ganesh polytex ltd presentation

Ganesh Polytex LtdCorporate presentation

August 2010

BSE Code: 514167

Bloomberg Code: GNPL IN

Reuters Code: GNSP.BO

www.ganeshpolytex.in

Recycling used PET bottles into fibers…

Recycling 1 ton of PET

saves 1.5 tons of Carbon

Dioxide vs. land filling or

Recycling 1 ton of PET

containers saves 6 cubic

meters of landfill space

32% more energy

efficient than glass

bottles per 1000 gallons

beverages delivered

Recycling each plastic

bottle can conserve

enough energy to light a

60W light bulb for up to

6 hours

PET Facts

Accounts for 40% of

global packaging mix

PET is fast replacing

glass and aluminum in

Recycled PSF made from

waste PET bottle eating

market share cottonDioxide vs. land filling or

incineration (Credit :

WRAP)

Low per capita

consumption: India

0.3kg vsworld avg of

over 2kg

Contribute 68% and 18%

less solid waste by

weight vis-à-vis glass and

aluminum containers

Glass and Aluminum

containers yield 230%

and 175% more

atmospheric emissions

vis-à-vis PET.

PET is the fastest

growing polyester

application. Indian

market to grow 7.5% in

FY11

glass and aluminum in

packaging marketmarket share of cotton

and wool

It takes thousands of years for a PET bottle to

decompose, recycling is the only method to

protect the environment; as of now only 10% of

bottles are recycled ! The use of PET bottles isbottles are recycled ! The use of PET bottles is

growing at 7% YoY

Ganesh Polytex is India’s largest player in PET

Recycling, growing @ 40% CAGR over last four

years; has drawn interesting growth plans

Usage pattern set to go up in

PET’s favor for

cost, convenience, energy saving

benefits

Huge recycling

opportunity as recycling

rate in US 27%, EU 46%

PET Recycling Opportunity

High scope of growth

PET is one of the fastest growing segments in plastics providing a hygienic, durable and user friendly packaging

solution for all kind of bottled drinks, beverages, pharmaceuticals, liquor, chemicals, and other liquid products.

With life style changes and higher disposable income, demand of Pet bottles is set to grow at much faster pace

as the per capita PET consumption in India is 0.3 kg, vis-a-vis world average of 2.1 kg in 2008.

Indian PET demand 340,000 tpa,

growing at ~7.5% p.a. against

Recycling Capacity of 175,000 tpa

Excess of 200,000 tpa PET waste by

2012 >>>>>>>>>>>>>>>>>>>>>>>>>>>> 125% more than

the current recycling capacity

4

6

16

30

26

28

31

51

6

12

10

4

10

19

20

1

90

82

74

66

64

53

49

48

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Eastern Europe

Latin America

Western Europe

Australasia

World

Asia Pacific

Middle East & Africa

North America

CAN Glass PET

Source: Euro monitor

• Ganesh Polytex Ltd. (GNPL) has been churning out Yarns and Polyester staple fibers from

used PET bottles for years

• Mr. Shyam S Sharma, 68 year old technocrat got inclined towards entrepreneurship in the

late 1980’s after working with various Birla group companies for more than two and half

decade

Brief Profile

• In 1995 the company hit upon the idea to manufacture green fiber or recycled PSF from

used PET bottles with a capacity of 6,000 tpa. This plant was imported from South Korea

with technical know-how. Over the years the capacity has grown three fold to 18000 tpa

• Looking at the enormous potential in the sector, in 2006 GNPL set up its 2nd plant at

Rudrapur, Uttaranchal with a waste PET bottle processing capacity of 7,200 tpa. By 2008,

GNPL ramped up the capacity to 21,600 tpa. In the recent expansion in March10 the

capacity got enhanced to 39,600 tpa taking the overall capacity to 57,600 tpa

Vision & Mission

Vision

To become a Global Corporate citizen committed to recycle every PET bottle which is thrown into waste

with world class recycling facilities and to create wealth for our stakeholders through conducting business

around social and environmental concerns

Mission

� To be a high performance organization by making the best use of resources and empowering people.

� To be the preferred choice of our customers by providing world class customer services.

� To maintain high levels of quality in our products through innovative Research and technology

development in our processes, products and applications.

� Building relationships with stakeholders based on trust, transparency & ethical business conduct.

� To contribute to the cause of making our planet a better place to live in for the present and future

generations.

PET Recycling Business

• Eco Friendly

– PET is non Bio-degradable in nature which puts ecological balance for a toss

– PET beneficiation is a noble environment friendly endeavor through which

materials spurned by society is transformed into things for human use

– In days ahead various government bodies are likely to dole out incentives to

the organizations engaged in such environment friendly activities

• Scalable

– Packaging containers are growing at 1.5x to GDP which will yield enough waste

materials to be recycled

– Growth stems from high rate of consumption behaviour pattern seen across

several sectors like pharmaceuticals, beverages, liquor, personal care etc..

• Sustainable

– Increasing awareness among citizens for cleanliness will drive the movement of

PET recycling in line with other waste materials like plastics, paper, metals etc…

Industry Potential

Polyester Staple Fiber (PSF) is kind of Polyester Fiber made directly from Purified Terephthalic Acid (PTA) & MEG or PET Chips or

from Recycled PET Bottle Flakes. PSF made from PTA & MEG or PET Chips is known as Virgin PSF and PSF made from Recycled PET

Flakes is called Recycled PSF

Product/Process Overview

Mono

Ethylene

Glycol

(MEG)

Poly Ethylene

Terephthalate

(PET) chips

and Films

PET Containers

and Films

PFY and PSF-

Virgin grade++++

~80% wasted

Textile & Non-

textile

Applications

Purified

Terephthalic

Acid (PTA)

~20% Recovered and

recycled

PET Flakes

~80% wasted (Land Fill

and incinerated)

Regenerated PSF

Break down to

raw materials

Chemical Process Mechanical Process

Unviable till date-High

scale process presupposes

huge waste as feed stock .

Regenerated POY

Future Plan

Manufacturing Process

Raw material storage Yard: Input raw Material - Used

PET Bottles in a compressed state

Sorting & Washing: Sorting bottles to remove non- PET

materials. Shredding PET Bottles to convert into

Flakes

Dryer section: Vacuum drying in the dryer to

remove the moisture from the flakes

Raw Material

The company has tied up with franchisee vendors in different cities to procure the PET waste bottles which is the main raw

material

Spinning, winding and CAN collection: Heating

, melting, extruding to form filament.

Fiber Line: Drawing, Spinning, Finishin

g, Crimping , Cutting for final fiber

Storage and dispatch of fiber: Bale storage and

loading trucks as per the sale

Finished product finds application for spinning of yarn, stuffing in toys and other life style products like

pillows, quilts, mattresses and furniture, non-woven carpets and fabrics, medical & packaging textile, geo textile, fur

fabrics, construction and paper industry and other technical textile

Divisional Breakup

Capacities

Division Capacity

Recycled Polyester Staple fiber (RPSF) 39,600 TPA at Rudrapur

18,000 TPA at Kanpur

Dyed Texturized / Twisted Filament Yarn 2,400 TPA at Kanpur

Divisional Revenue Divisional Revenue Year Recycled Polyester Staple fiber (RPSF) Yarn

Total

Revenue

(`̀̀̀mn)

Domestic Export

Qty.(MT) Value

(`(`(`(`mn)

% of

total

Qty.(MT) Value

(`̀̀̀mn)

% of

total

Qty.(MT) Value

(`̀̀̀mn)

% of

total

2006-07 6,579 290 46% 2,136 99 16% 1,736 237 38% 627

2007-08 10,862 558 53% 4,751 236 22% 2,064 261 25% 1,054

2008-09 13,844 730 54% 6,743 368 27% 2,075 256 19% 1,354

2009-10 23,731 1,266 64% 6,565 323 16% 3,545 401 20% 1,989

Business Strengths

Bottles

86% Films

11%

Others

3%

Global Consumption of PET Packaging

Point 1: Proliferation use of PET bottle on

the back of 7-8% CAGR growth coupled

with low scale of recycling (10%) to yield

abundant feed stocks to be recycled

59%37%

MMF

Share

inching

towards

50%

Share of fiber consumption

Point 2: Indian Man Made Fiber(MMF) :

Natural fiber ratio of 41:59 to align to

41%63%

59%

India Global

MMF Natural

50%

Natural fiber ratio of 41:59 to align to

global ratio of 63:37 consumption

Point 3: Raw material price for recycled PSF

insulated unlike in virgin PSF which is linked

to crude prices (PTA and MEG) thereby

ensuring stable margins with scale up of

business

0.0%

3.0%

6.0%

9.0%

12.0%

15.0%

18.0%

0

1,000

2,000

3,000

4,000

FY09 FY10 FY11E FY12E

Sales (Rs.mn) EBITDA marginPAT Margin

GNPL’s past and projected financials

Global Fibre consumption pattern (%) Point 4: Changing life styles and cost effectiveness

led to innovative applications of the MMF. This has

clearly helped to expand its market share. Such

trend is likely to continue. Some of the notable ones

are winter clothes, Disposables, Non-woven

technical textiles etc . Expanding market lends

growth visibility

68

4838 36

10

53 2

540

54 57

177 5 5

1960 1990 2000 2009

Cotton Wool Synthetic Cellulosics

Business Strengths

Point 5: GNPL’s cost of Recycled PSF, which is otherwise 15% competitive to virgin one, is

further supported by concessional CST, Excise Duty Holiday and full IT exemption for first 5

years and 30% for subsequent 5 years at Rudrapur. Such fiscal benefits would help GNPL to

combat competitive pressures and bolster profitability margin

Point 6: Industry associations like CII, have launched programs to reward companies for green

endeavor like recycling. In future, government shall extend benefits to such companies.

Industry, which is at present having low profile status will attract massive funds for expansion.

GNPL to enjoy early bird mover advantage.

Cotton Wool Synthetic Cellulosics

Management Team

Mr. Shyam S. Sharma – Chairman & MD – A textile engineer. Served the

Birla group for 25 years in various senior positions and promoted the

said company in the year 1987. He is well versed with the fiber and

textile technology with an experience of more than 45 years.

Mr. V. D. Khandelwal – Executive Vice President – A Post Graduate in

Commerce and having experience of more than 36 years in trading of

different types of textile yarns. He is one of the Promoter Director anddifferent types of textile yarns. He is one of the Promoter Director and

looks after the affairs of the company since inception.

Mr. Sharad Sharma – Joint Managing Director – A Commerce graduate

with more than 17 years in marketing of yarns and fiber. He is engaged

with the company since 1992.

Mr. Rajesh Sharma – Executive Director – A Commerce Graduate with

rich experience spanning over 20 years in plant administration. Looks

after the administration of the company’s Rudrapur unit.

Strong Show

520 627

1,054

1,354

1,989

Sales (`̀̀̀ mn)

325

473

670

858

1,025

Gross block (` ` ` ` mn)

FY06 FY07 FY08 FY09 FY10

9.0%

10.0%

11.0%

12.0%

13.0%

0

50

100

150

200

250

300


2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

0

10

20

30

40

50

60

70

80

90

100



EBITDA (`̀̀̀ mn) EBITDA Margin PAT(`̀̀̀ mn) PAT Margin

Key Financials

Particulars/Year FY08 FY09 FY10 FY11E FY12E

Income Statement

Net Sales 1,054 1,354 1,989 2,616 3,508

Change (%) 69 28 47 32 34

EBIDTA 109 167 240 364 597

EBIDTA margin (%) 10.4 12.4 12.0 13.9 17.0

PAT 38 43 90 159 290

Change (%) 98 16 107 77 82

PAT Margin(%) 3.6 3.2 4.5 6.1 8.3

Cash Generation 74 100 159 265 454

` ` ` ` mn

Balance Sheet

Equity Capital 99 99 123 189 189

Preference shares 45 45 45 45 45

Reserves 104 141 251 624 876

Net Worth 247 285 419 858 1,110

Term Loan 235 302 302 656 762

W.C. Borrowings 190 245 238 342 438

Unsecured Loan 41 66 49 50 50

Net Deferred Tax 35 42 43 43 43

Capital Employed 748 940 1,051 1,949 2,403

Net Block 333 614 578 790 1,625

Capital WIP 151 5 140 700 -

Current Assets 348 440 471 637 1,007

Current Liab & Prov. 83 120 139 177 230

Net Current Assets 264 320 333 460 777

Total Assets 748 940 1,051 1,949 2,403

Key Ratios

Ratios

FY08 FY09 FY10 FY11E FY12E

EPS 3.6 3.8 6.9 8.1 15.1

P/E 12.7 7.3 6.1 3.3

Price/Book Value 2.4 2.1 1.6 1.2 0.9 Price/Book Value 2.4 2.1 1.6 1.2 0.9

EV/EBDITA 8.2 5.1 4.8 4.4 2.6

EV/Sales 0.9 0.6 0.6 0.6 0.4

Mkt Cap/Sales(x) 0.5 0.4 0.3 0.4 0.3

ROE 20.5 18.1 24.1 19.6 27.3

ROCE 12.8 13.7 17.5 16.5 22.5

Interest Coverage (x) 3.0 2.6 3.1 4.1 5.0

Debt/Equity(x) 1.1 1.3 0.8 0.8 0.7

Way Forward…

• Setting up a greenfield capacity for manufacturing Recycled Partially Oriented Yarn (POY) of

15,000 tpa and spun yarn 5,000 tpa from PET bottle Waste

• Acquiring yarn spinning capacity on job work/lease basis or taking over existing units to

convert the recycled PSF into value added yarn

• Having established its pole position in the market, with the largest capacity, GNPL is further

looking forward to expand footprint to new geographies in the realm of national as well as

international level to further scale up its business

• Further, plans are afoot to integrate forward into downstream value added products like

technical non-woven textile, geotextiles etc.. To bolster margins

• To achieve `̀̀̀10 bn revenue milestone over next 5 years

Thank YouThank You

ganesh polytex ltd presentation

Documents