Ganesha Ecosphere Limited has informed stock exchanges about receiving a significant GST demand notice from tax authorities in Uttar Pradesh. The disclosure was made under Regulation 30 of SEBI Listing Obligations and Disclosure Requirements Regulations, 2015.

GST Demand Details

The company received a Demand Notice/Order dated November 28, 2025, from the Office of the Joint Commissioner, Corporate Circle, SGST, Moradabad, Uttar Pradesh. The notice was issued under Section 74(9) of the Central Goods and Services Tax Act, 2017, following an audit conducted by the SGST department.

Company's Response and Legal Position

Ganesha Ecosphere Limited has strongly contested the demand notice, stating that the order is not based on correct facts and is not legally sustainable. The company plans to file an appeal against the order within prescribed timelines, supported by:

• Detailed facts and figures
• Legal justifications
• Various high court rulings supporting their position
• Required evidences substantiating their legal stance

Financial and Operational Impact

The company has clarified that there is no immediate impact on its financial position, operations, or other business activities due to this demand notice. All amounts mentioned in the GST demand, interest, and penalty are currently under contention and will be challenged through the appropriate legal channels.

Regulatory Compliance

The disclosure was made through a communication dated February 3, 2026, signed by Bharat Kumar Sajnani, Company Secretary-cum-Compliance Officer. The company acknowledged an inadvertent delay in submitting the disclosure to stock exchanges due to oversight, and has assured that such unintended delays will not occur in future.

The matter represents a significant regulatory challenge for the company, though management remains confident about their legal position and expects to successfully contest the demand through proper legal channels.

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.