Ganesha Ecosphere Limited (GESL), a leading manufacturer of recycled polyester staple fiber and yarn, has reported a challenging second quarter for the fiscal year 2025-26. The company's financial results reveal a significant downturn in profitability and revenue compared to the same period last year.

Financial Performance

GESL reported a consolidated net loss of 5.00 crore rupees for the quarter ended September 30, 2025, marking a stark contrast to the profit of 271.00 crore rupees recorded in the corresponding quarter of the previous year. This represents a substantial decline in the company's bottom line.

The company's revenue also saw a decrease, falling to 3,633.82 crore rupees from 3,868.06 crore rupees year-over-year, indicating a 6.1% reduction in top-line performance.

Operational Metrics

The EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for the quarter experienced a significant drop:

The sharp decline in EBITDA and EBITDA margin suggests that the company faced considerable pressure on its operational efficiency and profitability during the quarter.

Board Approval and Audit Review

As per the LODR (Listing Obligations and Disclosure Requirements) data, the company's Board of Directors approved these unaudited financial results at a meeting held on November 10, 2025. The statutory auditors have carried out a limited review of the financial results as required under SEBI regulations.

Business Segments

Ganesha Ecosphere continues to operate in the manufacturing of recycled polyester staple fiber and yarn, with no reportable segments as per Indian Accounting Standard 108 on Operating Segments.

Conclusion

The company's performance in the second quarter reflects a challenging period for Ganesha Ecosphere. The significant drop in profitability and revenue indicates that GESL may have encountered challenges in its operating environment. Investors and stakeholders may be closely watching the company's future announcements and initiatives to gauge its potential for recovery and growth in subsequent quarters.

Ganesha Ecosphere Limited , a leading PET recycling company, reported a challenging first quarter, primarily due to unprecedented events that led to a spike in raw material prices. The company's management discussed the performance and outlook during their Q1 earnings conference call.

Raw Material Cost Surge and Production Impact

The company faced significant headwinds as raw material costs rose to 70.00% of revenue, up from 64.00% in the previous quarter. This surge was attributed to a sudden increase in demand for flakes, especially in overseas markets, leading to a substantial volume of flake exports from India in the last quarter.

The spike in raw material prices had a cascading effect on the company's operations:

• Production capacity utilization dropped to 95.00% from 99.00% in the previous quarter.
• The rPET granules business experienced a 25.00% decline in production and sales volume.
• The legacy Recycled Polyester Staple Fiber (RPSF) and yarn business recorded its lowest performance in several quarters.

Price Pressures and Market Dynamics

PET bottle scrap prices, a key feedstock for Ganesha Ecosphere's products, reached unprecedented levels of INR 55.00-56.00 per kg during April and May. The company was unable to fully pass on these cost increases to customers due to several factors:

• Overcapacity in the industry
• Suppressed demand from the user industry (yarn spinning and non-woven textile sectors)
• Cheaper fabric imports
• Uncertainty over U.S. tariffs on Indian imports

rPET Granules Business Performance

The rPET granules business, which is primarily regulation-driven, faced its own set of challenges:

• The mandatory use of rPET granules was implemented as scheduled from April.
• However, production and sales volume dropped by about 25.00% from the last quarter.
• Early onset of monsoon during mid-summer affected beverage sales, a key consumer of rPET granules.
• High PET bottle scrap prices resulted in a 35.00% to 40.00% premium in rPET granule pricing compared to virgin PET.

Regulatory Environment and Industry Response

The Ministry of Environment, Forest and Climate Change (MoEF) issued a draft notification on June 3, proposing that any shortfall in the mandatory usage of rPET can be made up over the next three years. This led to some brands slightly lowering their purchases of rPET granules.

Positive Developments and Outlook

Despite the challenges, the company reported some positive developments:

• Exports increased to 12.00% of revenue from 9.00% in the previous year.
• The company received good export orders for RPSF from the European market, benefiting from the depreciating rupee against the euro.
• Sale visibility for rPET granules until December has been finalized with existing customers, showing improved uptake by brand owners.

Financial Guidance and Future Plans

Ganesha Ecosphere maintains its revenue guidance of INR 1,500.00 crores and expects to surpass the previous fiscal year's financial numbers. The company has realigned its business strategy to address the new challenges and realities in the market.

Key future plans include:

• A brownfield expansion of 22,500 tons at Warangal, which will be operational as per schedule.
• Targeting a total capacity addition of 90,000 tons.
• Promoters have infused INR 104.00 crores by conversion of their equity warrants in July, reinforcing their commitment to the company's growth.

Conclusion

While Ganesha Ecosphere faced significant challenges in Q1 due to raw material price spikes and market dynamics, the company's management remains optimistic about future prospects. With strategic expansions planned and a focus on both domestic and export markets, the company aims to navigate through the current headwinds and capitalize on the growing demand for recycled PET products.