Ganesh Benzoplast Limited — Q3 FY25 earnings call

Call held 13 Feb 2025

Management summary

Ganesh Benzoplast reported a mixed Q3 FY25, with consolidated PAT growing 13.7% YoY to ₹18.3 crores despite a 16.0% YoY revenue decline. The Chemical segment showed strong profitability improvement, while the long-standing Morgan Securities legal dispute was settled for ₹40 crores. The company secured financial closure for its new ₹900 crore LPG capex project, targeting 80-85% EBITDA margins, though the project timeline has been extended. Strategic options for the Chemical division are being explored to unlock value.

Highlights

  • Consolidated PAT grew 13.7% YoY to ₹18.3 crores in Q3 FY25, up from ₹16.1 crores in Q3 FY24.

  • Chemical segment's 9-month cumulative profit reached ₹12-13 crores, a significant improvement from ₹6 crores in the previous 9 months, driven by discounted raw material procurement and domestic market focus.

  • The new ₹900 crore LPG capex project achieved financial closure and is projected to deliver high EBITDA margins of 80-85% on expected revenues of ₹180-200 crores.

  • The 20-year-old legal dispute with Morgan Securities was settled for ₹40 crores, with a net cash requirement of ₹30 crores after tax benefits, removing a significant legal overhang.

  • The Cochin terminal is fully occupied at 100% capacity, contributing to stable operations.

Concerns

  • Consolidated revenue declined 16.0% YoY to ₹89.2 crores in Q3 FY25 from ₹106.2 crores in Q3 FY24.

  • Standalone revenue declined 6.8% YoY to ₹55 crores in Q3 FY25 from ₹59 crores in Q3 FY24.

  • The Goa terminal continues to operate at a low utilization of 30-40% due to the mining ban, and management currently lacks a clear plan for improvement.

  • The new LPG capex project's construction timeline has been extended, with piling work starting in March 2025 and overall completion expected in 2 years (March 2027).

Key financials

  1. Consolidated Revenue ₹89.2 Cr -16%YoY
  2. Consolidated PAT ₹18.3 Cr +13.7%YoY
  3. Standalone Revenue ₹55 Cr -6.8%YoY
  4. Standalone PAT ₹16.1 Cr +1.9%YoY

What they filed

Q1 FY27: revenue up 22.9%, net profit up 0.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue98 89 100 96 99 +1%105 +18%111 +11%118 +23%
EBITDA25 27 32 29 22 −12%22 −19%21 −34%27 −7%
Net profit16 18 -13 18 24 +50%16 −11%15 +215%18 +0%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Chemicals
    ₹6.5 Cr EBIT (Q3 FY25)₹12 Cr Cumulative Profit (9 months)

Capital allocation

high confidence
  • Capex ₹900 Cr Internal accruals and reserves, supplemented by debt (financial closure achieved)
    • New LPG terminal construction (piling work, main tanks)
    Rishi Pilani: "So we don't need to raise any further funds for this. Because actually, the way we have enough internal accruals and reserves in our cash to suffice for both the LPG and the Morgan case." and "For the main tanks, the financial closure was achieved about a week back."
  • Debt Debt disclosed
    • Repayment Settlement payment for Morgan Securities dispute. ₹10 crores already paid, balance ₹30 crores (net after tax benefit) to be paid by November 2025. Full ₹40 crores to be booked as expense in Q4 FY25. ₹40 Cr
    Rishi Pilani: "For the main tanks, the financial closure was achieved about a week back."
  • M&A Chemical Division Divestment · Announced

    To create separate valuation structures for the Infra and Chemical divisions and allow for direct control of both divisions.

    Rishi Pilani: "we are very much committed to the fact that we need to, like I said, create 2 separate valuation structures for the Infra and the Chemical division. ... while demerger is one of the options that we are also strongly considering and going ahead with, we would like to there are a couple of more other structures that we are looking at in which the investors can understand the valuations of the 2 companies separately, so they can value the infra and the Chemical separately."
  • Liquidity Liquidity disclosed Internal accruals and reserves are sufficient to fund both the LPG capex project and the Morgan Securities settlement.
    Rishi Pilani: "we have enough internal accruals and reserves in our cash to suffice for both the LPG and the Morgan case."

Guidance & targets

Profitability

  • New LPG Capex Project EBITDA Margin Profitability · steady state · High confidence 80% to 85%
    See, while I don't know all -- I mean, we can't give numbers and all on calls, but what we are expecting is that once we reach steady state, we should do EBITDA margins upwards of 80% to 85%.

    — Rishi Pilani

  • Chemical Segment EBIT Profitability · future · Medium confidence INR 18 crores to INR 20 crores, gradually crossing INR 25 crores
    So with that, obviously, I can see the profit of around INR18 crores to INR20 crores in the Chemical segment. And gradually, it will definitely cross that INR25 crores number.

    — Amar Kabra

Revenue

  • New LPG Capex Project Revenue Revenue · normal case basis · High confidence INR 180 crores to INR 200 crores
    But as of now, we expect that the revenues on a normal case basis should not be less than close to about INR180 crores to INR200 crores.

    — Rishi Pilani

Capacity

  • Chemical Segment Capacity Utilization Capacity · future · High confidence 85%

    Previously 75% → 85%

    See now our target is to reach the capacity of 85% from the existing 75%.

    — Amar Kabra

Volume

  • New LPG Terminal Throughput Volume · low case expectation · Medium confidence minimum 30 to 40 throughputs
    we are hopeful that based on our current market scenario that we have studied, getting minimum 30 to 40 throughput should be a low case for us. That is our expectation.

    — Rishi Pilani

Capex

  • New LPG Terminal Completion Capex · from March 2025 · High confidence 2 years
    So as of now, so what we are looking at is that the actual work should start sometime in March, of the main tanks, that is the piling and everything. So from there on, you are looking at about 2 years.

    — Rishi Pilani

What to watch in Q4 FY25

Start of piling work for new LPG terminal

Next quarter (March 2025)
Current Financial closure achieved, EPC contract for piling finalized.
Target Piling work commenced.

Why it matters

Marks the physical commencement of the major capex project, crucial for its overall timeline and future revenue generation.

Rishi Pilani: "actual work should start sometime in March, of the main tanks, that is the piling and everything."

Risks & concerns

  • Prolonged legal dispute resolution (Morgan Securities)

    medium

    The Morgan Securities case took 20 years to settle, with the award challenged for 10 years, indicating potential for lengthy legal battles.

    Analyst acknowledged

  • Delays in capex project execution

    medium

    The new LPG capex project faced delays in financial sanction and construction start, pushing the completion timeline further out.

    Analyst acknowledged

  • Underutilization of Goa terminal

    medium

    Goa terminal utilization is low (30-40%) due to the mining ban, and the company has no clear plan to improve it currently.

    Analyst acknowledged

  • External market factors impacting Chemical segment

    low

    US elections and Nigeria problems led to lesser production/marketing in the Chemical segment, though offset by raw material procurement and domestic sales.

    Management acknowledged

Q&A highlights

5 direct, 1 evasive
Morgan Securities Settlement Details Direct
the arbitration did not award 36% interest. They awarded 3% interest on monthly rest. But that's not the same as having a 36% interest or a simple interest of 36%.

Clarified the actual interest awarded and the company's rationale for settling a 20-year-old case, which was a significant overhang.

Asked by Vishal Prasad

Operational Control and Leadership for New Capex JV Direct
It will be joint. ... All strategic decisions are joint.

Provided clarity on the governance structure of the significant new capex project, indicating shared control.

Asked by Vishal Prasad

New Capex Project EBITDA Margin and Revenue Potential Direct
once we reach steady state, we should do EBITDA margins upwards of 80% to 85%. ... revenues on a normal case basis should not be less than close to about INR180 crores to INR200 crores.

Quantified the significant profitability and revenue potential expected from the large new LPG terminal project.

Asked by Vishal Prasad

Strategic Carve-out/Demerger of Chemical Business Partial
the company is definitely proceeding with creating some strategic carve-outs. ... Any corporate action will have to wait till Morgan is repaid fully. ... What exactly that action is to create that separate outlook is still being considered.

Indicated a strategic intent to unlock value in the Chemical division, but the specific action and timeline are still uncertain and contingent on the Morgan settlement.

Asked by Jayesh

Update on New LPG Capex Project Timeline and Approvals Direct
approvals from PESO and MPCB are concerned, those are in place with us now. ... financial closure was achieved about a week back. ... actual work should start sometime in March, of the main tanks, that is the piling and everything. So from there on, you are looking at about 2 years.

Provided a concrete timeline for the start of construction and overall completion, revising previous expectations and confirming key approvals.

Asked by Yash Dedhia

Funding for Morgan Settlement and Capex Direct
we don't need to raise any further funds for this. Because actually, the way we have enough internal accruals and reserves in our cash to suffice for both the LPG and the Morgan case.

Reassured investors about the company's financial strength to fund significant outlays without external equity dilution.

Asked by Yash Dedhia

Goa Terminal Underutilization and Future Plans Partial
Goa terminal specifically is at about 40%. ... with the mining ban that was imposed by Supreme Court in Goa, the mining ships stopped calling Goa. ... It's not happening. We don't have that right now.

Highlighted a persistent operational challenge with no immediate solution, indicating a drag on overall asset utilization.

Asked by Shubhangi A.

Interest Rate for LPG Project Financing Evasive
since it's a part of the JV funding, and it's not really part of something that is GBL on its own has arranged. So it's actually we are bound by some confidentiality agreements there.

Management declined to disclose a key financial detail for the large capex project, which could be a point of concern for investors.

Asked by Rohit Potti

3 min read 7 chapters

Detailed narrative

Q3 FY25 Financial Performance Overview

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.

Morgan Securities Settlement

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.

New LPG Terminal Capex Project

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.

Chemical Division Performance and Outlook

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.

Strategic Carve-out for Chemical Business

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.

Goa Terminal Utilization Challenges

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.

LPG Business Mechanics and Throughput

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.

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