Ganesh Benzoplast Limited (500153) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Ganesh Benzoplast Limited Q2 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rishi Pilani, Chairman and Managing Director. Thank you, and over to you, sir.

Good evening, everybody. Thank you so much for joining us for the Q2 FY '26 conference call. We will initiate the call by taking you through the business highlights for the period under review, after which we will open the forum for Q&A. Now I hand over the call to Mr. Amar Kabra, GM, Finance and Taxation, to share the quarter numbers with you.

Yes. Good evening, everybody. So on a consol basis, during the H1 of financial year '26, the company achieved a total revenue of INR 1,946 million as compared to INR 1,851 million for the corresponding period in the previous year, with an increase of 5% Y-o-Y. During H1 of financial year '26, the consolidated profit after tax is INR 419 million as against INR 329 million for the corresponding period in the previous year, with an increase of 26% Y-o-Y. On a quarterly basis, the company achieved a turnover of INR 990 million as compared to INR 976 million in the corresponding quarter in the previous year. And the profit after tax increased to INR 237 million as compared to INR 164 million in the corresponding quarter in the previous year with an increase of 44% Y-o-Y. Consolidated EPS increased to INR 3.30 in Q2 of financial '26 from INR 2.29 in Q2 of financial year '25 with an increase of 44% Y-o-Y. On a stand-alone basis, during the H1 of financial year '26, the company achieved a total revenue of INR 1,186 million as compared to INR 1,028 million for the corresponding period in the previous year with an increase of 15% Y-on-Y. During H1 of financial year '26, the stand-alone profit after tax is INR 350 million as against INR 304 million for the corresponding period in the previous year with an increase of 15% Y-o-Y. On a quarterly basis, the company achieved a turnover of INR 616 million as compared to INR 543 million in the corresponding quarter in the previous year, with an increase of 13% Y-o-Y and the profit after tax increased to INR 209 million as compared to INR 147 million in the corresponding quarter in the previous year with an increase of 42% Y-on-Y. Stand-alone EPS increased to INR 2.91 in Q2 of financial year '26 from INR 2.06 in Q2 of financial year '25 with an increase of 41% Y-o-Y. So with that, I have given the highlights for the results. Now I would like to open the forum for questions and answer.

[Operator Instructions] We take the first question from the line of [ Gautam Gupta ], an individual investor.

Congratulations for a steady set of numbers. I would start with -- by addressing the elephant in the room. In the last con call, we said that by September end, we will be announcing for what we will be using a 4-acre land, but there hasn't been any exchange filing. Can you please explain for that?

Yes, we were going through some -- we had to solve some technical issues with the closure of the JV because of which it is delayed. But now the work has already commenced in terms of engineering and everything. And in the first phase, we are already building 30,000 tonnes of A-class petroleum tanks in the land, while the balance, we are still deciding what to do.

Okay. I also want to know something about the supply side for the demand of the products. I mean the largest in the industry is coming up with 3 lakh liters metric ton plant of LST and similar for somewhat new construction for LPG. So will we be able to get orders for our plant -- new plant terminals?

See, as of now, we have not got any indication or any signal from our customers that they are planning to migrate or go away. Plus, as on date today, if you see Bombay's volumes, the Bombay region volumes are divided amongst 2 ports, which is Mumbai port and JNPT port, right? So if there is enough demand to supplement that the ships don't prefer to do 2 port callings. It's not their first choice. But as of now, on JNPT side, there is not enough tankages, right? So if there is another option that comes up, which allows the ship to discharge fully at one port, then probably we may -- what we are looking at is that we'll be cannibalizing the volumes on Bombay Port Trust, which is also significant.

Okay. Another question is that the same industry leader has been signed an MOU with the Vadhavan Port Management Trust. So the port for Phase 1, it is -- the time line is 2029, '30. So are we also in talks for the allotment of land over there? Or we are just looking for what we have in our plate right now?

See, I don't know the details of the MOU, so I can't comment on it. What I can tell you from our side is that we are always looking for any viable opportunities to expand and grow. But the term is viable.

That's it from my side. I just want to congratulate, sir, for turning around this company being a successful entrepreneur from a chemical company to...

We take the next question from the line of Saurabh Dhole from True Beacon Investment Advisors.

I have a question on the information that you laid out on Slide #14, where you're talking about the potential of your facilities at the JNPT site. So you've laid out a number of points as to how you can increase your realizations over time on these facilities. So I'm interested in knowing what -- where are we in this journey of, let's say, increasing the height of the tanks or maybe making them or converting them to cargo tanks. And when do these changes start impacting the realization numbers and the revenue numbers of the company?

So what you are seeing, that is an ongoing process. It's not a when. This is happening continuously. We are converting tanks for specialized products. We are enhancing tank capacities. We always go to improve our product mix wherever we can. So the steady state growth that you keep seeing is actually a mixture of all this. Now why none of these can result in step jumps is because you have to understand that they add incremental values. They don't add additional values. So if, let's say, you change a product mix and a tank is giving you a rent of INR 100, with the product mix change, you get a rent of, let's say, INR 110 or INR 105. But that tank capacity may be just 1% of your overall capacity. So what you see is the impact is not that significant, but why it's important to us is because it improves -- yes, it does give us incremental growth in terms of profits, but also it gives us a wider customer base, longer stickier contracts. And so we have to factor in all of those together.

No, that's obviously visible in your the LST division margins, et cetera. But what I meant to ask is that, let's say, you were to raise, or you think that the potential of raising the height of the tanks is from, let's say, 100 to 120. I wanted to know where are you exactly in that 100 to 120 journey? Are you at 103? Are you at 115?

So every year, we are doing this. Whenever we get an opportunity that a tank can remain empty for 3 to 4 months, then we take that opportunity to do this exercise. But that opportunity is very limited because obviously, the tanks are always full of cargo, and it doesn't make sense to take a tank down for 4 months, 5 months to do these exercises. So I would say that this would be an ongoing activity for all the tanks over the next 4 to 5 years. Slowly, slowly, whenever we get an opportunity, we do that. And in some tanks, we may not get the opportunity also because they are already at max height. So whichever tanks are possible, probably we realize the full potential over the next 4 to 5 years.

Okay. And just one last question. On this land that is available to you, this 4.5 hectares that you're talking about, what is the max potential of this particular land in terms of adding capacity at the JNPT?

See, max potential depends. So like I said, we have already started with 30,000 tonnes of Class A tanks. But the max capacity depends like right now, we have a lot of different product choices, including some cryogenic bullets -- sorry, pressurized bullets. There are a lot of options being discussed right now. So you -- so the exact capacity is difficult to define in terms of a land. So -- but let's say, if I just made LST, which is the normal liquid, probably we could make totally including this 30,000 close to about 1 lakh to 1,20,000 KL.

Got it. So that increases your capacity by almost 50%?

Yes, we are close to 3 lakh now, almost 40%, yes.

40%, yes.

We take the next question from the line of [ Rekha Multani ] an individual investor.

I wanted to check on your dividend policy actually. So I know last few years, even though we were profitable, we couldn't pay out because of the margin issue. Now that it's resolved, what can we expect in terms of dividend?

See, ma'am, dividend policy is something that we are also actively looking at being promoters, you can understand that we stand to benefit the most from it. But there are 2 things that we always look at is, one is that what is the company doing with the money right now. So right now, like I said, we have this expansion coming. We have -- we want to make sure that we are doing that as fast as possible. So we are looking at somehow trying to get a good mix in of dividend versus capital utilization. Probably, I think in next quarter, when I do the call, at that time, we'll be able to give you a very, very firm answer on this.

Yes. We are thinking on dividend also. But yes, we'll confirm by next quarter.

We take the next question from the line of [ Anukul ] an individual investor.

I have a few questions. Firstly, could you please update me on the LST utilization and the EPC order pipeline?

Okay. What's the second question?

The next is providing any visibility on the Chemical segment margins and volume going forward?

These 2 questions?

Yes. Firstly, these 2, then we'll proceed with my other questions.

Okay. So LST utilization has remained almost steady with what it was in last quarter. Obviously, there is some ups and downs that go on, but more or less, we are at a steady state that we are running where JNPT and Cochin are almost 100% utilized and Goa is about approximately 5% to 10% utilization. That's what it goes at. For EPC order book, as of now, we are working on projects in Mundra and the JSW project that we have. These are the 2 projects that we are working on. And for Chemical division, so Chemical division more or less works at the steady state. Yes, in June quarter due to the weather and all, there is less sale of the food products that utilize food preservatives. So there is a small variation that comes, which is normally expected. This is also seasonal. Otherwise, whatever numbers we have, we are quite hopeful that we continue to meet or beat them quarter-over-quarter.

Understood. Great. One thing I need clarification, because I missed the point on the CapEx front, what you had told on that side, if you can just repeat that out?

CapEx.

CapEx for upcoming expansion?

Yes, right. Sorry?

CapEx for what? I've not said anything about CapEx till now.

No. Like earlier, you told that you're planning for a CapEx in LST side. In the last con call, you had...

Yes, yes, yes. Okay, okay, okay. So like I already said, we have started work on 30,000 tonnes of A-Class tanks. So that CapEx has started. Our overall -- the final number for CapEx will again depend on the final tanks that we decide to build for what type of product? Is it for gas? Is it for liquid and what kind of associate ancillaries are required for that. But again, going back to my -- like if we go just by pure liquid, we would expect anywhere around INR 125 crores to INR 150 crores of CapEx if we go only for pure liquid for developing the entire plot.

Understood. And what incremental revenue are we seeing from this 30,000 tonne A-Class tanks?

Our expectation would be that only from these tanks, we should be able to get what we get for our existing tanks, which is approximately in the range of about INR 400 to INR 500 a KL per month.

Okay. Understood. And this CapEx that you are telling, will this be funded through internal accruals only?

Yes. We are, as of now, planning to fund it through internal accruals. We will -- we always, like any other company, we will make sure that we have backup bank lines available in case we require. But as of now, the company has sufficient funds to fund it.

And it will come in a staggered manner, phase by -- so obviously, it will be -- most hopefully, it will be through our internal resources.

Understood. Understood. So roughly, I can expect around INR 20 crores of incremental revenue from this?

The -- you're seeing from the A Class tanks?

Right, right.

So it's INR 30,000, yes, approximately, you can say anywhere between INR 12 crores to INR 15 crores. That would be our hope.

Understood. And lastly, I need one clarification on the lease-related items and financials one-off, whether the INR 80.08 million lease rental is a onetime charge, firstly, on that part?

And for what else?

The nature of the INR 97.26 million exceptional income, which we have included and any future lease-related charges that is expected in FY '26, '27?

Yes. So I'll answer the lease-related item is that we have gone for a renewal of our land lease with JNPT since 30 years were over. So based on the certain rules of the port and as per the Major Port Trusts Act, they have revised the lease rentals. So while we don't have the renewed letter in our hand, as a prudent practice, since we know that this might be the approximate impact, we've taken it. And this would be quarter-over-quarter. So this is going to be the revised lease rentals that will continue now. Have I answered your question? Understand? Understand?

Yes, yes, yes.

And for the INR 97.26 million, as you know that we had a JV with BW and all for LPG, which for whatever reasons, we all decided to break away from. But -- so this is a fee that has been paid by BW to us for breaking away. So this is a onetime. The fees is to the onetime.

Okay. And lastly, just one last question from my end. From the incremental revenue of INR 12 crores to INR 15-odd crores that you are seeing, how much margins on this incremental revenue can we expect?

So you can expect for this part an EBITDA of almost 90% because there is no real increment in cost, except for a little bit handling cost. Rest all is already the manpower, and everything is already in place. The lease rentals are already accounted for from before.

Understood. And any time line of this CapEx by when are you planning for doing this and...

We would expect the INR 30,000 to commission within a year.

Okay. And any further CapEx which you are planning for going forward post that?

That -- see, like I said, we are still selecting the final product mix. So as soon as we decide that, we will let you know.

We take the next question from the line of [ Ketan Chheda ] an individual investor.

I'd like to know that in the June quarter, we had a bump up in the margins of both LST division as well as the Chemical divisions. And of course, in this quarter, we've seen that those margins kind of dip. So could you explain what has caused this? Because the bump up in the margins was in both LST as well as the Chemical divisions in the June quarter?

Chemicals, obviously, it's a seasonal thing, Rishi has already explained. You can see June to June and September to September year-on-year. So there is no much variation in that figure. Obviously, June to September, there is slight down in the Chemicals segment. And in LST, you can see due to this lease rental only, you are seeing the down in the profit. But if you remove that leasing, lease expenses, then there is an upward trend only. It's -- we are in incremental profit as compared to the last quarter.

Okay. So as far as LST is concerned, then whatever margins we've got in the September quarter is a steady state normalized we can expect?

Yes, yes. Because ultimately, as explained, this lease rental is this year -- this -- this rental will be increased. Otherwise, there is profit. And in fact, it is going to increase because the past litigation cost on account of Morgan and all these things, those are going to reduce. Then obviously, there will be a lease rental -- sorry, storage rental increment. So that will cover the increased lease rent. So hopefully, we'll be in a better position in next year.

Okay. So you're saying going forward, there's a possibility that our margins should improve going forward?

Yes, yes, yes. At least it will cover up that extra lease rental, which has been hit from this year.

Okay. Okay. Sure. And for the other development that we are thinking of the available land at the JNPT, so -- by when do we expect to kind of finalize the plans? Because now I think what you are doing is you kind of started development on a part of the plant, which is the 30,000 tonne petroleum tank, Rishi, that you mentioned. So then we will have some balance, right? So by when do we think of finalizing the plans on that one?

See, the thing is that we want to find the most optimum solution. So we are talking to a lot of stakeholders for different type of tanks. And we don't want to rush into answer until we've evaluated every option thoroughly in terms of what is the most -- what gives the most ROI to the company. So while it's very difficult to define a time line that this should happen within 5 days or 10 days or 1 month. Obviously, our hope is that we should do this ASAP and -- but I don't have a firm time line for this.

No, Rishi, I really appreciate if you're taking as much time you want but we don't want to kind of repeat what happened last time that we entered into some kind of a business proposal and then we get called off. I really appreciate you trying to kind of do the maximum diligence and making sure that we don't encounter this something again. So fair enough. The other question...