
For this quarter, we did around 11% of our exports.
Understood. Thank you. That's all from my side.
Thank you. The next question comes from the line of Niraj from CJ Shah & Co. Please go ahead.
Thank you for the opportunity. So seeing the draft of the question, which is currently being floated, it says that the FY2026 shortfall can be covered up over the next three years. Is the same applicable for FY2027 as well?
No, no. So this is only given for the first year itself because the presentation given to the MOEFCC was only for the first year. There will be due to lower capacity of the recycled plastics available in the market, there will be some hardship or difficulty in achieving first-year targets. So none of the users has asked any leeway for the second year and as the current situation, MOEFCC has not done anything for the second or third year. It is only for the first year.
Yeah. Basically, when this regulation was implemented from April 2025, the only approved capacity was about 70,000 metric tons in the country, and so the demand was expected to be to the north of 70,000 metric tons. That's why the user industry presented to say that we would be non-compliant from day one. That's why this was the shortfall toward the next three years. It was the reasoning and the notification.
Understood. So the main problem was non-availability of supply. So can you tell us, sir, how has the supply side changed in the last six months? What is the current capacity available in the industry, and what was it six months ago?
Six months ago, it was 70,000 metric tons, and right now, it is 210,000 metric tons available for high-approved capacity. It was high-approved capacity, yes.
Ganesha, our capacity has also come thrice. At the start of the financial year, we were having only 15,000 metric tons of rPET available. At the present, we are having 43,500. Am I correct? This is the figure.
It is 42,000 tons.
42,000 tons of approved rPET available from Ganesha.
Understood.
Sir, the capacity is improving by when?
Yes. I want you to join the question two again.
Sure.
Thank you. The next question comes from the line of Shubham Kodar from Shubham Advisors. Please go ahead.
Thank you for the opportunity. Am I audible?
Yeah. Yeah. You are audible.
A little more to the context, I just like to know a few things about the.
Sorry, your Wi-Fi is very, very low.
Is it better now?
Yeah. Yeah. It's better.
So I just want to know a few things about our project program. So you mentioned we are going with the brownfield expansion at Warangal and Bilaspur brownfield expansion as well. Could you please share what kind of expectations are we incurring there, what kind of revenues are we expecting?
For this brownfield expansion is about total 2,500 metric tons per annum. We spent about INR 150 crores for this expansion.
This will be live by?
This will be live by the end of March. In fact, it would have been operational by January end because some part of the machine was brought damaged in transit, and so it is now being replaced. It will take another one and a half months for the replacement from the supplier, so the operational part is shifted from January to March.
Okay. And so, for which product are we putting this line and what kind of revenue are we expecting at the current realization?
Can you please come again?
For which product are we putting this line? I mean, for our original legacy business or for the after-garments business? And what kind of revenues are we expecting from this expansion?
This revenue will be operational. This plant will be fully operational from and the material will be available from April onwards. The revenue potential of this line is about INR 250 to INR 250 crores annually.
250 to 250?
Yes.
Okay. And so, as you please correct, you need to talk about greenfield expansion as well?
Yeah, so greenfield expansion is planned. Though, because of this scenario of the market regarding the use of the rPET, so the project is slightly delayed, and it is expected to be operational by the end of this financial year.
What is the expected capital here?
Expected expenses about INR 500 crores for this project.
Okay. Okay. Thank you so much.
Thank you. The next question comes from the line of Shubham Kodar from Broom & Shackleton. Please go ahead.
Hi, sir. Thank you for the opportunity. So my first question is that can you please quantify the absolute amount of inventory loss that you will incur this quarter for both of your businesses?
It is roughly to the tune of INR 10-11 crores.
Okay. And coming to your legacy business, you've ensured realizations have now dropped below 90,000 metric tons per month. And your RM seems to be inflated yet. But given the current RM and what you are seeing currently, what is expected to meet the legacy tier?
Yeah. So going forward, we are looking this is the demand, and this is the market scenario. We are looking for the EBITDA margins of in the range of 7%-9%, which we were earning earlier before this business was at some advance in the last two or three quarters. Before that, we were earning 7%-10%. We are looking at combating that from this position.
Understood. Sir, but in the legacy business, like a couple of years back or so, we used to make like 10%-11% margin, right? Are we expected to get back to that level?
Currently, we are looking for 9%-10%, and we are trying to go further. It may be over next quarter, next quarter in March. We will be above 10%. But in the current quarter, we are expecting 7%-9%.
Understood. So lastly, on your rPET business, sir, can you just briefly give the number of the rPET utilization for the rPET plant in the future? And what kind of rPET utilization are you looking to cover in Q3 and Q4?
The Q3, as we discussed earlier, the Q3 deliveries are not clear very much as of now because of this notification issue. But from March onwards, we are expecting we would reach to 90%, to the highest one in our r-PET business.
Q3 notification would be in line to what we are witnessing to?
Right.
Or even lower?
Correct. Correct.
Understood. Got it. Thank you so much. I'll look into this further.
Thank you.
Thank you. The next question comes from the line of Bhavya Gandhi from Dalal & Broacha Stock Broking. Please go ahead.
Hi, thanks for the opportunity. Bhavya, we just wanted to understand, is there any way to hedge at raw material, maybe through derivatives or exchange? Because I see you've capped that you cannot be hedged. If at all, there is some related commodity which is very similar, and you can hedge at raw material pricing?
So actually, it is not. It is not a very organized collection system or organized supplier here. So there is no hedging mechanism available. Like it was available, I think it is in metal. It's cheaper. I think there is some hedging mechanism, but it's not there in the scrap.
Sir, for the 22,700 metric tons capacity addition, have you made the payment for the machinery and all? Because I see INR 115 crores sitting in capital work in progress. So is it regarding that only, or is it something else?
Yeah. So mostly, it is for this 22,700 tons expansion, and most of the payment has been made.
Most of the payment. Sir, just last thing on the traditional business, what should be the long-term gross margin one should work with? If you can provide some range.
So normally, it is the range of 62%-65%, 66%.
Okay. Gross margin.
Okay. Yeah. 100 minus, I'll do it. Okay. No issues.
Got it, sir. Yeah. That's it from my end. Thank you so much, sir.
Thank you. The next question comes from the line of Shah from Sameeksha Capital. Please go ahead.
Yes.
Yes. Yes, Shah. You please go ahead.
Yeah. So sir, this quarter was like in the second quarter because of the draft notification and then when we caught. So how do you see FY2026 for an overall division in terms of revenue? What do you think to end your?
So in number terms, we cannot predict because the quarter three, especially on quarter to quarter segment, we are not clear how much revenue we'll generate.
Right. So quarter three is expecting a similar performance like Q2?
Yeah. Yeah. Yeah. We are not much hopeful on the quarter three.
And then some backup?
Certainly, we are not expecting it. It will be as for the quarter two, but it may be around quarter one results.
Okay, and then some improvement in quarter four?
Quarter four, we are hopeful quarter four will revive the business.
Right. Okay. Sir, on the margins planned on a consolidated basis, FY2026?
Sorry?
For the margins?
Yeah. So sir, basically, margins. We are not giving any margin guidance this time. Rather, we would be better in providing the same after the Q3 numbers.
So because of the inventory loss that we have here, it's incorporated in the Q2 numbers, right? So going forward, at least that loss will not be reflected in the numbers?
Yes. The inventory loss will not be there. And that's why we are saying the Q3 will not be reflected out of the Q2, maybe Q1.
All right. All right. Okay. Thank you. That's it for my side. Thank you.
The next question comes from the line of Bhavya, an individual investor. Please go ahead.
Hello. Hi. Hello. How are you doing, sir?
Yeah. Yeah. You are good.
I just wanted to know the final capacity utilization of Q2?
Yes. I'm sorry. Bhavya, everything capacity utilization was about 15%.
And when the INR 1,100 crores dividends for FY26 still impact, given performance?
I just answered this question in the last question of Shah. It is not very much clear the outline numbers for the Q3 was. It will be different from the deliveries of B2B for this month. We are very much positive for our legacy business, but for the B2B business, we are not sure.
So the guidance will be up to Q3?
Yeah. Yeah. Guidance will be yes, up to Q3.
Okay. What is your client's concentration?
So in our legacy business, the client is very, very prepared, and we are not taking more than 5% from a single customer. In case of B2B, yes, of course, client concentration is more. We are continuously aligned to the corporate approved and trusted only.
Okay. So that's it for my side, Ji. Thank you very much.
Thank you. The next question comes from the line of Bhavya, an individual investor. Please go ahead.
Hi. Good morning. My question is with respect to the product mix of rPET Chips, which is a relatively perhaps higher margin product, and RPSF, which is relatively lower margin. So what is our current status of this product mix? And going forward, let's say by 2027, then with the current scenarios we can analyze, what do we expect 2027 in our product mix of rPET Chips, granules, and additional RPESE?
Currently, our product mix is about 65% on the PSF side, 28% from the chips side, and the rest is from the yarn side. Going forward, after this greenfield expansion and brownfield expansion, this product mix will change to 65% from the chips and 25% from the rest of the businesses.
So is the current scenario going to affect this product mix for 2027, or will it get shifted towards 2028 or continuous?
So yeah, it will be shifted for this expansion of 22,500. This ratio will be higher than 2020 in the next year.
So 2027, and we are expecting this improved distribution from higher margin rPET chips?
That's correct.
My question is with respect to some of the previous discussions on sustainable fiber spinning development, for example, we were talking about sustainable fiber for antibacterial fiber for that particular type of fiber. Any developments in this regard where we could have improved the possibility for the premium products in coming quarters?
Yes. Yes. And that premium fibers are gaining ground. So the pace is very, very slow because it's very premium products. So the demand and the supply are very, very slow, but it is gaining traction, and we are expecting good margins from that.
So when do we expect launch of these kind of products in coming quarters?
So you see, these are the same products, and it cannot get a very, very great portion of the overall product mix. So yeah.
Who could be target customers for these kind of fibers, even if it's smaller volume?
So you see, looking to the specialty of these fibers, these fibers are mostly used for industrial purposes, not for the common man purposes. Of course, it is high-end industrial ends where these fibers are being used, like flame retardant and all those. Flame retardant is basically used in automotive and some industrial applications. These are very specific products and take a longer time to get into the line. Of course, the product will not be for the market. It will only be for the specific purposes.
And my last question with respect to what everybody is talking about is government notification. What I understand is that even if the government notification is finalized in its current form, for example, even in the worst-case scenario, in that case, will the impact only be for the first year? And second year, we may see higher demand or the requirement will be shifted from year one to year two?
Yes. So if any carryover is given, then it has to be added to the next three years. So it is nowhere the final mandate percentage has been reduced. It is just a carryover. Like you are not paying tax this year, but you have to pay the tax next year.
So, if the pressure is less, it is for the first year, even on the overall industry, which is the second year and third year, sees the bounce back of demand from the customers.
Of course. Of course.
Thanks.
That's correct.
Thank you. We take that as the last question for today's conference. I now hand the conference over to management for closing comments.
Yeah. Thank you for all joining today and for your continued trust and support. We are confident in our strategic direction and committed to delivering long-term value. Your insights and engagements are invaluable as we navigate the corporate trade. We look forward to meeting you on our progress in the next quarter. Till then, stay safe and stay connected. Thank you very much.
This brings the conference call to an end. On behalf of Antique Stock Broking Limited, we thank you all for joining us. You may now disconnect your lines. Thank you.