Ganesha Ecosphere Limited , a leading recycled polyester staple fiber (rPSF) manufacturer, reported a challenging second quarter for fiscal year 2026, with compressed EBITDA margins and negative net profits. The company faced headwinds due to inventory losses and delayed government notifications affecting rPET deliveries.

Financial Performance

Ganesha Ecosphere experienced a significant setback in Q2 FY26:

• EBITDA margins compressed to 6.1%
• The company reported a slight net loss
• Inventory losses of approximately INR 10.00-11.00 crores due to raw material price volatility
• A 4% drop in average selling prices across businesses

Operational Challenges

The company faced several operational challenges during the quarter:

1. Raw Material Price Volatility: Sharp fluctuations in raw material prices between March and June 2025 led to elevated procurement costs.
2. Reduced Deliveries: The company could only deliver 70% of its rPET granules production due to uncertainty caused by a draft notification.
3. Regulatory Impact: A draft notification by the Ministry of Environment, Forest and Climate Change (MoEFCC) in June 2025 led to reduced or postponed purchases of recycled material by the Food & Beverage (F&B) industry.

Future Outlook

Despite current challenges, Ganesha Ecosphere remains optimistic about its future prospects:

1. Legacy Business Recovery: The company expects its legacy business to improve, with EBITDA margins projected to reach 7-9% in upcoming quarters.
2. Capacity Expansion: A brownfield expansion of 22,500 tons capacity is planned to be operational by March 2026, with an investment of approximately INR 130.00 crores.
3. Regulatory Clarity: The company anticipates a recovery in demand and deliveries beginning January 2026 as regulatory uncertainty is expected to diminish.

Management Commentary

Yash Sharma, Director of Ganesha Ecopet Private Limited, stated, "While the financial performance in the first half of FY26 fell short of our expectations and the inherent potential of our business, the core fundamentals still remain strong. We believe that the worst is behind us, supported by the revival of our legacy operations and the long-awaited emergence of demand in the B2B segment."

Industry Developments

1. Recycling Capacity: The FSSAI-approved recycling capacity in India has increased from 70,000 tons to approximately 210,000 tons over the past six months.
2. Export Regulations: Changes in European norms have led to a significant drop in the export of flakes from India, affecting the domestic supply-demand dynamics.

Conclusion

While Ganesha Ecosphere faces near-term challenges, the company remains confident in its strategic direction and long-term value creation potential. The management expects a stronger performance from the March quarter onwards, driven by improving demand, regulatory support, and operational discipline.

Investors and stakeholders will be keenly watching the company's performance in the coming quarters, particularly the impact of regulatory clarifications and the realization of projected improvements in the legacy business.

Ganesha Ecosphere Limited has reported a significant share pledge to Axis Trustee Services Limited, according to recent corporate action. The pledge, involving 20,00,000 equity shares representing a 7.46% stake in the company, was executed on November 18, 2025.

Pledge Details

Key Points

• Axis Trustee Services Limited has clarified that it holds no beneficial interest in the pledged shares.
• The pledge serves as security for facility arrangements under SEBI takeover regulations.
• The pledged shares represent 7.46% of Ganesha Ecosphere's total equity share capital.

Company Information

Ganesha Ecosphere's equity structure, as per the shareholding pattern for the quarter ended September 2025, is as follows:

This pledge transaction does not alter the company's total equity share capital or voting rights structure.

Implications

While share pledges are common in corporate finance, they can sometimes indicate financial arrangements or obligations of the pledging entities. In this case, as Axis Trustee Services Limited is acting as a debenture trustee, the pledge likely relates to a broader financial arrangement rather than a direct investment or ownership change.

Investors and market participants may want to monitor any further developments or disclosures related to this pledge, given its significant portion of Ganesha Ecosphere's equity.