Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ganesha Ecosphere Ltd (BOM:514167, Financial) reported a 39% increase in revenue compared to the previous quarter, indicating strong business performance.
- The company achieved a significant improvement in EBITDA, reaching INR 55 crore, which is 14.3% of the revenue.
- Capacity utilization reached 106% in the standard business and 58% in the Warangal location, showing efficient use of resources.
- The company is focusing on export markets and diversifying its product mix, which is expected to yield positive results.
- Ganesha Ecosphere Ltd is on track with its expansion plans, including a new facility in Orissa with a capacity of 45,000 tons, which will help meet rising demand.
Negative Points
- The RPS business is facing challenges due to cheap imports and fluctuating raw material prices, impacting profitability.
- There is a lower than expected demand in some segments, which could affect short-term performance.
- The company is experiencing pricing pressures in the RPSF market, making it difficult to pass on cost increases to customers.
- The expansion project in Orissa is expected to take up to two years, which may delay the realization of its full benefits.
- There are concerns about potential conflicts of interest with related party transactions, particularly with GSPL, which could affect future business dynamics.
Q & A Highlights
Q: Can you explain the relationship and future plans between Ganesha Ecosphere and GSPL, particularly regarding potential conflicts in the yarn business?
A: GSPL is involved in the spun yarn business, while Ganesha Ecosphere focuses on filament yarn, which are different segments. There is no conflict of interest as Ganesha supplies raw materials to GSPL. Future expansions will focus on filament yarn, and any spun yarn business in Ganesha may be phased out. (Respondent: Unidentified_2)
Q: Could you provide more details on the expansion plans, including the timeline and funding for the new capacity?
A: The expansion involves a 45,000-ton capacity with an investment of INR 450 crore, expected to be operational in one phase. The funding will come from internal accruals and existing resources, with no immediate plans for equity fundraising. (Respondent: Unidentified_2)
Q: What is the expected capacity utilization and revenue generation from the Warangal plant in the upcoming quarters?
A: The Warangal plant is currently operating at 72% capacity and is expected to reach 90% by March. The projected quarterly revenue run rate is around INR 165 crore, with annual revenue expected to be between INR 500 to 550 crore this fiscal year. (Respondent: Unidentified_2)
Q: Are there any technological advancements or changes in the new Orissa facility compared to existing plants?
A: The new Orissa facility will feature technological improvements, including lower power consumption and enhanced production efficiency. These advancements are expected to reduce operational costs and improve product quality. (Respondent: Unidentified_2)
Q: What are the financial projections and guidance for the upcoming fiscal years?
A: For the current fiscal year, Ganesha Ecosphere expects a top line of INR 1,500 to 1,600 crore with an EBITDA margin of 14.5% to 15%. Over the next few years, the company anticipates a revenue growth of 25% to 30% annually, with long-term EBITDA margins of 16% to 17%. (Respondent: Unidentified_2)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
