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Ganesh Ecosphere
BSE: 514167|ISIN: INE845D01014|SECTOR: Textiles - Processing
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Mar 12
Chairman's Speech (Ganesh Ecosphere) Year : Mar '13
Dear Shareholder''s
 
 The year 2012-13 was one of the most challenging in recent memory,
 India recording its slowest GDP growth in a decade due to muted export
 growth, high interest rates, inflation and lower infrastructural
 investments.
 
 These challenges also extended to our sector in the form of rising raw
 material costs and growing competition. I am pleased to state that we
 addressed the rise in raw material costs through enhanced production
 efficiency, de-bottlenecking and higher capacity utilisation. We
 countered growing competition through enhanced customer proximity,
 product customisation and innovative solutions.  These are the result
 of our various initiatives during the year under review:
 
 - Enhanced production 8.20% over 2011-12
 
 - Increased revenues 12.93% over 2011-12
 
 - Enhanced net profit 16.53% over 2011-12.
 
 Supply side economics
 
 Internationally, PET has emerged as a preferred packaging medium with
 large consumer product companies shifting from conventional packaging
 forms to PET and recycling PET as part of their corporate
 responsibility.
 
 India generates significant amount of PET waste every year.
 Interestingly, PET demand in India is estimated to be around 1,309.3
 thousand tonnes by 2016 while recycling capacity is presently estimated
 at around 4,00,000 TPA, creating an attractive business opportunity.
 Besides, even as the global per capita PET consumption is 2.3 kg, the
 corresponding figure in India is only 0.3 kg, indicating a growing room
 not only for PET consumption but for also recycling.
 
 There is another case for the growing potential of this business. PET
 bottles take a number of years to decompose, which rules out land
 filling as this could pose a serious threat to the environment. So even
 as we have the prospect of rising PET consumption on the one hand, we
 have a greater consensus that PET recycling is indeed the sustainable
 road ahead.
 
 In India, we are attractively placed with around 75% of waste PET
 bottles getting collected, second only to China''s 90% collection rate.
 This scenario secures our raw material supply side, strengthening our
 sectoral viability.
 
 Demand side economics
 
 At Ganesha Ecosphere, we utilise waste PET bottles to manufacture
 polyester staple fibre. The dynamics related to PSF are influenced by
 the broader textiles universe including the availability and pricing of
 cotton and competing raw materials.
 
 Though cotton is the dominantly consumed fibre in India, the share of
 cotton in total fibre consumption showed a decline from 74% in FY09 to
 59% in FY11. Correspondingly, the share of man-made fibres is growing
 and likely to touch an estimated 45% by FY17 of the overall fibre
 consumption.
 
 This growing consumption of polyester provides a credible demand side
 scenario for the country''s PET recycling business.
 
 Our competitive positioning
 
 At Ganesha Ecosphere, we are attractively placed to capitalise on the
 prospects of our business for some good reasons.
 
 We possess the largest recycled PSF capacity in India translating into
 attractive economies of scale and in turn having a sizeable market
 share.
 
 By the virtue of having been among the first players in India''s PET
 recycling industry, we now possess strong R&D and a portfolio of
 customised products.
 
 The road ahead
 
 At our Company, we are seized with the prospect to graduate into a
 higher league.
 
 We are taking a number of initiatives to drive revenues and enhance
 profitability through various initatives.
 
 One, we are increasing our RPSF capacity in a phased manner from 57,600
 TPA to 87,600 TPA by FY 2015.  We are optimistic that this increase
 will help us to enhance market share significantly in the next couple
 of years building into projected revenues of more than Rs.700 cr at full
 expanded capacity utilisation.
 
 Two, we are commissioning a 7,200 MTPA spun yarn capacity at Bilaspur
 in 2013-14. Previously, the Company was outsourcing the conversion of
 recycled PSF to spun yarn but following the commissioning of the
 captive unit, the Company will be better placed to enhance product
 value and margins significantly.
 
 Three, we prudently managed our long- term debt and our long-term
 gearing of 1.22 providing room for additional borrowings.
 
 Outlook
 
 Following buoyant demand for the textile industry in India and the
 Planning Commission''s projected 8% growth for the sector during the
 Twelfth Five Year Plan, we expect that demand for recycled fibre demand
 will remain robust with significant addition to the topline and
 bottomline of the Company.
 
 On behalf of the Board of Directors, I would like to thank our
 stakeholders especially our equity investors for staying invested. All
 our efforts are aimed at generating sustainable growth, which in turn
 is expected to enhance shareholder value.
 
 Regards,
 
 Shyam Sunder Sharmma
 
 Chairman
Source : Dion Global Solutions Limited
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