Ladies and gentlemen, good day and welcome to the Q4 and FY 2025 Ganesha Ecosphere Limited earnings conference call hosted by Antique Stock Broking Limited. As a reminder, all participant lines will be in the listening-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your dashboard 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.
Thank you, Muskan. On behalf of Antique Stock Broking, warm welcome to all the participants on the 4th Q FY 2025 earnings call of Ganesha Ecosphere. Today, we have Mr. Gopal Agarwal, CFO; Mr. Prashant Khandelwal, Senior Vice President; and Mr. Yash Sharma, Director of Ganesha Ecopet from the management. Now, I would like to hand over the call to Mr. Agarwal for closing remarks, post which we will open the floor for Q&A. Thank you, and over to Gopalji.
Yeah, yeah, thank you. Good note. So yes, yes, we'll make the start.
Sure. Thanks, Manish and Gopalji. Good afternoon to everyone, and I welcome all the participants here to our 4th quarter and full year earnings con call of FY 2025. To begin with, we are pleased to share that the company crossed the INR 200 crore mark in EBITDA and INR 100 crore in PAT for the first time during FY 2025. Production numbers also surpassed 1.5 lakh metric tons, and we have achieved a revenue of INR 1,465 crores.
This year was a journey of navigating industry challenges while achieving significant milestones, and along with that, reinforcing our commitment to growth and operational excellence. Operations in our Warangal plant have become stabilized, and during the year, its products, particularly the food-grade rPET granules, are having excellent performance and have set a new benchmark in the industry. We have also added a multiple set of new customers and vendors to expand our footprint across the country.
Having said about all the positives, there are still challenges which we also faced, particularly in the last quarter. Our legacy business is facing some heat due to the higher input prices as well as surplus demand from the user industry, so high volatility in the scrap bottle prices all around the year, and the prices which soared an all-time high in March 2025 because of higher exports of PET flakes and intermediate product while converting PET scrap into final products. The soaring input prices impacted our legacy business and customers using the rPET granules, also not comfortable with the rising gap between the virgin and the rPET polymer prices. Currently, the stand on USA on tariffs is also creating uncertainties in the business, while some are getting positive traction and some are feeling the heat.
We trust that these challenges and uncertainties are temporary, and the process of emergence and addressing them is a part of our business cycle. Plastic waste management rules for use of 30% recyclate have also been implemented as per the schedule. Scrap bottle prices have started to stabilize from its peak. We have also started making higher exports of the rPET polymer to keep balance between the domestic and the export demand for our company. In our legacy business, also, we are expecting that the demand should return back to normal levels in the next two to three quarters. We are continuing to develop the newer value-added products, exploring newer markets, increasing proportion of alternate raw materials, etc.
The recent FTA of India with the UK is also looking to be a very good positive for the Indian textile sector, particularly for the finished garment sector, which we expect to travel down to the entire textile value chain. We believe that the long-term business outlook is intact, though there could be some short-term tides in between. We are excited about the opportunities available in the recycling sector and keeping the pace not only in the implementation of our expansion projects, but also looking for and exploring newer opportunities in newer domains. Thanks a lot for your patience, and now over to Gopal for taking you through all the financial numbers.
Yeah, thank you. Good noon, everybody. In FY 2025, the company made a strong performance with consolidated production numbers of 156,087,000 tons, which is an increase of 20% over FY 2024 production numbers. The company crossed consolidated top line of INR 1465.54 crore and bottom line of INR 103 crore, which is a growth of 30.5% and 54% respectively. The company earned 14.4% EBITDA margins against 12.3% earned during FY 2024. On a standalone basis, the company achieved production of 112,084,000, which is slightly lower than FY 2024 production numbers. Revenue numbers are INR 983.88 crore, which is almost at par with last year's numbers.
The company earned PAT of INR 75.48 crore, which is an improvement of 21% over FY 2024. On a Q2 basis, the company's performance was slightly impacted and achieved consolidated production of 38,790 tons, lower by 4.75%. Revenue of INR 344.37 crore, lower by 13%, and PAT of INR 23.76 crore, lower by 20%.
On a Y on Y basis, there is an all-round improvement in production revenue and profitability numbers by 40%, 13%, and 10% respectively. The company earned EBITDA of INR 51.10 crore, which is lower by 9.5% in comparison to Q3 FY 2024, but higher by 8.5% on a Y on Y basis. The company's standalone business during Q4 FY 2025 witnessed some slippage in production turnover and profitability numbers, both on Q on Q and Y on Y basis, mainly because of soaring input prices and slowdown in demand. During the quarter, the company achieved capacity utilization of 99% in standalone business and 63% in subsidiaries.
Its sales volume was lower than production numbers, both on standalone and consolidated basis, mainly because of unprecedented increase in scrap bottle prices, particularly in the month of March, and also because of our focus to trim down the receivables position rather than pushing the sale. With this, we are ready to take the questions which you may have. Thank you.
Thank you very much. We will now begin the question and answer section. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Parth Agarwal from Bastion Research. Please go ahead.
Hi. Thank you for the opportunity. Sir, I have a question regarding the sales volume. So, our sequential decline in sales volume, is it attributed to an increase in the scrap bottle prices or there is some other reason?
Yeah, Parth, so both the factors are there. One is the increase in the prices of input. So that made the buyers wait and to buy the material on need basis only. And another way, we are also focusing on reducing our receivables numbers rather than pushing on the sale.
Got it. And sir, so the increase in price of scrap bottles that you have faced during the month of March, so is it due to rising number of competitors sourcing the bottles and hence the price war because of that, or there is some other reason? It's more of a temporary?
Yeah, so basically, it is mainly because of the increase in exports of the waste PET flakes, which is an intermediate product from the PET scrap.
Got it. So it has nothing to do with the competition?
Yeah, competition was there, but it is mainly because of the exports.
Got it. Okay. Just one data-keeping question. So if we go to slide seven, where we have mentioned a consolidated performance on a YoY basis, we have mentioned a production volume for Q4 FY 2024, which is comparative for previous year at 27,752. In Q4 FY 2024, if I look at the IP of Q4 FY 2024, that time the number was 34,000. So either this number has been restated, or I'm not sure why there is a change.
Sorry, can you please come again? I couldn't hear.
So if we go to slide seven, and if we look at the production volume, it's at 27,752 for Q4 FY 2024. Okay?
Correct.
If I look at Q4 FY 2024 presentation, which is a presentation which was released a year back, that time the production volume was 34,000 something. Even if you look at slide number seven and eight, the consolidated production volume and standalone production volume are the same. Either there is some mistake with this data, or I'm reading something wrong.
No, so basically, now we are presenting the production data of the products which we are selling in the market. Earlier, maybe we had removed the rPET flakes numbers also of our subsidiary, which we have now removed.
Okay. Okay. Thank you. Thank you so much.
Thank you. A reminder to all the participants, you may press star and one to ask question. The next question is from the line of Prakash Kapadia from Spark PMS. Please go ahead.
Prakash Kapadia, yeah, thanks. They're already up. A couple of questions from my end. Historically, I think value-added business was around 40%, and 60% was from the standalone business. How much was that mix? And in the next two years, what kind of contribution can we envisage from the value-added business and the standalone business? And in your opening remarks, you alluded to standalone business seeing challenges. So what is the outlook for that business as we move forward? Is demand even seeing muted in the current scenario? And I think with the capacity expansion, what kind of sales number can we directionally look at by 2027?
Prakash, you were talking about the standalone business. Correct?
Yes. So at a consolidated level, the total capacity of 286,000 tons per annum. So what will be the total consolidated sales which we can look at by 2027? And on the standalone and the value-added subsidiary business, what kind of a mix or contribution?
There is some voice in the background.
One second. I'll go to a better reception area. Sorry. I'll go to a better reception area. Is this better now?
Yeah, yeah, yeah.
Yeah. Sorry. So what I was trying to understand is two or three things. One is that 286,000 tons per annum, what is the kind of sales which is directionally possible as a company? Secondly, from a historical mix perspective, I understand value-added was around 40%, and the standalone business was around 60%. And you alluded to the RPSF contribution to sales not being too good in terms of demand. So what is the outlook for the standalone business? And directionally, what kind of EBITDA margin can we expect with the mix change from FY 2025 onwards in the standalone and the consolidated level?
Yeah. So Prakash, first we come to the value-addition quantums. We are operating at around 40%-42% of the value-added products and the normal product mix in our standalone business. We are continuously trying to increase this year. We are expecting it to be 55%-60% over the next two years' time. Most of the contribution will come from the value-added products over the next two years' time. Yeah, certainly, the outlook for two or three quarters is not good for this standalone business because of the soaring raw material prices, because of the alternate uses of the input material. But certainly, the industry is taking the alternative path to make things normalize. We are also looking for some alternate raw materials, textile waste, etc. We are also working on the value-added products.
And so we expect by the end of this financial year, FY 2026, the business will be normalized for our standalone perspective. And going forward, we will be able to maintain the EBITDA of 10%-11% which we are earning either way in this business.
Okay. That's on the standalone side. And is it right to say with the contribution from the value-added products that would be at max 17%-18% EBITDA margin?
So for the consolidated business, yeah, consolidated business, we are talking more of subsidiary business. Subsidiary business, we are earning the margins, EBITDA margin in the range of 21%-22%, which we expect to be continued.
I'll join back as well. Thank you.
Thank you. A reminder to all participants, you may press star and one to ask question. The next question is from the line of Prakash Sharma from Equinox Capital Ventures Private Limited. Please go ahead.
Hi, sir. Congratulations for good setup numbers. So my question is on your margin side that I can see that there is a good jump in our margin as compared to financial year 2024, is around 12%-14%. So will this margin be sustainable in future? And do we expect an improvement in the margin?
Yeah, thank you. So we expect that these are the sustainable margins. So the margins have improved because of the Warangal facilities. So we are with the stabilization of the operations in Warangal project, we are expecting these margins are sustainable.
Okay. And, sir, if I see on your inventory side, it seems to be a little bit stretched. We have grown our sales in the last three years around 12.8%, and our inventory has grown around 21%. So what is the normalized inventory days in our business, and how can we tackle this?
Yeah. So you are correct. Inventory level has increased slightly in the current year, particularly in the March quarter because of the higher production and lower sales. But we think it is temporary, and going forward, with keeping the pace of the sales volume, we would be able to reduce the inventory.
What is currently inventory days in our business?
Currently, it is around 100 days.
Okay, so what are we expecting to reduce it?
We are looking for reducing it to by about 70-75 days.
Okay. In the next two years, right?
Yeah, next one and a half year.
One and a half years. Okay. And sir, what revenue guidance are we expecting for financial year 2026 and 2027? If you can highlight on that.
So for FY 2026, we are looking the turnover of about INR 1,700-INR 1,750 crore. And for FY 2027, the turnover will depend upon the operationalization of our new expansion plan.
Okay, sir. Okay. Thank you very much for asking my question.
Thank you. The next question is from the line of Nitesh Dutt from Burman Capital. Please go ahead.
Hi. Thanks for the opportunity. I have a couple of questions on your Warangal facility. So for rPET, can you please provide the utilization levels and also what kind of realizations are we getting, especially for Q4? What realizations should we get?
Yeah. So we are operating at about 80% capacity utilization, and overall capacity utilization is about 63% in our subsidiaries.
80% is for rPET and 63% overall?
Yes.
All right. And so for the remaining products, RPSF, PPSF, filament yarn, etc., how do you see the ramp-up over the next couple of quarters and FY 2026? What kind of utilizations do you foresee for the next year? And when do you expect the pickup to start?
Yeah. Yes. You would like to?
Yeah, sure. So yes, absolutely. So RPSF is already also touching almost 70% realization, and the other products, filament yarn, being a very, very highly premium product, the utilization is still on the lower side. But we think that by the end of this year, we should be able to reach between 70%-80% of realization, between 70%-80% of utilizations in this filament yarn as well. So I think by the end of this year, we should be looking at overall utilization level between 75, not of 75% on the overall facility levels. Also, I mean, our rPET capacities are also going to increase in this facility. So even that operationalization is going to happen. Slightly affect because after the commissioning of a new facility, new production line, it takes some time.
It takes three to six months to stabilize the operations to get the necessary approvals and everything before the ramp-up could happen, so yeah, yeah. All right, and just when are the capacities getting operationalized for Warangal? The new additional capacity which we are currently setting up will be operational by October.
We are expecting it to be operational by December, yeah.
Yeah. Yeah. Understood. Lastly, on rPET side, do you expect that in Q1, we should see a better demand ramp-up because EPR mandates have become applicable from 1st of April? So are you already seeing some increased traction from customers post-31st March?
Yeah. So post-.
Yes.
Yeah. So yes, definitely, the laws or mandate are in place now, and there is definitely an increased discussion going on from across different brand owners. What has interestingly happened is that there were many brands who were still not even considering the use of rPET. So they have also started now. They are also now starting their journey of using rPET to some levels, although it is still not to the level that we expected. The jump should have happened, but yes, increasing number of brands and customers are now looking to start using rPET in their applications.
The main interest is because of the rising gap between the virgin and the recycled granule pricing, which is currently around 30%.
Got it. Next, on RPSF side, so do you see any kind of pickup in Q1 already, basically versus Q4? Just want to understand if the Q4 volumes are the bottomed out volumes or volumes can go lower versus Q4 as well?
No, in fact, the Q4 volume is better than the.
Actually, the numbers when we're talking about the rPET granule values?
No, no. I'm talking about RPSF.
Okay. RPSF numbers. Yeah. So we are expecting to maintain the RPSF numbers in Q1 also as per Q4.
Okay, and when do you see the pickup happening from, basically, in standalone business? When do you see volume growth coming up?
Actually, we are already almost utilizing 100% capacity in our standalone business, and we are not going to expand any capacity as of now in this business, so whatever the volume addition will be from the sale of inventory rather than any volume increase from production side.
So what we basically expect is that the margins should improve in the next two to three quarters. Definitely, the marginal numbers should improve from the current numbers, but there's not going to be a huge volume change as such because of no new additional capacity coming in. I just wanted to make sure that I got it right. So in our standalone business, we had 15% volume decline. So you are expecting similar volumes to continue, or do you expect volumes to improve going forward?
Yeah. So in next one or two quarters, we are expecting the numbers, what the numbers we have achieved in March quarter. But certainly, after two to three quarters, the increase will be there in numbers.
Got it. Understood.
We are not expecting any further decline in the volume in current quarter.
Got it. Lastly, because of these increased bottle prices, do you foresee any impact on your margins for both rPET and RPSF businesses?
Yeah. So the peak has been achieved in April itself. Now the bottle prices have started to soften up.
Got it. Thanks. I'll get back in the queue for any follow-up.
Thank you. The next question is from the line of Dolly Choudhury from Niveshaay. Please go ahead.
Hello. Thank you for the opportunity. So I just had one question on industry level. So in the last few months, if you see, there has been many announcements by different companies regarding expansion for recycled PET facilities. And we are also doing a huge CapEx. So as I also mentioned in your presentation regarding the industry size of 1.3 million and the norm is there. So as we will calculate the supply, we'll meet the demand or maybe surplus it in a year or two to see total or so. What is your view on that?
So yes, you're right. Obviously, a lot of players are announcing the additional capacities in the rPET segment. So now you should understand that there is a very important factor here that the capacity, the rated capacities which are stated by the people, is not actually what is the final output. The final output usually is much lesser, approximately 20%-25% lesser than the rated capacities. What usually people do is that they disclose their rated capacities rather than disclosing actual volumes like we do. That's the number one factor. Number two is that we think that not everyone will be able to manufacture very high-quality rPET production because rPET, as we have understood, is that it's a very highly technical product. And if you don't achieve very consistent quality of operations in terms of your contamination levels, it is very difficult to sustain.
Looking to both these factors, we think that the actual utilizations of the rPET capacities globally remain to be in very lower numbers. Also this capacity number which has been declared by the industry, it's not the real number that is actually coming up on ground. A lot of projects, they get made every day and they get canceled also in a few months' time. We are still not sure how this will go in two years down the line.
Okay. Okay.
Thank you. The next question is from the line of Sabyasachi Mukherjee from Bajaj Finserv AMC. Please go ahead.
Yeah. Hi. Two questions, Gopalji and Yash. Number one is on the rPET volumes. I see that it is lower quarter on quarter. So Q3, we did some, I think, around a little short of 12,000 tons. Q4, we are lower than 11,000 tons. Why is it so? I mean, one would have expected an increase quarter on quarter. Anything here to be read into?
Yeah. So as we told, there was an increase in the gap of virgin and recycled PET. So that was the main reason, and our customers just looked at the quantity only on need basis.
This is on rPET you are saying, Gopalji?
Yes. I am talking about rPET.
Okay. But on the mandate, I mean, 1st April, there is this regulation, right? I mean, why people would move to virgin now? I mean, they eventually have to move to recycled only, right? What is the logic behind?
Actually, the regulation has come from the 1st of April 2025. It was not up till 31st March.
Right. Right.
Whatever the mandate, the regulatory mandate is from the current year only, not in the last year.
Okay. So I mean, follow-up to that, given now we are almost two months into the quarter, are we seeing any uptick in the rPET volumes now?
So see, currently, it is running on a similar level, I would say, as Q4 levels. There is a slight improvement from those levels, yes. The utilization has gone up very slightly. But see, what is happening currently is that until the end of April, or I would say the beginning of May, if you would have seen, the crude oil had crashed very significantly because of which the virgin PET prices came down very heavily. So what happened at the end of that is that the difference between rPET and VPET prices increased to a very, very high level because of which the volumes at the brands of recycling have slightly gone down. But now, again, from the last 10, 15 days, as the bottle prices, scrap prices started to go down and the rPET prices started to come down, again, the lifting has started to become slightly normalized.
We have also locked in some export volumes to help increase the sales and overall utilization numbers. I think it will definitely be better. Until this regulatory regulation which has been implemented, we are still seeing that all the brands have not started with full force usage of the rPET material. Everyone is currently in their process to start this utilization of the rPET material at the higher level. As that happens, definitely, there should be a much larger uptick than what we expect.
Yes. Just to understand this thing better, so see, this crude oil price variability, whatever is happening, eventually, once this mandate gets strict and implemented by the government, and there would probably be some industry lobby being against it, but I think with the government's stance, if this gets implemented more strictly, I believe eventually, not in a quarter or so, but companies have to comply with this regulation, right? Is that understanding correct? I mean, what has been your experience in interacting with several stakeholders and the government body, if you can?
No. Absolutely. So your understanding is fully correct. The current government stands, as per the regulation implementation, to be very, very that it has to be implemented as is, and they are very strict about it, so to speak. So even though the industry is trying to defend, but still, they are saying that the regulation has to be implemented. Though, yes, I mean, currently, everyone is just figuring out how they have to ramp up their usage volumes. So that ramp-up has still not happened, but it has to happen in this year's timeline for them to be able to justify to the government the usage of the compliance of the regulation.
Understood. Got it. Now, on the year FY 2026, on the volume guidance, if you have anything on the rPET side, because I think FY 2025, we have done some around 40,000 tons, if I'm not wrong, on the numbers. What is our target for FY 2026? Do we have any volume guidance kind of a number?
Yeah. So for FY 2026, the number could be around that only because our capacity is 42,000 tons, and capacity ramp-up will happen by December 2026. So it will take two to three months or four months' time in stabilizing. So we don't expect there would be any increase in the numbers in this current financial year. Yeah. But of course, there would be a significant jump in FY 2027.
Gopalji, I think last time when we spoke in the con call, I think we were doing a brownfield one in Warangal, which should be up and running by September, October, you said. The greenfield will probably take time. But the brownfield one should add some volumes in FY 2026?
Yes. That is what I am telling. So this Brownfield will be operational by December.
Okay. Okay.
And yeah. And it takes one quarter or so in stabilization. So there may be some additions, but the major growth will come in next year only.
Do we need to have further validation from the customers for this new line, the brownfield one?
You see, for every line, you have to take approval from FSSAI for every line, irrespective of in the similar facility you are putting up that line. So FSSAI approval will also take at least two to three months. And yes, it would be a shorter time span for the approval of the brands because it is being put in the same premises. But still, they will also validate every new installation separately.
Understood. Just one last question on the legacy business. The volume this quarter is 23,500 versus if I look at last four quarters' average is somewhere around 28,500 and 29,000. I understand there has been an increase in scrap bottle prices and probably textile as a segment was not doing well. All is understood. My question is, I mean, we had force in this kind of an environment where probably people are not taking, I mean, offtake is slow. But still, our production volumes are higher, which led to probably some bit of inventory stocking at our side, which kind of impacted the cash flows as well. My question is, why didn't we, I mean, proactively cut our production? Second, follow-up to that is, why are we seeing such kind of challenges in this segment? Are we shifting the same raw material?
Because the raw material, I believe, is the same for RPSF and rPET, the scrap bottles. Are we shifting some of the raw materials to rPET from RPSF? Can you throw some light on these questions?
Yeah. So we have increased the buying and sourcing of the raw material. So as such, we are not shifting the raw material from the PSF to rPET. So our overall procurement number has increased, number one. Number second, yes, there was some slowdown, particularly in the month of March in offtake in the January and mid-February. The offtake was not much affected, but the prices of input feedstock was more increased towards the second half of the quarter. So that impacted the market, which we are not actually visualizing in the beginning of the quarter.
What is the outlook next two to three quarters on the legacy business, RPSF?
So we are expecting that the business would remain as it is in next two to three quarters. Two to three quarters are painful for this industry, for the legacy business.
Okay. Got it. Thanks, Gopalji. Thanks, Yash, for answering all the questions. Thank you. All the best. That's all from my side.
Thank you.
Thank you. A reminder to all participants here may press star and one to ask question. The next question is from the line of Vidisha from Sarda Pookhraj & Sons . Please go ahead. Yes, Ms. Vidhi, go with the question, please.
Hello. Thanks for the opportunity. Yeah. My question is regarding the planned EPCG of 725 here. Are we fully funded for right now? And how do we plan to fund if there is any additional requirement, maybe this year or next year?
Yeah. So this EPCG to happen over the next two years' time, we have already spent around INR 90-INR 100 crore on this EPCG in the form of advances, etc. And the rest of the expenditure is to take place over the next two years' time. So we are having the fund tie-up, entire fund tie-up for this project.
Okay, and when do we plan to see 100% utilization from the current Warangal facility, and even from the upcoming facility in Old Bend, Warangal?
Yeah, so the existing capacity of Warangal, we are expecting to be optimal utilization by Q3, Q4 of this year, and for the expansion project, our full impact will come from the FY28.
Okay. What can be the peak revenue, maybe utilization per ton that we can expect in FY28 at the peak capacity?
After this expansion, we are expecting our turnover in the range of about INR 26-2,700 crore.
It will be in FY 2027, 2028, or maybe later?
FY 2027, 2028. Correct.
FY 2027, 2028. Okay. And what can be the additional depreciation which we will see in the coming years due to this expansion?
So from the expansion side, our additional depreciation would be to the tune of INR 35-40 crore.
Okay. Thank you for the opportunity. Congratulations for the result.
Thank you.
Thank you. The next question is from the line of Deep Mehta from Bank of India Mutual Fund. Please go ahead.
Hi sir. Thank you for the opportunity. Just one question. We are setting up a JV for backward integration, right? So what is the progress in that? How many washing lines have we already set up, and how should we look at it impacting our margins going ahead?
Yeah. So we have already worked on a washing line in South of India, Tiruchirappalli. And second line in Chennai, we have already bought the land. And so work should be started from there. So we are working on the two lines at present.
Going ahead, how should we look at it benefiting us in terms of RM realization as well as margins?
Prashant, you will answer, please. So basically, you see what is happening now, the raw material has to be collected locally. So geographically, we want to cover the material from a radius of 250-300 km across India. So from there, the idea of putting up different wash lines in different geographies where Ganesha's standalone plant is not there. So this will certainly have an impact on collection cost, the procurement of the material locally by reducing the impact of cost of transportation. Because you see.
As well as availability of the raw material for our future expansion.
Yes. Yield loss is about 22%-23%. So this additional transportation cost can be waived off if you are putting the local wash lines in different areas.
Understood, sir. So if yield loss is 20%-20%, can we expect that our RM cost can reduce by that extent over medium to long term?
No. Basically, we will see the transportation cost on that. Basically, we are presently buying the bottles in which we are getting the yield of 75%-76%. So we are transporting the 23%-24%, the wastage. So from that washing lines, we will transport only the washed flakes. So that will save on the waste which we are transporting.
So can we quantify the margin benefit which we may get over medium to long term by doing this, or?
So it is rather more from the margin. It is more from the security of the raw materials and the availability of the raw materials rather than making margin on this venture.
Understood, sir. Understood. Yeah. That's all from my side. Thank you.
Thank you. Ladies and gentlemen, in order to ensure that management is able to address questions from all the participants in the conference, please limit your question to two questions per participant. Do you have a follow-up question? We request you to rejoin the queue. The next question is from the line of Bhavya Gandhi from Dalal & Broacha Stock Broking. Please go ahead.
Yeah. Hi. Thank you for the opportunity. Just my question is regarding the penalty clause.
I'm sorry to interrupt, sir. There is some echo from your line. I just request you to use handset, please.
Yeah. Is it better?
A little bit is better. Go with the question.
Yeah. So what is the penalty clause for one kg if the EPR is not followed? Can you quantify the amount that the brands will have to pay per kg if they are not procuring RPET?
So basically, there are two penalties for non-compliance of EPR regulatory liabilities. Number one, there would be a penalty of INR 2,900 per ton for the first default, and it will go up to INR 8,700 per ton on third default. And even after this, you are not allowed to go away with your responsibility to go for EPR recycled content in the packaging. There will be an environmental compensation case which may go up to INR 300-500 crores depending on the turnover of the brand owner who is not completing the EPR regulation.
Okay. Okay. But let's take an instance in the first year. Say for example, if it's INR 2.9 per kg, and if the differential between virgin and RPET is closer to INR 30, it makes sense to go and pay the penalty. I understand that the later stage, there will be other penalty clauses which one will have to go for. But in the first year, can we expect brands sort of going for paying the penalty rather than using the RPET?
It depends on the individual philosophy of every organization. If you pay the penalty or if you pay the price. Basically, it is the regulation, and it is the compliance part. One cannot overlook the compliance part for long. Temporarily, that may be true, but for long term, you cannot afford it to be non-compliant.
Got it. Got it. And sir, what is the INR 48 crore government grant which is standing in the liability part? I understand the asset part, but what is the - just a bookkeeping question - what is the INR 48 crore which is standing on the liability side which is regarding government grant? How are we supposed to pay any amount?
No, no. Actually, it is not the liability which will enter any outgo on the cash flow. Actually, it is the Ind AS adjustment where you have to create where any benefit you are getting from the government, even the notional benefit. You have to spread it over the period of the benefits which you will get. So suppose we are saving any customs duty, and we are importing any plant and machinery under EPCG license. So we are saving the customs duty on that. So customs duty benefits will be exhausted over the period of useful life of the assets. So until then, it is standing as liability in the balance sheet.
Very good. And just to follow up on the Odisha plant, are we going to purchase land, or is it going to be a leased rental?
Sorry? For the Odisha plant, are we going to purchase the land, or is it going to be on lease?
The land would be on lease.
Land would be on lease. Okay.
Yeah. Long-term lease. Long-term lease.
Long-term lease. Okay. Fair enough, and that's it from my side.
Thank you. Thank you. Yeah. Thank you. The next question is from the line of Mehul Pujani from 4 Cents, please go ahead.
Thank you for the opportunity, sir. I have two questions regarding contribution, revenue contribution from legacy business and revenue contribution from export business. And the second question is, with the tariff regime, is there any impact which we'll have if there is any adverse tariffs laid out by the U.S.?
In overall revenue, 67% contributed by the legacy business. Out of 1465, 983 is the legacy business turnover. It is around 67%.
Okay. And sir, export contribution?
So total, we made the export around INR 135 crore on consolidations per year.
So how much is that, sir? Percentage, right? Sorry.
That is roughly 9%.
Only 9%. Okay, so then we don't anticipate any impact of tariffs?
Yes. Not much.
Right. And sir, in the value-added business, what are the key products, sir?
So in case of fiber, we are making a number of value-added products like the short-cut fiber, like the antimicrobial fiber. We are doing a hollow conjugated fiber. We are making the dyed fibers.
What are the end-user industries, sir?
end user different.
What are the end-user industries?
There are different end-user industries like their geotextile industry, automotive, then carpet industries, and technical textile industries who are consuming these value-added products. As well as, there are certain products for the textile industries as well, like antimicrobial and flame-retardant FR fibers. So these are also being consumed by the textile industry in apparel and home textiles.
Right, sir. Sir, one relevant follow-up question.
Sir, I just request you to rejoin the queue for the follow-up question.
Okay. Thank you so much, sir. Thank you.
Yeah. Thank you. The next question is from the line of Rohit from Laddha & Associates. Please go ahead. Yes, Mr. Rohit, go with the question, please.
Yeah. Hi, sir. Am I audible?
Yes, sir.
Yes.
Yeah. So I have only one question, and I'm not sure if that has already been addressed, but it's regarding the gap that is more and more arising between virgin PET and rPET. Has that already been answered, sir? I actually came in the middle.
Yeah. So basically, lately, the crude prices have fallen down, and so the Virgin PET prices have come down. And on the other side, RPET prices, the bottle prices have increased, and so the prices of RPET granules have increased. So the gap has widened. But now, since the last 10, 15 days, the things have become reversed. Now, the prices of the RPET, the PET bottle, are also decreasing.
Okay. But.
Going forward, the gap will be narrowing down. The gap will be narrowing down going forward.
Okay. Because the crude prices, if I saw in the quarter one of FY 2026, the impact of this crude price, meaning the gap increasing, is much wider if the RPET prices won't decrease that much. Am I understanding?
Yeah, so because the prices have started, the prices of raw bottles have started to cool down.
Okay. And from what I understand, sir, the prices for raw bottle or our cost of production for this RPET, these raw material for the raw bottle prices, they depend on some private market or something? How do you decide the rates pan-India-wide? How do I decide what my raw material?
So basically, though it is an informal market, but the prices are dependent mostly on the demand and supply.
Okay, but is there a platform to decide this? From what I understand, there is one private platform. I'm not sure if Ganesha follows that platform for procurement.
We are not following any platform. The industry largely is not following any platform, I think. It is based on our requirement and availability.
Yeah. Okay. So, when I mentioned platforms are more on the price discovery, is what my understanding. Sir, Kabadiwala platform.
I think, sir, this industry is there for more than 30 years. So I don't think that now for price discovery and finding a, and we are into this industry for the last 30 years. So I don't think that any specific platform would be required.
So just to conclude, sir, the impact of the gap of virgin PET and RPET won't be that much because the prices have decreased for the raw bottles, as you're saying, right?
Yeah. So the gap is narrowing down. Certainly, the gap is narrowing down going forward.
Okay. Okay. Okay. Okay. Sure. Sure. Thank you so much, sir.
Thank you. The next question is from the line of Sabyasachi Mukherjee from Bajaj Finserv AMC. Please go ahead.
Yeah. Hi. Thanks for the follow-up. Gopalji, I think last time in Q3 call, we had given a guidance of revenue of INR 1,800-INR 1,900 crores for FY 2026. What is our revised guidance given that the base business is seeing a little muted environment? And also, I think the RPET businesses also will be similar to FY 2025 levels only. What would be the revised guidance?
So the revised guidance is in the range of INR 7,800 crore-INR 7,850 crore.
Okay, and the base business out of that base business will be somewhere around 900, 950, and the rest would be the value-added RPET?
Correct. Correct. Correct.
Okay. Okay. Okay. Got it. Thank you.
Thank you. The next question is from the line of Gunjan Kabra from Niveshaay. Please go ahead.
Hi. Thank you so much for the opportunity. So just wanted to understand that there's a differential in the pricing that you mentioned, 30% or the differential. And the norm is not being maybe fully compliant, but in the longer term, the compliance has to be there. But are the existing players in the RPET chip business also contemplating existing customers of ours also in the interim one to four terms? Are they also contemplating whether to delay the purchase of RPET chips because the prices of virgin chips are pretty much lower than their cost of manufacturing will go up? So are the existing players also contemplating?
Yeah. Certainly. So you see, the regulation has been implemented from first of April. And with the implementation of the regulation, the price gap has been widened by 30%-35%. So certainly, the consumer industry is looking for how to implement it, and they are weighing all the options available with them. But certainly, the.
Based on our customer base that we are already supplying to, are they also contemplating between the two?
Yes.
So basically, you see, yes, you are absolutely right. So even the existing customers that we had, not every one of them, but some of them looking at the huge price differential between virgin PET and rPET did reduce some of their offtake quantities, and the reasoning was that they would want to again accelerate it once the prices of both virgin PET and rPET stabilize. So yes, even the existing customers, not some of them, some of them even increased, but some of them did also decrease some volumes of offtake looking at the high price differential between the two.
So do you think that the existing decline in the volume is offset by onboarding new customers going forward for at least two, three quarters, or it's a little slow on that side as of now?
No, no, no, no, no. It is. It is. So we are seeing the addition of new customers also now, which has already happened. And in fact, I mean, again, since the rPET prices have started to come down and the vPET prices have started to come up and the gap has already started to come down significantly, we are again seeing that they should normalize the rPET volumes as well.
Yeah. But certainly, given the price differences and the gap of the premium, and certainly, the customers are facing some dilemma how to implement it.
Okay. Got it. And with this differential, do you think the margins can be sustainable on the RPET chip side for us as well going forward? Or right now, in the interim period, we can see a little dip in the margins of the RPET chip business only?
So we are not expecting any dilution in the margins as of now.
Okay. And on the export side, are we looking very actively on the export market also because of the EU and the Europe in the U.S. business also? People are the demand for RPET chips can increase on that side also. And as per my understanding, RPET chips are exempted from tariffs as well. I don't know if it is correct, but my understanding. So are we also exploring on that side?
Yes. Yes. Absolutely. Absolutely. We are also very actively working to manage some of our capacity exposure to the export market as well. They've already reached to a certain percentage, and now we are going to increase it as well. Yes.
Okay. Okay. Thank you. Thanks, Gopalji. Good luck.
Thank you. Thank you, Gunjan.
Thank you. That was the last question for the day. I now hand the conference over to the management for closing comments. Over to you, sir.
Yeah. Thank you. Thank you, everyone, for participating in the conference call. And also, Mr. Manish and Kabra Team, thank you. Good day.
Thank you. On behalf of Antique Stock Broking Limited, that concludes this conference. Thank you for joining us. And you may now disconnect the line. Thank you.
Thank you.
Thank you. Thank you.