Ganesh Benzopl.

Ganesh Benzoplast reported a mixed financial performance for Q3 FY25. Consolidated revenue declined by 16.0% YoY to ₹89.2 crores, down from ₹106.2 crores in Q3 FY24. However, consolidated net profit after tax (PAT) increased by 13.7% YoY to ₹18.3 crores, compared to ₹16.1 crores in the corresponding period last year. On a standalone basis, revenue decreased by 6.8% YoY to ₹55 crores, while standalone PAT saw a modest increase of 1.9% YoY to ₹16.1 crores.

The company successfully settled a 20-year-old legal dispute with Morgan Securities for ₹40 crores. While the arbitration award in 2015 included 3% interest on monthly rest, the company challenged it in various forums. The settlement amount of ₹40 crores will be booked as an expense in Q4 FY25, with a net cash requirement of ₹30 crores after accounting for a ₹10 crore tax reduction. Management stated that internal accruals and reserves are sufficient to cover this payment without needing to raise additional funds.

Ganesh Benzoplast is undertaking a significant capex project of approximately ₹900 crores for a new LPG terminal. Financial closure for the main tanks has been achieved, and approvals from PESO and MPCB are in place. Piling work, the initial phase of construction, is expected to commence in March 2025, with the overall project anticipated to be completed in about 2 years (by March 2027). The company projects high EBITDA margins of 80-85% on expected revenues of ₹180-200 crores from this project once it reaches steady state, with a target throughput of 30-40 minimum.

The Chemical division demonstrated improved profitability in Q3 FY25, with EBIT around ₹6.5 crores. For the first 9 months, the cumulative profit for the Chemical segment reached ₹12-13 crores, significantly higher than ₹6 crores in the previous 9 months. This improvement was attributed to new management (since April 2025), bulk procurement of raw materials at discounted prices, and a focus on the domestic market to mitigate impacts from US elections and Nigeria issues. The company aims to increase capacity utilization from 75% to 85% and targets EBIT of ₹18-20 crores, gradually crossing ₹25 crores.

Management reiterated its commitment to creating separate valuation structures for the Infrastructure and Chemical divisions to unlock value. While demerger is a strong option, other structures are also being considered to allow investors to value the two companies separately and provide direct control. Any corporate action will be finalized within the next 2-3 months, but its implementation will await the full repayment of the Morgan settlement by November 2025.

The Goa terminal continues to face significant underutilization, operating at only 30-40% capacity. This is primarily due to the Supreme Court's mining ban in Goa, which halted the bunkering of mining ships, the terminal's original purpose. The company has modified the terminal to handle other products like edible oil, molasses, and naphtha, and is exploring different products to improve utilization. However, management acknowledged that a clear plan for full capacity utilization is not yet in place.

The company clarified the mechanics of its LPG terminal operations, explaining that revenue is generated on a per-tonne basis for cargo unloaded. Throughput refers to how many times a terminal can receive, evacuate, and turn around cargo. While most Indian terminals achieve 60-70 throughputs annually, the new LPG terminal is expected to achieve a minimum of 30-40 throughputs as a low-case expectation. Operations involve continuous rotation, with simultaneous evacuation and receiving of cargo to maximize efficiency.