Ganesha Ecosphere held a conference call on 09 August 2021 to discuss the results for the quarter ended June'21 and way forward. Mr. Sharad Sharma – Managing Director and Mr. Gopal Agarwal - Chief Financial Officer of the company addressed the call.

Highlights of the Concall

• The company's performance has been affected during the quarter on two points- a major fire in Kanpur Unit on June 04, 2021 caused due to mechanical failure in the machinery resulting in loss of two production lines and building premises and secondly re emergence of second wave of covid19 put extreme pressure on economy and business, significantly impacting demand and supply in domestic markets

• Total estimated loss due to fire was Rs. 25.13 crore (net of taxes). The plant is fully covered under insurance and the assessment of loss by the insurance company is in progress.

• The company is quite confident in recouping the entire loss from insurance company. However pending the assessment and finalization of loss by them the company would be accounting the income of insurance claim as and when the amount would reasonably ascertain

• The company achieved production volume of 27,014 tonne at 90% of capacity utilisation

• The company earned Ebitda per tonne of Rs 8500 which is lower by 20% compared to Q4FY21

• The company is exploring to put up recycling capacity of other plastic scrap, in addition to Pet scrap. The company is also exploring venturing into recycling of different thermoplastics such as HDPE (high density poly ethylene), PP/PE (polypropylene/polyethylene), etc. as recycling of these products are currently under structured and the industry is down cycling the scrap instead of getting value.

• The company expects that good demand is going to be created for recycled thermoplastic with regulatory compulsions in the form of extended production responsibilities, as well as pledge for sustainability by corporate. There is a big vacuum in terms of availability of quality products.

• The company feels things are now looking up with a revival of demand and restoration of supply chain as well as firming up of prices and businesses coming to normal in Q2FY22.

• The execution of the Telengana project is taking slight delay from the plan timelines primarily due to lockdowns and supply chain disruptions at suppliers end. Now dispatches of some of the machinery has started and it is taking all the required steps and precautions to remedy the current delay.

• The Telengana project capex has increased from Rs 400 to Rs 453 crore as the company has made changes in machinery configuration to make the specialty product and specialty fibers which is realisation and margin benefit.

• In Nepal project also the company faced some delay due to ongoing pandemic related lockdowns in Nepal, which delayed some regulatory approvals needed to take over a company. Two months long lockdown across the country has been removed during the latter part of July 21. Now, the takeover of the company in Nepal has been completed and equipment dispatches are going to start from mid of August and production to begin by December 2021. The company expects revenues of Rs 15-20 crore in FY22 and Rs 60 crore in FY23 and Ebitda margin from this facility would be around 25%.

• The recycled fiber prices were under pressure during the Q1 because of the demand slowdown because of pandemic. Now the prices are looking up. Currently prices are at around Rs 75 per kg and the company expects prices to move up from here.

• The company is very much optimistic in the textile sector going forward especially the sports and the demand from India will go up in European countries after the ban on Chinese products

• The company would lose around 1000 tonne of production every month due to disruption in the Kanpur facility. So in next nine months around 9000 tonne of production would be affected.

• The company expects to produce 95000-98000 tonne of production in FY22

• The company expects that FY22 financial performance will be much better than FY21 both in terms of topline and bottomline as insurance claim is expected to settle in this financial year only and as heat of the pandemic is not crossing the first quarter.