Ladies and gentlemen, good day and welcome to the Q1 and FY26 Ganesha Ecosphere Limited earnings conference call hosted by Antique Stock Broking Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this 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 from Antique Stock Broking Limited. Thank you, and over to you, sir.
Yeah, thank you. Good afternoon, everyone. I am pleased to host today's earnings call of Ganesha Ecosphere. We have a leadership team represented by Mr. Gopal Agrawal, CFO, Mr. Prashant Khandelwal, Senior Vice President, and Mr. Yash Sharma, Director, Ganesha Ecopet. Without any delay, I would like to invite Mr. Yash Sharma to start with opening comments, post which we will move to the Q&A. Thank you, and over to Yash.
Thanks, Manish. Good afternoon, everyone, and a warm, warm welcome to all the participants to our Q1 FY26 earnings call. The first quarter of FY26 was a challenging quarter for us due to some unprecedented events that led to a spike in raw material prices, which further put pressure on the RPSF prices as well as the virgin materials. The spike in raw materials was also attributable to a sudden rise in the demand for flakes, especially in the overseas markets, leading to a huge volume of export of flakes from India in the last quarter. The performance of the legacy business has thus taken a sharp beating, making the first quarter the lowest quarter of RPSF and yarn business for us among the last several quarters.
Of the scrap, key feedstock for our products reached at an unprecedented level of 55-56 per kg for some time during April and May. Merely a fraction of this price surge in feedstock could be able to be passed on to the end customers, the biggest reason being overcapacity in the industry and the suppressed demand from the user industry as well. Yarn spinning, as well as the non-woven textile sector, which is already facing headwinds in the form of cheaper imports of fabrics, as well as uncertainty over the US tariffs on the Indian imports. So overall, on the legacy business side, due to the slowdown of the demand at our buyers, our production levels also came down to 95%, as against 99% during the last quarter.
The proportion of value-added production, normal products, was also reduced by a few percentage points, and the overall raw material cost swelled to 70% of the revenue, as against 64% during the last quarter. Higher scrap bottle prices, lower sale prices, and lower capacity utilization, coupled with the demand slowdown, majorly contributed to the decline in this profitability. In respect to the RPET granule business of the packaging vertical, which is primarily regulation-driven, and the regulation for the mandatory use of RPET granules was implemented as scheduled from April 25. However, the run rate of production and sale volume has dropped by about 25% from the last quarter, and results could not be translated on the expected lines due to a couple of factors.
Number one was the early onset of monsoon during the mid-summer, which is the peak season for the beverage industry, which also affected the beverage sales of our country really badly. Second was the high PET bottle scrap prices also resulted in a 35%-40% premium in the RPET granule pricing compared to virgin, also because virgin prices had crashed due to the cooling of crude prices, so as per the past trends, prices of virgin PET usually remain firm in summer because of the higher demand, but unfortunately, this season it was the opposite case.
Basically, lower approved capacity of RPET granules. MOEF has issued a draft notification on 3rd June on the demand of the packaging industry, proposing that any shortfall in the mandatory usage of RPET during FY25-26 can be made up over the next three years, though that makeup would be over and above the individual targets of the respective future years. Based on the draft notification, the brands who were already using RPET granules and also those who were to start the consumption very soon slightly lowered down their purchases. Set off allowed to the bottlers for their past consumptions of RPET granules during the last financial year against the stipulated targets of FY26 was also leveraged by the brands to postpone their purchases slightly to subsequent quarters due to the high premium of RPET versus VPET.
Despite the disappointments in the first quarter, there are some positive forms in the form of revenue numbers and margins of our new business, which were maintained, and we could keep the expenditures under control. Though the performance was not on the expected lines, things have definitely started improving already in the current quarter as under. The prices of PET bottle scrap have come down and now normalized in the range of INR 41-INR 44 per kg, and thus improving the gross margin significantly. With the onset of forthcoming festival season, demand is also improving slightly, and the orders for September-October deliveries have picked up significantly, and we are expecting that demand will return back to normal levels in the subsequent quarters. We have got very good export orders of RPSF from the European market on the back of depreciating rupee against the euro.
With ease of price differential between the virgin and recycled granules, the sale volume of RPET has also significantly picked up, and the production run rate has reached very high levels now. Sale visibility until December has been finalized to us by our existing customers, with much improved offtakes by all the brand owners that we are currently working with. On the regulation side, while giving the finality by the MOEF, the draft notification is still pending and soon to come out. As per our sense, the shortfall of FY26 proposed to be set off will be capped to around 10%-15%, meaning that rigid plastic packaging industry will need to comply at least 15%-20% mandatory usage, and only 10%-15% of shortfall should be allowed to be carried forward and set off.
Although we are still awaiting the final go-ahead from the ministry on this, this is what the expected outcome is as of today. Much-awaited FSSAI licenses have also been provided to many new recyclers, and thus it has broad-based the capacity of the recycling industry. With new approvals in place, the current approved capacity now stands to around 1.67 lakh tons, and thus easing the fear of the packaging industry about the availability of required volume of RPET material for complying to the regulatory guidelines. Our brownfield expansion of 22,500 tons at Warangal will be operational as per schedule. We have also started making good exports of RPET granules to keep the balance between domestic and overseas demands. Promoters have infused INR 104 crore by conversion of their equity warrants in July, reinforcing their commitment towards the growth of the company's business.
Though the performance in the first quarter is falling short of our expectations, and we have faced some new challenges which we were not expecting, we believe it was just a temporary bump, and we have realigned our business strategy according to the new challenges and realities, and are confident in surpassing the financial numbers of FY25 under the prevailing national and global market scenarios, despite lower numbers in the first quarter. It is our belief that the long-term business outlook is quite intact, and we are fully geared up to seize the opportunities available in the PET recycling industry, which is upcoming. Thank you all for your patience and listening, and now we are ready for any questions that you may have. Thank you.
Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mr. Naeem Patel from Bastion Research. Please go ahead.
Hi, am I audible?
Yes.
Yeah, so thank you for the opportunity. I had a question regarding our upcoming greenfield capacity in Warangal. So is it going to be completely integrated where we ourselves procure the raw materials and manufacture the washed flakes, or is it going to be structured more around sourcing the washed flakes from the joint venture with EcoChain, which happened this year? So any more color on that would be appreciated.
Thank you, Mr. Patel. It will be the consolidated capacity where we would be having the washing line as well as the granulation line.
Understood. So we won't be procuring from the joint venture at all?
Yeah, so in joint venture, we are putting the washing line to start making the primary washing, and it is not the food-grade washing. So from these small lines, we will be transporting the washed flakes to our mother plant. So in mother plant, we will be making the washing, the rewashing the flakes to make it food-grade, and then we'll make the granulation.
Understood. And just for tracking purpose, back in FY25, we used to report consolidated utilization. So was that utilization included facility as our total capacity, or was it tracked separately? A bit more color on that would be helpful.
No, so we have given the separate capacity utilization of the standalone business and capacity utilization of our Warangal subsidiaries.
Okay, understood. Thank you. That's all from my end.
Thank you. Participants, if you wish to ask a question, you may press star and one on your touch-tone telephone. The next question is from the line of Mr. Mann Ashar from Growth Sphere Ventures. Please go ahead.
Hello. Hi, Yash. Congrats on a decent set of numbers in this time where the EPR was delayed and everything. So Yash, I just have two questions. I'll begin with my first question. The biggest bottleneck in the RPET was the approval timeline, right? And now, since the EPR has shifted to FY27, or it has been deferred to FY27, how do you see the competition coming in? Since there are, I guess, five, seven players whose capacities are ready, but they don't have any approval, so do you think that this time period will be taken by brands to basically shift their supply chain and shift their and bring new suppliers, and henceforth bringing the competition into the market and realizations getting down, say, in FY27 and 28 down the line when our new capacity is coming?
Thank you for the question. So basically, first of all, the EPR guidelines have not shifted, but what the recent draft which came out, what the government has allowed, that the 30% any shortfall from the 30% requirement for this year can be offset by doing a higher percentage in the subsequent years. So for example, let's say a brand owner, let's say, is able to do 15% this year and is falling short of 15% for this year, so they have to offset this by doing the extra 15% over the next three years above the given target for the next three years, number one. So the EPR requirements have not shifted, but they have just allowed carry-forward of the shortfalls if the brands are facing, number one.
Number two, yes, obviously, it's very important that the industry capacity gets created because unless the industry capacity gets created, there is a very strong stance from the industry that how are they supposed to even complete their required targets, the RPET targets, if the capacity is not there on the ground. The EPR implementation will not even make sense. This is the biggest ground that the industry is putting forward to the ministries for deferment, which they are not listening to. But I still think that if you think about the regulation implementation, when it happens, as it starts happening, the supply and demand of high-quality RPET granules will still be in a much bigger glut because although the capacities are on the ground, how much of really high-quality RPET will be available in the market is still a big question mark.
So it will take a lot of time for the industry to mature and to get to that level, and meanwhile, we are already expanding our capacities of RPET going forward. Yes, there may be certain challenges in the short term, but I think that the long-term fundamental is very, very strong and clear.
Got it. Got it. Yeah, so just to basically add to your answer, since the EPR is deferred, the volume has been deferred to 27 and 28, so second question was just on that line, that are the brands interested in having at least the minimum quantity that they agreed to buy from you guys in FY26, or that is also being deferred to 27 and 28?
No, no. Obviously, so all our customers are taking the quantities that they had estimated for this year. Although, obviously, it's not nowhere even close to 30% requirement as per the mandate, but yes, they are maintaining their given targets to us for the quantity of RPET. Yes, what happened is that because of the sudden jump in the prices and the huge premium, and coupled with sales pressures that they were facing in the season, they did defer their purchases a little bit, but we are again already almost fully back on track and fully utilized as of today, and it's pretty clear until the full year as well.
Okay. Yeah. That's great to hear, Yash. Thank you so much. All the very best.
Thanks.
Thank you. Participants, if you wish to ask a question, you may press star and one on your touch-tone telephone. The next question is from the line of Mr. Jatin Pandey from PKD Advisors. Please go ahead.
Hello, sir. Can you hear me?
Yes.
Yeah, yeah. You are doable.
Yeah. Thank you for the opportunity. So I wanted to ask on the capacity front itself. So as you mentioned, that high-quality RPET, the capacities that have high-quality RPET might not be as much as stated. But how do you see playing this out over the next five years if you have any idea about that?
Yes, so for our long-term vision, as per our long-term vision, we are looking for having around 30% of the market share in the recycling sector, so over the next five years, our target is intact.
Got it. And in terms of supply, how are you going to ensure that your supply of recycling material, that the RPET, that is safeguarded from the competition because you see a price war that is going on there? See, obviously, it is obviously it will happen. We do not doubt that competitive pressure will not be there, but we still think that currently the market is very, very at a nascent stage, immature. None of the qualities of any of the competitors have yet been proven on the ground, and we think that still we are very, very efficient in our operations from any of our competitors currently operating in the Indian market, be it about sourcing, be it about operations, be it about sales and volumes.
So we think that we will always be able to remain, be able to maintain that alpha from the competition no matter what. So we are always going to have that upper hand, competitive advantage from any of the other competitors that are out there in the market. Got it. Got it. Thanks a lot. Thanks a lot.
Thank you. The next question is from the line of Mr. Amit from Edha & Company. Please go ahead.
Good afternoon, sir. I'm Aurobin.
Yeah, yes, please.
Thank you for the opportunity.
So, there's a statement that you're in. I'm sorry to interrupt. Could you come again with your question, please?
So, madam, my question is, what is the current debt level and targeted debt reduction by FY26, and what is the blended cost of debt?
So currently, the debt is in the region of around INR 550 crore, and the average cost is about 8.5%. Sorry, you are not audible.
Mr. Amit, you are not audible.
Hello.
Mr. Amit, could you come again, please?
I have to rejoin with you.
Yes, sir, please. Thank you so much. We'll move on to the next participant. The next question is from the line of Ms. Dolly from Niveshaay Investment Advisory. Please go ahead.
Hello, sir. Thank you for the opportunity. I merely had two questions. So firstly, I wanted to understand regarding the Warangal unit. So if we see the realizations have been all-time high, not all-time high, maybe good this quarter because of higher raw material prices and everything, but our volume has reduced. So as a company, I wanted to understand the strategy regarding our company and industry also. So are we not willing to take a margin hit because our margins have been at this volume, our margins are decent? So are we not willing to take a margin hit for a higher volume or the prices are fixed in the industry?
See, this is always a strategic call that we make. It really depends on the situation, depends on the customer, depends on a lot of factors, market conditions. If there is a visibility of a higher volume, we obviously try to grab the opportunity by finding out the right solution. But if the volume is not flowing in, then there is no point in even discussing this sort of a solution, right? So it really depends on the situation. We did not, I mean, we did not face a situation where by taking a margin hit or taking a profitability hit would lead to an increase in any big volume. So it did not make sense at all.
It is like you just mentioned also. It is important to increase the supply in the industry. So many players will be coming up maybe two years or three years later. So do you think this 24% margin will be sustainable when many supply increases, or we can see this going down?
Yeah, so the industry is very necessary. The industry is developing, and so it is very, very difficult to predict the pricing and the margins presently over the next three, four years, so definitely, we expect the margins would be maintained until the demand-supply gap is there, and which we expect would be next three, four years when the 60% mark is achieved, so till then, the demand-supply gap would be there, and we expect the margins to be maintained.
Lastly, there is this concern that in our standalone business. We just mentioned that from INR 52-INR 54 per kg prices, it has dropped in recent months. If we can tell the percentage gap between if a customer is buying a virgin yarn or a recycled yarn, what would be the percentage gap last quarter, and what would be now?
So I couldn't get what is the percentage gap you're talking about?
So if I'm buying virgin yarn and I'm buying recycled, obviously, recycled yarn would be expensive at INR 53-INR 54 per kg. So how much expensive it was last quarter because that's why our volume decreased?
Yeah, so basically, the raw material prices were increased, but because there remains a gap of 10%-12% in the pricing of the virgin and the recycled PSF. Recycled PSF is sold cheaper by 10%-12%. So because of the demand slowdown in the user industry, we could not pass on the increase in the raw material prices to the final consumer. And that's why the profitability was affected. Earlier, we were able to pass on any increase or decrease in the raw material prices to the end consumer, but this time we could not because of the slowdown in the industry.
Okay. Okay. Got it. Thank you. Thank you so much. All the best.
Thank you.
Thank you. Participants, if you wish to ask a question, you may press star and one on your touch-tone telephone. The next question is from the line of Mr. Pankaj Gupta from Ratnabali Equity Private Limited. Please go ahead.
Hi, Yash and Gopalji. Just one thing on the export side. Are our products, RPET flakes or granules, being exempted under this 25% and 50% tariff, which has been levied?
So yes, till date, it is so all petroleum products, basically, all petroleum products are coming under Annex II. So any tariff, we call it Trump tariff, sorry. So any Trump tariff is not being attracted to any petroleum product till now, and these RPET flakes and RPET granules are out of this tariff imposition.
And second is that there were some regulations on Europe around SUPD, and there were some media articles that only the waste which is generated from European Union areas will only be counted as 25% towards their obligations of 25%. So since we are exporting to Europe, any development or any clarity on that front?
We were not exporting anything to Europe earlier also. Only the export of flakes was happening to Europe earlier to this SUP notification where it has been mandated that only the European region waste will be considered as mandatory use of recycled plastic. The major export of RPET was happening to US only. This Europe version has impacted the export of PET flakes from India, and that is why the prices in India have gone down for PET bottles.
Okay. And one thing, see, you have mentioned that the bottle prices went up as high as 54, 55, but now that has been corrected. So at one point of time, the RPET granules were trading at 40-50% premium to the virgin prices. What is the scenario now?
Yeah. So the premium has come down by about 20% with the decrease in the prices of the PET bottle itself.
Okay. So in that case, the acceptability of brand to take RPET should increase because the differentiation has reduced drastically?
Yes, of course. Of course. It is. It is.
Just last question. See, all our lines in Warangal, which is 42,000, all of them are now FSSAI approved and brand approved for all the three lines?
So two have already got approval from brands as well as FSSAI. For the third one, we got the approval from FSSAI. The brand approval is in process. So it's a matter of time because we have already done all the trials. So maybe in a week's time or 10 days, we can get the brand approval also.
Okay. Thank you. Thank you.
Thank you. The next question is from the line of Mr. Amit Kumar Rajput from Ritz Capital. Please go ahead.
Hi. Am I audible?
Yes, sir. Please go ahead.
Thanks for the opportunity and congratulations on the detailed numbers. So my first question regarding is we are predominantly working on a textile industry focus because our product is more predominantly sell on textile for textile industry. So what will be the impact of U.S. tariff on a demand side? Are you seeing any sort of demand difference in textile industry?
Sorry, Mr. Rajput, it is a good question. The demand has already been discounted because of the US tariff. But the exact picture will emerge once the things are finalized. As of the things are changing every day. But yes, the new orders from the Americas to the suppliers are on hold. So the demand is already affected. But going forward, we see it will not be impacted much. Two or three factors we see. One is the Government of India will make some incentives to the exporters to one of these incentives. Number one, there may not be the so high tariff. It might be the industry is expecting it might be diluted over a period of months or so. And number second, the Government of India will also do some package or incentives to the exporters.
Number three, even if the so high tariff remains there, so America is not having the capacity to fulfill the shortfall which will be created from the import from India. So that will be channeled through China or Vietnam or Bangladesh. So in that case, whatever the dumping has been happened from these countries to India, that will be stopped because we are having the limited capacity. And once the capacity is channeled to the USA, so that material will not come to India. So the domestic demand will be improving. So going forward, temporarily, maybe there are some challenges, but in the medium term, we don't see much impact will be there on the Indian economy because of that.
Okay. And regarding your guidance for the next year, what will be the domestic target in FY26 or FY27?
Yeah. So Mr. Rajput, will you please come again? Your voice was cut in between.
Can you come again with your question, please, sir? There's a lot of disturbance at your end. Yeah.
Okay. So my second question regarding the revenue mix which we are targeting for FY26, FY27?
Are you talking about the product mix?
Revenue.
Revenue. Total revenue mix, that would be around 50% from the subsidiary and... sorry, 35% from the subsidiary and 65% from the legacy business.
What will be the product mix?
So the product and legacy business, mainly the recycled PSF and yarn is there. And for the subsidiary, the major contributor to the recycled RPET granules.
Okay, so we are estimating that yarn will be major contributor towards our revenue in FY26 and.
So the major contributory in 26 would remain the recycled PSF, not the yarn. Yarn, we are having very small capacity.
Okay. Thank you, sir. That's all from my side, and wish you all the best for your future. Thank you.
Thank you. Thank you.
Thank you. The next question is from the line of Mr. Bhavya Gandhi from Dalal & Broacha Stock Broking Private Limited. Please go ahead.
Yeah. Hi. Thanks for the opportunity. So my first question was regarding the EPR fulfillment that they have to do for FY27. That also, they can roll it over to plus three years or starting from FY26, the addition will be three years. Three years addition will be from FY26.
So basically, the draft notification issued on June by MOEF is allowing only carryover for the shortfall of the first year, the year we are in, 2025, 2026. The remaining target for next years are intact. They have not been allowed to carry over. And even this carryover will be over and above the target for the next year. So let's say in 2026, 2027, you have a mandate of 40%. So if you carry over any of your shortfall of 2025, 2026 to 2026, 2027, it will be over and above 40%.
Okay. Got it. Right, so FY27 and 28, they cannot roll it over for further years. In fact, they'll have to fulfill for FY26 as well in 27 if they fall short in 26.
Correct. They've been allowed just to look that the approved capacity is not there. That is why they are just giving a head start that, okay, if you are having any shortfall because of non-availability of the material, it can be carried forward. So we have presented the case, and I hope even for the first year itself, there will be a cap.
Got it. Got it, and sir, is it possible to quantify what will be the total RPET capacity across the industry at this point in time and what is the demand? Because now the first Q is already done, so some demand assessment.
So basically, looking to the total consumption of 1.2 million tons of PET in India for packaging, especially in the bottles, the food packaging, the demand should be 3.6 lakh tons for the first year itself because you have to.
Yeah. So ideally, the demand must be 3.6 lakh tons, but if we exclude the unorganized sector, so roughly the demand is around 200,000 tons for this 25, 26. Okay. And versus that capacity, what would be the RPET capacity total across players today?
Currently, the approved capacity is around 1.5 lakh tons.
Okay. Fair enough. And sir, is it possible to quantify the INR 125 crore CapEx? How are we planning to fund that? What is the cash flow status at this point in time? Are we going to take any debt for that INR 125 incremental CapEx, which is there in Warangal?
No. So we are not taking any debt for this 125. It is entirely from the internal accruals and the cash balances available with the company, including this conversion of warrants from promoters recently done. INR 104 crore, we got it.
Okay. And sir, what would be the peak level of debt for FY27 and 28, if you can provide?
We are looking around INR 700 crore of the debt, peak level.
Okay. Fair enough, sir. That's it from my end. Thank you so much. Thank you so much, sir.
Thank you. The next question is from the line of Mr. Jayesh from Niveshaay Investment Advisory. Please go ahead.
Yeah. Thanks for the opportunity. By the way, I am an individual investor. So sir, I just wanted to understand what could be the next quarter guidance regarding revenue and margins?
So, instead of the quarter on quarter, we are having that guidance for entire 2025, 2026. So the guidance is about looking to the present circumstances and some uncertainty prevailing globally over the tariff and all those things. We are confident in surpassing the revenue and the bottom line number of the 2024, 2025. But certainly, if the situation improves and the things look up, we would do better than that in this year.
Any particular number that you would like to put?
Yeah, so for this financial year, as of now, we are giving the guidance of around INR 1,500 crore.
Sorry, your voice. I didn't get it. Can you say that again?
As of now, we are giving the guidance of about INR 1,500 crore in view of the present circumstances and the situation prevailing.
Okay. And any improvements on margin level?
Yeah. So the margins, we are just guiding that we would be surpassing the revenue and the bottom line numbers which we have achieved in 2024, 2025.
Okay. Yeah. Thank you.
Thank you. The next question is from the line of Mr. Deepak Ajmera from IGE India. Please go ahead.
Thanks for the opportunity. I have two questions. One is that as of now, we are saying the margin got impacted because of the monsoon-led lower demand on the food-grade side by the FMCG or the food companies. Now, if that is the situation today, means when the capacity is not there across industry and we couldn't keep our margin intact, then what will happen after the capacity is there across industry? Means why we are confident that margin will be maintained later on when we can't maintain today in this quarter? That was the first question.
So it is. So the margins were impacted largely in our legacy business of the RPSF. But in case of RPET granules or the other business of subsidiary, we have maintained the margins. The margins are intact. So with the increase in volumes and the offtake, the same level of margins will be maintained. And there is no challenge as of now in maintaining the margins in our subsidiary businesses.
Got it. So food-grade, there is no issue on the margin side. Got it. Second question is, if the capacity across industry will be so low compared to demand, then what's our plan after this December capacity? I mean, the next phase of expansion because this is just the beginning of the requirement on the recycled side, so on the food-grade. So after this December capacity, what's the plan for further expansion?
We have already announced the capacity addition of about 90,000 tons, including this Warangal expansion, brownfield expansion. The brownfield expansion, it will be the mix of brownfield and greenfield. Total 90,000 capacity will be added by FY27.
Yeah. I got it. But my point is, it is too low compared to the requirement. And the demand is also growing. And there will be carry forward. And then subsequently, also, the capacity requirement will be very high. So are we planning for the next phase of expansion post this capacity addition?
Yeah, so post this 90,000 capacity addition, making our total capacity 132,000 tons of the granules from the presently 42,000 tons. We would certainly be making some further capacity expansions, but the plan will be finalized after this addition of 90,000 tons, and apart from us, other players are also adding the capacity, so we don't expect there will be much shortage of the demand and supply gap. There will not be a very big gap going forward.
Yeah. Got it. But the other players are not proven yet. So we have early mover advantage. We can capitalize. That was the only point. Yeah.
Of course. But you see, capacity addition required two to two and a half years' time. So you plan the capacity now, and it is about two years' time on grounding the capacity. But already, we have planned for the 90,000 tons. And so in the midst of the 90,000 tons, we will decide for the further CapEx and further capacity addition.
Oh. Thank you. Thanks for the opportunity. Best wishes.
Thank you. The next question is from the line of Mr. Aryaman from Investment Managers. Please go ahead.
Hi, sir. Maybe a follow-up on the last question. Can you maybe quantify the kind of supply that we will see in the next two years from these, especially in RPET, from some of these new guys? And other than say our first mover advantage, what's the kind of moat we have going ahead? Thanks.
Yes. You have to answer.
Sorry, could you please repeat your question?
Yeah. So basically, I wanted to maybe quantify the kind of capacity that we are going to see in the next two years in RPET from some of these new guys. I mean, probably now two, three big capacities coming in. And maybe other than first mover advantage, what maybe are our moat going ahead?
Sorry, sorry. So see, it's very difficult to tell you. So I'll give you an example. When we were back in December 2023, when the regulations of PWM regulations were in place and the application was to start from 2025 onwards, in 2023, the announced capacity of RPET in India, the announcements were around 300,000 metric tons. But the reality is that we are already in 2025 end, and the real capacity on ground is at 180, right? So the problem is that the announcements are made, but is the real action happening on the ground? There is a big mismatch always in that, and there is no way you can predict because everyone makes announcements, but the real implementation is a much different story altogether. People back off later.
As of today, the announcements that we are currently hearing or are currently out there in the market, we are hearing a capacity of 3.5 lakh tons by in the next two years. How much of that will be actually on ground is still a question mark.
Sure. Yes. Thanks.
Thank you. The next question is from the line of Mr. Mehul from 40 Cents. Please go ahead.
Hello sir. Thank you so much for the opportunity. Sir, if we were in a non-tariff scenario right now, which quarter would be the best quarter in terms of demand and supply for the industry?
Yes. So the demand yeah. Please, please.
Please, please go on, Gopal.
No, no. Please.
Sorry, which sector you were talking about?
The recycling sector.
I think we have two verticals. One is textiles, and the other is packaging where we send our applications in. So both of them are very different from each other. For packaging, usually the summer season is the best. Though this summer was really badly affected due to the early onset of monsoons in India. So for beverages, especially in packaging for us, the summer season is usually the best demand quarter. In case of textiles, it really varies. The festive season generally, I think quarter two, quarter three usually remain the better ones.
Okay. And so what you stated about the packaging vertical, it seems that Q1 is the best quarter. And how are Q2, Q3, Q4? I mean, in normal scenario?
So see, it's a fluctuating demand. It's very difficult to comment like that. But yes, obviously, certainly. So South India is a much more consistent industry in terms of volume in beverages and FMCG throughout the year because they don't have winters. But certainly in the North India, during the winter seasons, the volumes go down. So they go down by about 30%-40% in the winter half of the year.
But as far as the RPET granules are concerned, as for our supply is concerned, we are already having the clear visibility for this financial year. Though it was slightly impacted in Q1 because of the reasons already stated by you. But from Q2 and Q3 and Q4, we are already having the different content with us.
Okay, and so my second question is, how much of our revenues is exports?
So that's presently in the last quarter, we got the 12% of the revenue from the exports.
Okay. And what was it the previous year?
It was 9%.
9%. And any estimate you can give for this year? I mean, barring the uncertainty of the tariff.
Yeah. So barring that, we are expecting we would be making around 15%-20% of our total revenue from exports.
Right, sir. Okay. Thank you so much, sir. And all the best.
Thank you.
Thank you. The next question is from the line of Ms. Dolly from Niveshaay Investment Advisory. Please go ahead.
Hi, sir. Thank you for the follow-up. I just had one question. So this was regarding EPR penalty mandated by the government. So if it would be possible for you to quantify the calculation of the high difference between virgin and recycled chips in this quarter? So I wanted to understand, will it ever be lucrative for the packaging companies to actually use 100% virgin chips and the same penalty rather than using 30% recycled chips in costing terms if you can quantify the calculation?
Dolly, here we would like to bring your attention towards the penalty and consequences of the penalty. Penalty is not the forgo of your liability. Penalty is because you have not done what has been asked by the regulation. Beyond this, there will be, even if you are not completing your mandatory targets of using recycled plastic, there will be environmental compensation cases that may be taken by the courts, taken to the courts, and even up to the unit closure may happen. Because if you are not completing your mandate, it means you are still damaging the environment. Even if you have paid the penalty, but the damage to the environment has happened. Then there will be environmental compensation cases also going on. In short, paying the penalty is not absolving the packaging industry from the consequences of environmental damages. It will remain there.
Okay. Got it. And just one question on this export market that we are opening. So which countries are we majorly targeting here for RPET and for RPSF separately?
Mainly we are exporting to Europe. We are exporting to Middle East. We are exporting to the US also, some quantities to the US. We are also exporting to Nepal and the nearby countries.
Okay. Thank you.
Thank you. Ladies and gentlemen, I would now like to hand the conference over to the management for closing comments.
Yeah. Thank you. Thank you, Manish. Thank you all the participants for joining us on the phone call. Thank you a lot. Bye-bye.
Thank you, sir. On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.