Ganesha Ecosphere Ltd Management Discussions.



In 2020, the global economy de-grew by 3% due to the unprecedented disruption caused by COVID-19 pandemic on health, trade and economies. The governments across countries raced against times to curb the spread of the infection and took extreme measures characterised by instant lockdowns, closure of public transport and international borders. A significant focus shifted towards ramping up of healthcare infrastructure, scientific collaborations for vaccine development, and most importantly, policy intervention towards social relief and economic support for populace.

Barring few nations, the entire world slipped into an economic shock with massive contraction witnessed in the first half of the year. According to IMFs World Economic Outlook of April 2021, Advanced economies (AEs), and Emerging markets and Developing Economies (EMDEs) witnessed output contractions by 4.7% and 2.2% respectively.

Some of the other significant events during 2020 include trade tensions between US-China, India- China border stand offs, the UK exiting the EU, Middle East peace initiatives (Israel and few Arab nations), and change of regime in the US. These geo-political events had an impact on the world trade and bilateral relations among nations. Moreover, the devastating wildfires in Australia and US, and locust attacks adversely impacted the environment and farming community.

However, the timely intervention and response of governments, regulators, healthcare scientists, and people at larger, to the global challenge coupled with fastest development of the vaccine to mitigate the worst health challenge saw the global economy show signs of revival in the later part of 2020. One of the indicators of it has been the strong reversal in commodity prices of energy and metals. IMFs price index moved by 29% in the 2nd half of 2020, reflecting a broad- based revival in the global economy.

IMF predicts a sharp recovery in 2021, followed by a growth moderation in 2022. In 2021, it predicts the growth rate for the world, AEs and EDMEs as 6%, 5.1%, and 6.7% respectively.

The effectiveness of inoculation and other pandemic control measures by governments alongside sustained economic and policy

GDP Growth Trend (%)

2019 2020 (E) 2021 (P) 2022 (P)
World 2.8 -3.3 6.0 4.4
AE 1.6 -4.7 5.1 3.6
EMDE 3.6 -2.2 6.7 5.0
India 4.0 -8.0 12.5 6.9

Source.- WEO April 2021, IMF AE: Advanced economies,

EDME: Emerging markets and developing economies support holds the key to sustained recovery. However, many nations are witnessing a resurgence of the infection, resulting into economic disruption and could impact the speed of economic recovery.


India, the 2nd largest emerging economy and populous country of the world opted to prioritize the lives of its 1.3+ billion citizens over economic gains. The country set an example for the world with its fastest response mechanism, setup within no time to fight the pandemic.

The quick turnaround in setting up of COVID-19 dedicated healthcare infrastructure, making industries adapt to newer needs of medical requirements and imparting COVID-appropriate behaviour guidelines to its large population has helped it avert risks of severely impacting the health of the people and economy.

Moreover, the Governments efforts in the form of reduction in lending rates, moratorium of loans, easing out of financial obligations of states to the Centre and declaring certain mission critical sectors such as healthcare, chemicals and agriculture under essential services, allowed it to competently prepare for the worst pandemic in the century.

The second advance estimates of the Govt. of India indicates that the Indian Economy contracted by 8% for the full year 2020-21, which means the economy witnessed a sustained sequential recovery quarter-over-quarter. This testifies the sound fundamentals and inherent resilience of the Indian economy.

IMF predicts India to lead the global recovery and emerge as the fastest growing economies in the world. The Indian economy is expected to witness a steep rebound with a 12.5% GDP growth in 2021, before settling at the levels of 6.9% in 2022. However, the recent 2nd wave of

COVID-19 could downside its growth forecast.

Overall, the sequential recovery from the second half of 2020 backed by the Governments stimulus and infrastructure push, improving employment situation and forecast of a normal monsoon augurs well for the countrys economic recovery. Additionally, the strengthening of corporate earnings and financial position, sustained performance of the capital markets coupled with increasing participation by the foreign investing community, makes India as the preferred investment destination in the world economy.

Global PET Market Overview

The global polyethylene terephthalate (PET) market is expected to grow from USD18.78 billion in 2020 to USD22.66 billion in 2021 at an annual growth rate of 20.7%. This is on the back of rising demand for PET in packaging, and companies reorganizing their operations post COVID-19 impact. The PET market is expected to touch USD 26.61 billion in 2025 at a CAGR of 4%.

According to statista report, the global demand for PET was 27 million metric tons in 2020. By 2030, global PET demand is forecast to amount to 42 metric tons. There has been a significant rise in demand for PET for bottled water and drinks due to its flexibility, durability and light weight characteristics. The food and beverages segment has been a lead contributor to the growth of the global PET market.

Demand for polyethylene terephthalate worldwide

Bottled water and carbonated soft drinks (CSDs) dominate the PET packaging market. According to a report by British Plastic Federation (BPF), almost 70% of the soft drinks produced in the global market are packaged in PET bottles, while the remaining 30% get packed in other variety of packaging materials such as the glass, metal cans, and paper-based cartons.

The global polyethylene terephthalate (PET) bottle market touched a volume of 13.1 million tonnes in 2020 and is expected to reach a volume of 15.2 Million Tonnes by 2026.

Distribution of polyethylene terephthalate (PET) packaging consumption worldwide in 2019, by end-use sector.

The COVID-19 pandemic and its related restrictions have impacted the PET bottle market. The industry witnessed supply chain disruption and lowered consumer demand due to the pandemic. However, the expanding avenues of the usage of PET bottles as packaging solutions for varied products such as salad dressings, household cleaners, hand sanitizers, medicines, dish detergents and others, provide it the much needed growth impetus.

Globally, plastic continues to be the largest used material for packaging due to easy to handle and light weight characteristics of it. Asia-Pacific is the largest regional consumer of PET packaging, accounting to around 36.7% of the global PET packaging consumption in 2019. The global PET packaging demand is expected to touch 27.13 million tonnes by 2025.

Key Market Drivers for PET

• Changing food patterns and rising disposable incomes of consumers have increased the demand for bottled beverages, particularly in developing countries such as India and China. In addition to, changing lifestyles have enabled consumers to opt for on-the-go beverages.

• Changes in packaging regulations of various countries have influenced the PET bottles industry, which in turn is looking at innovative methods to improve shelf life, reduce cost of energy and make bottle-to-bottle recycling possible and sustainable.

• Technology advancements and use of innovative methods as part of PET packaging has been increasingly looked at by companies in the food and beverages industry.

• Expanding demand for PET bottles in other non-food segments such as cosmetics, personal care and home care due to its characteristics such as flexibility, rigidness and easy to handle.


Sources: IMARC Group, Research and Markets, Smithers, Market Watch, Statista, Mordor Intelligence and The Business Research Company.

Indian PET Market Overview

In FY2021, the Indian Polyethylene Terephthalate (PET) market demand stood at 1.08 Million Tonnes. The industry is estimated to touch 1.84 Million Tonnes by FY2030, growing at a healthy CAGR of 6.12% until 2030.

PET has become a primary material for packaging in the country with a spurt in demand witnessed during the pandemic due to enhanced focus on disposability and hygiene to reduce chances of infections. Moreover, there has been a significant increase in usage of PET bottles as packaging material in the pharmaceutical sector owing to the quality standards and safety protocols. The healthcare and pharmaceutical sectors are expected to lead the demand for PET bottles in India in the near future.

PET Industry Growth Drivers in India

• Rising disposable income, growing urbanization and extensive industrialization are expected to drive the growth of Indian PET resins market. According to McKinsey Global Institute report, India is expected to be the 5th largest consumer market by 2025 in the world.

• Increasing replacement of traditional packaging materials with PET resins for durability, flexibility and convenience.

• Growing demand for PET resin for packaging of alcoholic and non-alcoholic beverages to suit the changing lifestyle of consumers and make products cost efficient.

• Emphasis on sustainability and strict environmental regulations driving the growth of recycled PET containers and material, in various industries such as food packaging applications.

• Enhance focus on hygiene and well-being, leading to shift to PET packaging by sectors such as pharmaceuticals and food & beverages.

Global Recycled PET industry

Global Recycled PET market size is expected to reach USD 14.40 billion by 2028, growing at a CAGR of 6.7% during 2021-2028. In the world market, PET continues to hold the largest share in the packaging industry for food and non-food products, including liquids.

It is preferred over other materials in the food and beverages industry, in specific, due to its strength, thermostability, and transparency, and since it is inexpensive, lightweight, shatter- resistant and recyclable.

Asia-Pacific region is expected to account for the highest incremental growth for PET and recycled PET as the growing global population and resultant consumption of beverages and bottled water, would subsequently increase the usage of PET bottles and positively impact the recycling market growth in the region. Growing focus on recycling plastic by manufacturing companies will have a positive impact on the recycle market for the plastic bottle industry.


Source: Business wire and Research and Markets.

Indian Recycled PET industry

India generates around 9.46 million tonnes of plastic waste per year or around 946,000 truckloads at 10 tonnes a truck. It is this huge amount of plastic waste that has been attracting companies to look at waste recycling aggressively as India pushes for a circular economy agenda. According to a 2019-2020 report by the Central Pollution Control Board (CPCB) that collates data from 60 major cities in the country, India generates around 26,000 tonnes of plastic waste a day out of which 60% of plastic produced is recycled. PET bottles make a significant part of the plastic waste disposed of in the country.

As per a report by the National Chemical Laboratory, about 70% of PET bottles get recycled into polyester fibres in India. While an estimated 15% get converted into straps and films. The PET recycling business in India is seen at Rs. 3,500 crore annually.

The Indian government has been pushing the agenda of banning plastics that are not recyclable and hazardous to the environment. Under its aim to reduce waste, the Government of India has already banned imports of plastic waste into the country. It recently launched a nationwide campaign on phasing out single use plastics.

Niti Aayog, the public policy think tank, has proposed a comprehensive "National Material Recycling Policy" for the country to promote coordinated efforts of the national and state level programs, plans and actions towards ramping up material recycling in India in an organized manner. The Ministry of Environment, Forest and Climate Change under the Plastic Waste (Management and Handling) Rules, 2018 has given further thrust on plastic waste minimization, source segregation, recycling, involving waste pickers, recyclers and waste processors in collection of plastic waste fraction either from households or any other source of its generation or intermediate material recovery facility and adopt polluters pay principle for the sustainability of the waste management system, among others.


Source: CPCB, Outlook India, The Indian Express, Financial Express, Chemanalyst, India Spend and NITI Aayog.

Global Textile and Apparel Industry

The global textile market is expected to grow from USD 594.1 billion in 2020 to USD 654.7 billion in 2021 at a compound annual growth rate (CAGR) of 10%. The market is expected to reach USD821.7 billion in 2025 at a CAGR of 6%. Asia Pacific is the largest region in the global textile market, accounting for 51% of the global market in 2020. Western Europe accounts for 17% of the global market as the second largest region. Africa was the smallest region in the global textile market.

While the spread of COVID-19 infection across the world impacted the global textile and apparel industry with restrictions marring the supply chain and muting the consumer demand, technological advancement and environmental awareness is driving the next wave of growth in the textile industry.

While the global apparel market contracted by 22% from USD 1,635 billion in 2019 to $1,280 billion in 2020, the consumption is expected to reach to pre-Covid levels over next couple of years to further continue its growth path to reach $2,007 billion by 2025. Overall, the global textile and apparel trade is expected to touch $1 trillion by 2025. China held 34% market share in the global textile and apparel trade in 2019 with exports worth $284.5 billion.

Key Growth Drivers:

• Growing e-commerce industry and rise in online shopping, providing larger selling platform and reach.

• Rising awareness towards sustainable clothing and manufacturing.

• Increase in demand for natural fibres and recycled materials such as use of recycled plastic as thread.

• Growth of smart textile across segments.

• Increase in demand for lightweight and multifunctional fabrics.

Global Textile and Apparel Trade

Leading Textile and Apparel Exporters (2019) Value us$ (Billion)

Country Exports Share (%)
Textile Apparel Total
China 134.6 149.9 284.5 34
Vietnam 10.2 33.7 43.9 5
Bangladesh 1.8 40.9 42.7 5
Germany 15.5 23.8 39.3 5
India 20.2 16.2 36.4 4
Italy 12.8 23.6 36.4 4
Turkey 12.2 16.1 28.2 3
USA 21.7 5.2 26.9 3
Spain 5 14.3 19.3 2
France 5.6 12 17.6 2
ROW 117.2 146.3 263.5 31
Total 356.8 481.9 838.7

Source: UN Comtrade and Wazir Analysis.

Leading T&A Exporters Category-wise

Indian Textile and Apparel industry

The Indian textile and apparel market is estimated at USD 75 billion in 2020-21. The market de-grew by 30% from USD 106 billion in 2019-20 on the back of COVID-19 pandemic and its related restrictions. However, the market is expected to recover and grow at a CAGR of 10% from 2019-20 to reach USD 190 billion by 2025-26. The share of apparels stands at ~73% of the total textile and apparels market in India.

India is the 5th largest exporter of textile and apparels in the world with exports worth around USD 33.5 billion in 2019-20. In 2020-21, the exports of textile and apparels dipped around 15% to touch USD 28.4 billion due to the pandemic. The exports are expected rebound to touch USD 65 billion by 2025-26, growing at a CAGR of 11%. Moreover, the restriction imposed by USA on imports from China will also increase the opportunity for India to increase its exports.

Indian Textile and Apparel Exports

Indian Textile and Apparel (US$ billion)

Source: DGCI&S, and Wazir Analysis.

Indias Domestic Textile and Apparel Market

Indias Domestic Textile and Apparel Market Size (US$ billion)

Source: DGCI&S, and Wazir Analysis.

Highlights of Union Budget 2021-22

• Mega Investment Textiles Parks (MITRA) scheme, in addition to Production linked Incentive (PLI) scheme.

• 7 Textile Parks to be established over 3 years.

• Textile industry to become globally competitive, attract large investments and boost employment generation & exports.

• Basic Customs Duty (BCD) on caprolactam, nylon chips and nylon fiber & yarn reduced to 5%.

• National Technical Textiles Mission is proposed for a period from 2020-21 to 2023-24 at an estimated outlay of Rs. 1,480 crore (USD 211.76 million).

Government Initiatives

• India-UK free trade agreement to boost the garments sector. In 2020-21, UK became Indias 14th largest trading partner, accounting for USD 8.7 billion in exports and USD 6.7 billion in imports.

• The Textile Ministry expects more market access for the Indian textiles and clothing sector in order to achieve its full potential.

• India-Japan pact on cooperation in textiles to facilitate Indian exporters to meet the requirements of Japanese importers as per the latters technical and quality regulations.

• Production linked Incentive (PLI) scheme worth USD 1.44 billion

(Rs. 10,683 crore) for manmade fibre and technical textiles over a five year period.

Financial Review

Ganesha Ecosphere has registered a fall in consolidated revenues from operations to Rs. 751.14 crore in FY21 as against Rs. 888.83 crore recorded in the previous year. The Companys consolidated PAT stands at Rs. 45.51 crore as compared to Rs. 64.00 crore for the year. Net cash from operating activities after tax is Rs. 27.39 crore as compared to Rs. 79.98 crore in the previous year. The fall in revenue and profits are mainly caused by nationwide lockdown imposed by central and state government to combat the spread of COVID-19.

During the year, the Companys EBIDTA margins stand at 11.28% and ROCE at 10.93%. There has been significant improvement in sales price backed by higher focus on premium value-added products and rise in raw material prices that controlled the sales price. The cost of raw materials consumed is Rs. 460.36 crore as against Rs. 557 crore of the FY- 20. The cautious measures undertaken towards working capital management and resource utilisation have enabled the Company to improve its gross margins and cost management. The Companys Debt to Equity Ratio for FY21 is 0.24. Net worth is at Rs. 518.83 crore in FY21 as against Rs. 477.69 crore in the previous year.

The Board of Directors has announced a dividend pay-out of 20%. The market cap of Ganesha Ecosphere stands at 1286.95 crore as on March 31, 2021.

Key Financial Ratio

Particulars Financial year ended March 31, 2021 Financial year ended March 31, 2020
Debtors turnover (x) 7.40 9.57
Inventory turnover (x) 4.73 6.47
Interest coverage ratio (x) 7.84 11.74
Current ratio (x) 2.22 3.23
Debt-equity ratio (x) 0.24 0.19
Operating Profit Margin (%) (EBIT) 9.10 10.27
Net Profit Margin (%) 5.97 7.14
Return on Average Equity (%) 9.13 14.28


The Changes in the ratios are due to subdued performance of the Company during the financial year 2021, In comparison to last financial year, 2020, on account of adverse impact of the COvID-19 pandemic over the business performance of the Company.


At Ganesha Ecosphere, our people are integral to the growth story. During FY21, we undertook various policy and financial measures to support our employees in these testing times of COVID-19. Our steps towards digitalisation of HR process that began a few years back enabled us to tide over the pandemic situation smoothly as our people continued to work remotely as well as from plants (later half of the year) under strict COVID-19 protocol.

Some of the key measures undertaken by us to combat the COVID-19 situation include;

• We provided easily available Loan/ Advances to employees to ensure no financial hardship is faced by any of our employees family.

• Proper Medical Check-up Facility was provided to employees and their families.

• Mental Health Support and Counselling was provided to employees and their families.

• Medical Testing Facilities was also provided to employees families to ensure their physical well-being.

As on March 31st, 2021, the total permanent workforce of the company stands at 2793.

Risk Management

Ganesha Ecosphere has a comprehensive Risk Management Framework that enables the Company to identify risks, assess them and act on a well-thought-out mitigation plan. Our Board and senior management team oversights the Risk Management system. It has become a part of how the Company operates on a day-to-day basis and is woven into our structure and operating principles, guiding the implementation of the organisations strategic imperatives.

Risk Risk Assessment Mitigation
Raw material The inability to procure raw material adequately at the right cost could impact operations Through its massive collection network, the Company is able to source a required quantum of raw material at a reasonable cost. Capacity utilization of more than 100% over last few years is the strong evidence of Companys ability to source adequate raw material.
Product The Companys products may not remain relevant in the market. The Company has the capability to supply high quality fibre and yarn in different variants for required application to its customers.
Cost An increase in operating cost could adversely impact profitability. The Company is continuously working towards debottlenecking and cost optimisation initiatives, helping optimise operations costs and strengthen profitability.
Demand Potential for a loss due to a gap between forecast and actual demand. The Company caters to various segments from yarn spinning to manufacture technical & non- woven textiles. Over the period, Companys capacity and sale volume is constantly increasing barring FY21, when production and volume both are lower due to Covid-19 impact.
Forex Foreign currency fluctuation could impact the profits of the Company. Currency risks are managed by constant monitoring exposures and limiting the same in view of applicable margins under the relevant market segments. Also, some portion of the foreign currency is hedged to mitigate any adverse movements in currency fluctuations.
Pandemic 2020 witnessed one of 21st centurys worst health crisis in the form of COVID-19 infection, i.e. coronavirus. The pandemic has spread fast across nations, impacting businesses and human lives. As it continues to grow at an accelerating pace, governments around the world announced various measures to curb the spread of the infection. Lockdowns and travel restrictions were announced to contain the virus, resulting into an economic shock, magnitude of its effect is yet to the ascertained as the world continues to be under the pandemic. In light of the challenges posed by the pandemic, the Company has leveraged its manufacturing facilities to innovate and produce new products. We have increased our focus on: - Employee well-being - Innovation in products - Newer markets - Prudent cash management, and - Cost optimisation.

internal Control Systems

The internal control and risk management system is structured and applied in accordance with the principles and criteria established in the corporate governance practices of the organisation. It is an integral part of the general organisational structure of the Company and involves a range of personnel who act in a coordinated manner while executing their respective responsibilities. The Board of Directors offers its guidance and strategic supervision to the Executive Directors and management, monitoring and support committees.

Business Outlook

While the resurge of COVID-19 infections with newer variants continues to remain a concern for the world, the rapid inoculation drives across countries and reopening up of economic activities in our main markets reassures our resolute to continue our growth story at a steady pace.

Ganesha Ecosphere Limited (GESL) has been on a consistent growth trajectory from past 25 years. We are furthering our aim to maintain our position as the largest PET recyclers in India by expanding and adding new capacities, diversifying our product mix and deepening our global reach. We have been enabling our partners across the world achieve their sustainability goals with our value-added products derived from PET bottle recycling. In this green journey, our business line has been evolving with newer avenues and solutions that reinstate our motto to turn waste into wealth.


The statements in the Management Discussion and Analysis section describing the Companys objectives, projections, estimates and prediction may be considered as forward looking statements. All statements that address expectations or projections about the future, including but not limited to statements about the Companys strategy for growth, product development, market positioning, expenditures and financial results are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statement on the basis of any subsequent developments, information or events.