Ganesh Polytex Ltd

Corporate presentation
August 2010

BSE Code: 514167

Bloomberg Code: GNPL IN
Reuters Code: GNSP.BO
www.ganeshpolytex.in
Recycling used PET bottles into fibers…
 PET Facts

Recycling each plastic

Recycling 1 ton of PET
Accounts for 40% of
containers saves 6 cubic
global packaging mix
meters of landfill space
32% more energy
bottle can conserve
efficient than glass
enough energy to light a
bottles per 1000 gallons
60W light bulb for up to
beverages delivered
6 hours

Recycling 1 ton of PET

Recycled PSF made from PET is fast replacing
saves 1.5 tons of Carbon
waste PET bottle eating glass and aluminum in
Dioxide vs. land filling or
market share of cotton packaging market
incineration (Credit :
and wool
WRAP)

Glass and Aluminum PET is the fastest

Low per capita containers yield 230% growing polyester
consumption: India and 175% more application. Indian
0.3kg vs world avg of atmospheric emissions market to grow 7.5% in
over 2kg vis-à-vis PET. FY11

Contribute 68% and 18%

less solid waste by
weight vis-à-vis glass and
aluminum containers
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 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
 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.

Huge recycling Usage pattern set to go up in

opportunity as recycling
rate in US 27%, EU 46%
PET’s favor for
cost, convenience, energy saving
benefits

North America 51 1 48

Middle East & Africa 31 20 49 Indian PET demand 340,000 tpa,

Asia Pacific 28 19 53 growing at ~7.5% p.a. against
Recycling Capacity of 175,000 tpa
World 26 10 64

Australasia 30 4 66
Excess of 200,000 tpa PET waste by
Western Europe 16 10 74
2012 >>>>>>> 125% more than
Latin America 6 12 82 the current recycling capacity

Eastern Europe 4 6 90

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

CAN Glass PET

Source: Euro monitor
 Brief Profile

• 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

• 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
Industry Potential
 Product/Process Overview

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
Mono PFY and PSF- Textile & Non-
Purified Poly Ethylene
+ Ethylene Virgin grade textile
Terephthalic Terephthalate
Glycol Applications
Acid (PTA) (PET) chips
(MEG)
PET Containers
and Films

~80% wasted (Land Fill ~20% Recovered and

and incinerated) recycled

Chemical Process Mechanical Process

Break down to PET Flakes

raw materials

Regenerated PSF Regenerated POY

Unviable till date-High
scale process presupposes
huge waste as feed stock .
Future Plan
 Manufacturing Process

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

Sorting & Washing: Sorting

Raw material storage Yard: Dryer section: Vacuum
bottles to remove non- PET
Input raw Material - Used drying in the dryer to
materials. Shredding PET
PET Bottles in a remove the moisture from
Bottles to convert into
compressed state the flakes
Flakes

Storage and dispatch of Fiber Line: Spinning, winding and CAN

fiber: Bale storage and Drawing, Spinning, Finishin collection: Heating
loading trucks as per the g, Crimping , Cutting for , melting, extruding to form
sale final fiber filament.

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
Year Recycled Polyester Staple fiber (RPSF) Yarn
Domestic Export Total
Qty.(MT) Value % of Qty.(MT) Value % of Qty.(MT) Value % of Revenue
(`mn)
(` total `mn)
(` total `mn)
(` total `mn)
(`

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
Global Consumption of PET Packaging
Point 1: Proliferation use of PET bottle on
Bottles the back of 7-8% CAGR growth coupled
86% Films
11% with low scale of recycling (10%) to yield
abundant feed stocks to be recycled
Others
3%
Share of fiber consumption
MMF
Share
inching
towards
50% 37% Point 2: Indian Man Made Fiber(MMF) :
59%
Natural fiber ratio of 41:59 to align to
63%
41% global ratio of 63:37 consumption
India Global

MMF Natural

GNPL’s past and projected financials

Sales (Rs.mn) EBITDA margin

4,000 PAT Margin 18.0%
Point 3: Raw material price for recycled PSF
15.0% insulated unlike in virgin PSF which is linked
3,000
12.0% to crude prices (PTA and MEG) thereby
2,000 9.0%
6.0%
ensuring stable margins with scale up of
1,000
3.0% business
0 0.0%
FY09 FY10 FY11E FY12E
 Business Strengths

Global Fibre consumption pattern (%)

Point 4: Changing life styles and cost effectiveness 7 5 5
17
led to innovative applications of the MMF. This has 5
40
clearly helped to expand its market share. Such 10 54 57

trend is likely to continue. Some of the notable ones 5

68
3 2
are winter clothes, Disposables, Non-woven 48
38 36
technical textiles etc . Expanding market lends
growth visibility 1960 1990 2000 2009

Cotton Wool Synthetic Cellulosics

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.
 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 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

` mn)
Gross block (`
` mn)
Sales (`
1,025
1,989
858
1,354 670
1,054 473
627 325
520

FY06 FY07 FY08 FY09 FY10 FY06 FY07 FY08 FY09 FY10

` mn)
EBITDA (` EBITDA Margin ` mn)
PAT(` PAT Margin
300 13.0% 100 5.0%
90
250 80 4.5%
12.0% 70
200 4.0%
60
150 11.0% 50 3.5%
40
100 30 3.0%
10.0%
20 2.5%
50
10
0 9.0% 0 2.0%
FY06 FY07 FY08 FY09 FY10 FY06 FY07 FY08 FY09 FY10
 Key Financials
` mn
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

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
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 You