Garware Hi-Tech Films Limited (GRWRHITECH) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Garhwari High Tech Film Limited Q1 F527 Earnings Conference Call hosted by Go India Advisors. As a reminder, all participant clients will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. I now hand the conference over to Mr. Garima Singla from Go India Advisors. Thank you and over to you, ma'am.

Thank you. Good morning, everyone. I'm Garima Singla, and it's my pleasure to welcome you on behalf of Garvare High Tech Films Limited. Thank you for joining us today for Q1FY27 earnings conference call. This call is being hosted by Go India Advisors. Please note that today's discussion may include certain forward-looking statements. Therefore, they must be viewed in conjunction with the risks that the company faces. Today on the call, we are joined by Mr. Deepak Joshi, Director, Sales and Marketing. I now invite Deepak, sir, to present the company's business outlook and performance, after which we will open the floor for Q&A. Thank you and over to you, sir.

Thank you, Garima. Good morning, everyone, and thank you for joining us today. Before we begin, I would like to express our heartfelt condolences on the passing of Mrs. Sarita Garware Ramsey, our beloved Joint MD. On behalf of the board and everyone at Garware High Tech Films, we extend our deepest sympathies to the Garware family and pray for strength and peace during this difficult time. I would also like to extend my warm wishes to all of you and your families on the occasion of India's 79th Independence Day. As we celebrate our nation's remarkable journey of progress, resilience, and innovation, we remain committed to contributing to India's manufacturing excellence and strengthening its position as a global leader in high-value specialty fields. I hope you have had a chance to review our financial results and investor presentation shared earlier. Today is a proud moment for everyone at Garware Hightech Films. The quarter we are reporting today is the culmination of years of disciplined execution, continuous innovation, and a clear long-term vision. Over the last several years, we have consciously transformed Karwari from a manufacturing-led company into a global technology-driven specialty film company. We invested ahead of demand, strengthened our R&D capabilities, expanded our specialty product portfolio, built deeper customer relationships, and established a differentiated direct-to-consumer platform. Every strategic decision has been guided by one objective, to build a stronger, more resilient, and a more profitable business capable of delivering sustainable long-term value. I am delighted to share that this strategy continues to deliver. Q1 FY27 marks the strongest quarter in Garwari Hightech Film's history. During this quarter, we delivered our highest ever quarterly revenues. EBITDA, Profit Before Tax, and Profit After Tax since the company's inception. More importantly, what gives us more confidence is not just the scale of growth, but the quality of our earnings. We have been driven by structural improvements in the business, including a richer specialty Income operation for the quarter stood at 633 crore, growing 28% year-on-year basis. Ebitda increased 56%. The data margin expanding by 544 basis points to a record of 30.30%, crossing the 30% milestone for the first time in company's history and significantly exceeding the upper end of our long-term guidance range. Profit before tax increased 60% year-on-year to Rs. 176 crore, while profit after tax also grew 60% year-on-year to Rs. 133 crore. Back margins expanded by approximately 420 basis points to 21%, reflecting the strength of our specialty-led business model, disciplined execution, and improving operational technology. Importantly, we do not view this as a result of one exceptional quarter. Rather, it reflects the structural transformation of our business over many years. On the business front, demand remained healthy across our key specialty segments, particularly sun control films and pain protection films, supported by improving demand across our key export markets. And continued momentum in India. Innovation continues to remain at the heart of our strategy. During this quarter, we launched our detailing kit for our existing gas network, which helps the detailing studio to complete their product basket and increase the wallet share. Our specialty portfolio with sustainable TPU-based UV-printable films for complex applications. PDLC specialty films enabling privacy on demand and graphic solutions expanding our value-added offerings across automotive and architectural applications continue to gain traction. We also continue to deepen our engagement with global automotive OEMs and other strategic customers across geographies. While we do not comment on customer-specific engagements, we remain encouraged by the opportunities emerging across both OEM and OEM. Our strategy of moving closer to the end customer is progressing well and remains one of the key differentiators of our business model. Globally, we continue expanding our global application studio network with 14 international studios across Middle East and the United States, strengthening our direct customer engagement in e-export markets. We are also witnessing encouraging momentum across Middle East, which continues to remain an important growth model. However, currently our supply chain remains impacted due to war. In India, our Garware application studio network has now expanded to over 250 locations, while Garware home solution continues to scale steadily with nine studios currently operational. We remain firmly on track. We believe our direct-to-consumer platform enables us to strengthen customer engagement, enhance brand visibility, and improve installation quality and create long-term pricing power. While we continue to invest in expanding this ecosystem, these investments are expected to strengthen our competitive positioning and support sustainable margin expansion over the long term. Beyond automotive applications, we continue to see significant opportunities in architectural film across commercial buildings, residential projects, and energy-efficient infrastructure, supported by increasing awareness around energy efficiency, sustainability, and CPM premium Thank you, everyone. On the manufacturing side, our strategic expansion projects continue to progress as planned. The TPU project remains on track for commissioning during the third quarter of April 27. Beyond strengthening our paint protection film business, this investment enhances our technology platform and creates opportunities to develop a wider range of next-generation TPU-based specialty products over the coming years. In addition, last quarter, we announced an investment of Rs 192 crore towards a new state-of-the-art sun control film manufacturing line, incorporating advanced robotics and automation. This facility will add approximately 1,200 lakh square feet of annual capacity and is expected to commence commercial production in H1 FY28, supporting both domestic and export growth opportunities. Another important development during the quarter has been DGTR's recommendation for anti-dumping duty on TPU-based pain protection pill imposed from China. We believe this represents an important step towards creating a more level-playing field for domestic manufacturers and further strengthen our long-term growth potential of India's specialty pill industry. Our balance sheet continues to remain one of our greatest strengths. Despite investing over Rs. 700 crore towards strategic expansion over the past few years, the company remains debt-free with a healthy cash and liquid investment balance of Rs. 850 crore. Thank you. Our guidance of achieving rupees. FY27 while maintaining EBITDA margin in the range of 25% plus minus 2. While this quarter margin performance has been exceptional, our focus remains on building a business capable of delivering sustainable industry-leading profitability across business cycles rather than optimizing for any single quarter. Over the medium term, we continue to target 15% to 20% revenue CAGR, supported by capacity expansion, increasing contribution from value-added products, and backward integration through the DPU project, the new project introductions, and continued expansion of our direct-to-consumer platform and disciplined execution. Before I conclude, I would like to sincerely thank our customers, channel partners, employees, shareholders, and all our stakeholders for their continued trust and unwavering support. The best quarter in our company's history is not something we see as a destination. It is a reflection of the foundation we have built over many years. The numbers we have delivered this quarter give us confidence. The capabilities we have built give us conviction. And that is why we firmly believe that the best years of Garhwari high-tech films are still ahead of us. Thank you once again. Over to the moderator, please.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Viraj Parekh from Carnvillian AMC. Please go ahead.

Good morning, sir. Congratulations on a good set of numbers. Just a question on gross margins. This quarter, we had exceptionally high margins at around 60 odd percent, and just wanted to understand a bit more on that, if you can help me understand, is that something, will it be a steady state number going ahead, or will it normalize to the 54, 55 percent you see in the past?

Yeah. Thank you on your kind words, and this, I mean, margin, if I talk of EBITDA margin, 30% plus, you know, we achieved in the past, the best is around 27%, right? Even in this quarter, we have not, there is no exceptional thing, like, I think...

I'm sorry to interrupt, sir. My question is on gross margin, not the EBITDA one.

Yeah, even under gross margin, there is nothing exceptional. I mean, this has come purely from the performance of the company, right? There is no, I would say, any item which is exceptional, like, you know, refunds for tariff or something. It is purely from the performance of the company. We have given the guidance on EBITDA margin, which will be ultimately from gross margins only. So I hope we will be in this range only, depending on the quarters. Like Q1 usually is very good, Q2 is similar, Q3 will go a little lower, and Q4 back on this thing. Overall, the margin percentage, like we have seen, we will be in this range only. This is nothing exceptional on these numbers.

So generally, even a product mix can lead to better margins. I was just looking a bit back. Q2 of last year also, we had a similar product mix of CPD and IPD. However, the situation geopolitically was a bit different. But that time, I think the margins were a little bit subdued at 53. So it's just a little bit difficult to understand that there is a 60% is only on product mix. Or is there like a very high value added product have we sold in this quarter? If you can just, you know, elaborate a bit more.

You are right. It depends on the product name. So three things work for us. The summer is... The call also remains similar, so I can... High IR products, you will always get better margins. That is number one. And second thing is, I mean, there has been companies' direction since last four or five years. We are continuously moving towards higher-end products. That means we are working towards like the products which give you the highest heat rejection up to 99% of the products. These products' sales gets increased, right? So, you will get better margins. At the same time, the strategic focus of the company is towards architectural business. If you really see, like from 5% revenue percentage of architectural, today stands more than 25%. So, such kind of high-end products always lead to good margins, and we have been very consistent in saying that our aim is to go... We do not want to do like a commoditized sun control. Even on the sun control, we are talking to higher ends where the heat rejection go up to 99%. So all such products, there is a big product basket which is getting increased of these products, and we'll continue to see these kind of numbers in future.

Thank you, sir. That's helpful. Just a last question. If you can help me understand how has Garvare Home Solutions, you know, I know it's recently started, but I just wanted to color on, you know, how the market is looking at it, how are the numbers, and along with it, you can just give me an idea of last year, out of 2,100 crore, you know, what was SCF and PTF, and what was the similar contribution this quarter for these clients?

Yeah. So, last year, actually, sun control business largely remained around 48% to 50% and balanced 25% from PPF and industrial product. Last year, I'm talking, and this quarter, sun control was around 55%, and PPF was 20%, and balance was industrial product. PPF, a little lower because sun control really grew fast. That was one. And second thing, we faced some challenges in the raw material supply chain because of Middle East issue. Unfortunately, one of our ships got stuck in Jabal Ali, so we received some of the consignments late, and that's why some of the products were delayed from Q1 to Q2. But SunControl remains largely the number one product for us.

And from Garlari Home Solutions?

Yeah, Garware Home Solution has just started. I mean, as we speak, we have nine studios. But the concept, because there are a lot of work going on on that segment where we want to create a new market for, you know, we want like every home to have these kind of products because they are really adding value to the consumer. So when we do these kinds of things, it's a new market creation for us. It's not something if you have a home, you cannot go anywhere and buy some films for you. Like you can buy a glass whenever you want, but film you cannot buy. Because even in the advanced markets like US and Europe, we have seen these kinds of difficulties. So that's why the company thought of a different concept where you can do all those things directly online, right? For that, a lot of work has been done. A lot of, I would say, market creation is being done through digital media, order now from system, all those work is going on. So, it's very steady, but we expect that these numbers of number of studios to go 50 by end of this year, and I can't give you as of now the guidelines on the total revenue, though we have our targets in place, but these are going to... So, we want to do something which nobody has done into the market fielded in the film side, especially on the home, or the home buyers.

So, will this be a B2B or B2C focused segment?

It is 100% B2C business. It is direct to consumer.

Got it. And so, any idea on U.S. demand right now in Middle East? That's the last question. Like, how are we looking at things on the ground?

See, in U.S., I mean, our global... Thank you. Thank you. Distributor and order flow is really strong that we have seen in Q1. I think that is one of the reasons you see very strong numbers for us because we focus where it really makes sense into the market, and U.S. market is really doing great, and we expect that to continue to do so. And Middle East, actually, growth and demand is really big. But unfortunately, we are facing some challenges sometimes on the deliveries because the situation is every week there is a change in the situation. But we expect, we are talking here, I mean, three-year, five-year horizon. These two are like one of the fastest growing markets for us, including India.

Thank you so much, sir. All the very best. I'll get back to you.

Thank you.

Thank you. The next question is from the line of Aman from Stallion Acid. Please go ahead.

Hello, I hope I'm audible, sir.

Yes, you are.

Thank you so much for the opportunity and congrats on a great set of numbers in a challenging environment. I have two questions, sir. Number one, if you can update us on the tariff refund claims, how much has been received so far, and what's the balance amount we can expect going ahead?

Yeah. So, you know, the quarter one where we are discussing currently, there was no impact of tariff. I mean, we didn't receive anything in the quarter one. However, we have received roughly 30 to 40% of what we are expecting in quarter two. And this will be taken into quarter two performance, right? So, quarter one performance is purely on the company's real natural performance. So, there is no change on that. So, that's one thing. And I think we hope like entire refund will be done in quarter two of this year.

Understood. Got it. And my second question is, with our D2C initiative gaining traction globally, and also on the domestic front with the support of anti-dumping duty, our premium product mix are improving and just being a manufacturing V2V company alone, now we are seeing involvement of consumer facing branded as a share improving for us. How should we see, sir, structurally growth for the next 2-3 years for us? Are we entering into a higher growth phase sustainably, sir?

I would say yes, because like we said, we are very confident of 2,500 crore plus for this year. And going forward also, we will maintain 15 to 20% guidance, which we have given. So, we can say in three to four years, we are going to touch 3,500 crore. I mean, this is our estimation, right, based on the current situation. And our margins will definitely be 25% plus on these things. It can go. We'll try definitely to go higher and to reach the current numbers because this has been very normal what we achieved this quarter. So, similar things will continue for us. Now, D2CY, I mean, let me tell you, this company is now we are thinking we have built a manufacturing excellence. We have R&D excellence. Now, you know... Then what happens is you compete, you continue to compete with your peers. Like, you know, you, you, I can't name them, but take up top three companies in US, right? People compete with them. But our strategy is different now, because if we keep on competing, we will get shared and sometimes we lose also. So we are now trying to create a different market for us. That means when we compete, for example, there is a film called Safety Film, right? There are standards of that A class, B class, and some other class. So what we are trying to make a class which is not made by anyone. It gives you a very different experience from what we got into the past. So this kind of creation into the market is making a very unique proposition for Garhwari. So this kind of awareness and I would say creating our own market will really help. Especially in US, Middle East, and India markets, people, there is a very low awareness into architectural products. So we are now trying to compete these things even with the glass companies like what they do and what we do. So we need to create market for that. We can't just keep on taking share from others and grow because there will be a limited growth. If you want to really grow 3,500 crores and beyond that, we need to think differently where we give alternative solution to the glass. So that kind of thinking company is working on the growth, whatever comes naturally is great. But on top of that, we are creating this kind of environment within our company, manufacturing setup to that kind of growth. And we are very confident that we will be successful in that because we are already seeing this kind of positive traction towards. towards this growth.

Got it, got it. Super. And so just one last thing on the TPU line, when it gets commissioned in Q3, how much more margin expansion we should expect in Fi28?

Yeah, so we have given a guidance of 1.5% to 2% after this line comes into stream, of course, for FY28. So the guidance is already given to that. But our aim is to make newer products out of TPU, which, let me tell you, Out of this, three products are already in target, and some of them have already been, I can say, trials and discussions have happened. So, as soon as the line comes, we are ready to take it off.

Understood. Thank you so much and all the best. Thank you.

Thank you. The next question is from the line of Rahul Jain from Credence Wealth. Please go ahead.

Thanks for the opportunity. Sir, condolences on loss of Saritama. And, of course, a very good set of numbers and the journey has been amazing for the last three years. So, congratulations to the entire team at Garawai. Thank you. Sir, my question is, yeah. So, my question is regarding one, the first question. You mentioned architecture business has already crossed more than 25%. Thank you. So basically, that means in this year, and this is for quarter one, I'm assuming. So this year, we are already in the run rate of around 600 crores. Is that a fair assumption? So going ahead, how do we look at architecture film, which is supposed to be our highest margin product?

Yeah. So, like I said, the company's focus is towards that only. So, we are just trying to make an infrastructure where we do, you know, compete with the, I mean, our philosophy is where there is a glass, there can be a film, right? I mean, if it is a high rise, it can be a safety film. If it is like sun facing, there can be a sun control film. If it is interior, there will be a decorative film. And if it is a privacy, there will be a PDLC film. If it is a bathroom, there will be a different kind of film which protects glass from shattering. So, we are now working on this strategy that wherever we get opportunity, we directly compete with that, like a glass and a glass with film. What difference does it make in terms of value proposition, in terms of, you know, the heat rejection, in terms of UV rejection, and ultimately the impact on environment when you produce a glass and when you produce a simple glass with a film. So, we are really, really getting very encouraging results. So, this remains the number one portfolio for us in terms of growth. So, where the company is fully focused on, and these architectural businesses really supported by TPU as well, where we have various kind of architectural products made by TPU, which we will see shortly, maybe from next year onwards, we will see traction of these products from next year.

So, sir, going ahead with your TPU expansion getting completed in, say, October, and whereby 25% of it will be for external space in use, and then STF also coming in the first half of next year, plus the PPF line which came in September 25, given what you have mentioned in the answer to one of the previous participant questions. So, can we look at, because of all these expansions going full throttle, do we expect the 3,000 crores of around top line for FI-28, 3,000 crores plus?

Yeah, we can, see, we are here to, definitely I have given you the guidance that in next three to four years, we will be somewhere around 3,500 crore. So, of course, in the journey between maybe two years after, we can see 3,000 crore number that is in horizon, yes. Sure.

And what is the current utilization of PTF, sir?

Utilization.

Yeah, the utilization of PPL, the new capacity.

Yeah, so PPF old is running almost 100%, and the new one is running at the rate of roughly 60%. We lost some volume last time, last quarter, because of some delays in the shipping, because I would say ship got stuck in Jebel Ali because of the war. I mean, it got stuck. So that's why we lost some of the volume, but that we will recover in the coming quarter.

Sure. Okay. Thank you so much, sir, and all the best.

Thank you.

Thank you. The next question is from the line of Svecha Jain from A.N. Svelte. Please go ahead. Hi, sir.

Thank you for giving this opportunity. Sir, am I audible?

Yes, yes.

Okay. Sir, typically for architectural product, what is the margin? Because they are the highest margin products, right?

So, they are highest if you talk of the top to top. That means, you know, if you talk of very high-end IR ejection on automotive versus architectural, yes, they are the highest one. But they also have like the products which are like you just want to cover your building and all. So, if you talk of like Apple to Apple, same kind of, you know, property, yes, this is the highest margin product.

Okay, so what I assume is overall the architectural segment that we will be doing, the margins would definitely be north of 25 percent?

Yes, definitely.

So the reason I'm asking is because, you know, you have guided us a margin of, you know, you're saying that we maintain a 25% margin. But what I understand is, and correct me if I'm wrong, A is architectural segment will obviously command a margin of 25% higher blended overall. The TPU line that is going to come, that will add 1.5% of extra margin. Plus, I believe the products that we do in the TPU. There will also be some specialized product, which will also, I don't know, you know, they will also themselves command some higher margin. Plus, the new SCF line will also, it's an automated robotic line, will also increase your efficiency there. So, I feel 25% margin, you are just being too conservative. Am I correct on that?

We are happy to say that we are conservative because we have seen times when something unexpected comes into the market, but definitely everything remains good. We are definitely going to perform what we have performed now because, you know, like I said, many people anticipated like these margins might be because of some exceptional thing has come from U.S. and other things. That's why I have clarified this is purely a performance, nothing else. So, of course, we will, when I said 25%, plus minus 2%, so 27-28% seems to be a very logical number for us. But since we have given the guidance, we would like to maintain that. Definitely, we will perform better than what we have said.

Okay. And, sir, this SCF of 191 crores, what would be the asset term, peak revenue that we can do from the SCF line?

Uh, that will be roughly 500, 550 crore.

All right. 550 crore, top line, okay. And then from this SCF, sir, how much, uh, we plan to do, uh, for the automotive and how much we plan to do for the home solutions, like a broad mix?

Uh, see, ma'am, uh, what happens is these lines, uh, normally, uh, we have already five lines, right? This will be like a six. And then we have PPF line. So, we have like many. So, what we do is we focus our team. Sales team focuses on their own because we do not have any mix. Like I said, our sales team in terms of architecture is very different from automotive because their way of thinking, their, like I said, where we need to compete is like very different segment. We need to think of a glass manufacturer kind of thing. So, when we go into the manufacturing, they do their job and put their growth on. Then we decide how do we allocate these manufacturers. We need to take advantage of the operational excellence. So I can say whatever the number we say, like 25-30%, now this will go to 35% architectural. So all new lines will take 30% of that because this is how the products are manufactured in our company.

Right, right, right. And so we mentioned that new products on the TPU, the ceramic coating and other products that we mentioned in the presentation. Are these all products on the home solution side?

No, like when we talk of, yeah, they are like, so some of them are home. Home solution means whatever you can use in your home. Like ceramic coating and graphene coating, they are on the automotive, on the car, right? So in home solution, you will see sun control, you will see surface protection, that means sofa and all those things. Then you will see like coating for the doors. Then there will be many products which are actually used in home. Yeah.

Okay, okay. So, these products that you mentioned in the presentation on the TPU side, can you help us understand what is the addressable market size for the products that we plan to launch on the TPU side? Because the line is going to commission in Q3, right? So, what is the referable market size there?

Actually, honestly, for TPU, such kind of products, As of now, in India, there is directly, there is, I can say, you need to create a market because these products are like for when you compete with the substrate PVC versus TPU. So, TPU is a much better product in terms of environmental sustainability, in terms of stretchability, in all those things, right? Right? So, currently, what we produce, the market size is much bigger. We can talk of something, you know, like, I won't be surprised if I say, like, this is easily 1,000 crore, but we need to really get there with our products and the timeline, right? So, and that will grow, because it's not something, as I said, we do not do anything. If you see our company history, we do not do something which is already available, and we jump and take share of something. Good morning, everyone. That's what we have done when we did the PPF, right? We created a market. People initially were skeptical of that, but finally they believed that there is a market of PPF. Now, the whole world wants to jump into PPF, right? Similarly, in Sun Control, now on TPU, right? You know, we know because we see the trends all around the world, and then we see what better can be done even from the U.S. and other players. How can we do better? Because our R&D is a very unique proposition. They think much. Different than the market. So let me tell you, this total addressable market is very big, and we may not be able to supply in the initial years for that.

Can you give me a geography-wise sales mix for the CPD division for this quarter, and what was it, you know, in FI 26 Q1, both value and volume-wise?

I think that if you can write to…

I'll take it. Yeah, I'll take it. I'll take it separately, no problem. And so what was the… Sure, sure. And what was the sales for Garware Home Solutions in this quarter?

See, that is actually just the beginning. Very minuscule, let me tell you. But that is going to gain traction. So we have internal targets for next year and year onwards. So we'll talk going forward on that. But that is doing really, really well. Okay. Okay, okay.

And for two small clarifications, sir, see, you said you are going to open 50 or 15 stores in FI27 for home solutions? I couldn't get that. 5-0. 5-0, right? Okay. And, sir, for the tariff refund, I didn't quite understand that. You said in Q2, we are going to get the entire tariff back or just the 30 to 40% of what we are likely to get? Just that clarification I wanted.

We will get full in Q2. That is my expectation. I said, till date, we have got already 22.

Okay, till date, we've got. Okay, okay. So, could you...

That is not included in any of the performance because this has happened in the month of July.

Understood. And, sir, would you be able to quantify this number? What are we expecting in Q2?

Yeah, see, the thing is, whatever refund we will get, we need to share with our customers in US, some of them. So, if you talk of net number, I expect anywhere around 50 crore plus should be with us.

Okay, okay, okay. Thank you, sir. Really appreciate it.

Thank you.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Pratham Kankaria from Quantum EMC. Please go ahead.

Yeah, hi, sir. Just one thing. So, firstly, you know, condolences on the loss. So, with GHS, you know, you are moving closer to the end consumer. So, can you elaborate means? How this strategy could impact our existing distributors and installers? Like, you're moving from distributor to this, not moving, but you're kind of shifting some of the model. So, have you witnessed any resistance from channel partners, and how do you plan to maintain this engagement?

Yeah, definitely, there were some resistance from all of them. But, you know, what we explained and what we have successfully done, they are doing better business than what they used to do in the past, right? That's the one thing we have ensured by various engagements that they continue to do better than what they were doing. So one of the examples like GHS products are very different as compared to your normal sun control distributor model because honestly, the distributor in the past we have seen, a couple of them are really good. A couple of them are just stockists. They just stock the material and send. And the company's vision of, you know, growing and growth and everything, mindset, right, some of them were not able to get along with that. So, unfortunately, we had to take tough call on that, right? So, we had to honestly shut some of them down, right? And that really helped the company to grow. If you are seeing this growth in the last three, four years, this is one of the reasons that we wanted people who are dedicated and passionate like our team is, like the company is, right? So, we had to take a tough call and we don't shy away from taking such calls. So, that's number one. Second thing is, the product line in Garware Home Solution is entirely different. It is directly controlled by the company. So, that means these products are very different in terms of their properties, in terms of, you know, their transmissions and all those things. That's why there is no direct conflict. Now we have made sure that this happens, right? Some of our general partners, they want to become a GSS also. So that also we have ensured that they get the enough chance to represent that. So that's why we have made it win-win for both of them.

Okay. Thank you.

Thank you. The next question is from the line of Sriram from iThought PMS. Please go ahead.

Thanks for the opportunity. What do we look for before partnering with any interior design tools or firms for setting up our Gargare home solutions?

Sorry, I didn't get the question, please.

Yes, so when we are setting up Garwale Home Solutions, partnering with any interior design store, so what do we look for before designing the partnership?

Okay. So, what we look for, because this is a business which is related to home, retail homes, right? So, that's why we look for partners who are already, they have a presence in home furnishing or glass or something which they are already doing in that segment where this film complements the home solution. So that is the primary requirement. Along with that, we check, of course, the other legal things like financials and all those things. But the primary requirement is he should be influential or very well connected with this kind of business, which comes like I gave you example of furnishing, glass and other interiors, bath fittings, all those things are a natural fit for us.

Thank you. And in PPS, apart from M&M, do we have any, like, any other OEM have authorized us, and are we the only PPS company that has been authorized by these OEMs?

See, we have like five OEMs with us, and some of them, we are the only one, and some of them, there are all. Like, some companies have a policy that they do not have one vendor. So, for that, they have another one, but we proudly say that we are the only official high-quality producers in India. So, that is the thing which is making India is the key thing for them. So, that's why we are a preferred supplier for many of the OEMs.

Thank you, sir. And the last question, connected with Garverai solution, the model is typically like what we did for PPF Garverai solutions, like we just give the products and discount to the partner, and what else is our contribution with that?

See, this is a little different model. Garware Home Solutions, in Garware Application Studio, it's a dual model, where some products are directly supplied by the company, some products are supplied through the distributor. But in Garware Home Solutions, it's totally different and fully controlled by the company, right? All revenues and everything comes to company, and company then distributes it. So that's the basic difference. And it is a much more, I would say, growth-oriented, aggressive, and, you know, that takes the company's strength into top. which is not available into the market, that makes a unique solution for company and the, you know, Understood, sir.

Thank you very much.

Thank you.

Thank you. The next question is from the line of Duaneel Desai from Turtle Capital. Please go ahead.

Hi, good afternoon, everyone, and congratulations for a very strong set of numbers and condolences on Ms. Karwar is passing away. So my first question, Disharjee, is that, you know, I think we have started focusing on the D2C part significantly. I think in last call, you mentioned that by FY28, that part will become quartered on crores, and margin that is significantly different. So, when you say D2C, does it mean the PTF India plus PTF International and Darwari home solution all put together?

Yeah, actually, yes, D2C model is right now already running in US and already running in GHS. So, we are expanding that to other territories as well. So, in fact, I mean, this business can be even bigger because now we are putting more efforts into that. So, it can be bigger than 100 crore. Because we have seen the success in last even three months as well. So we are seeing a much better traction into that business. So definitely it can be bigger than that.

And second question, I think you talked about the new products based on TPU. I think PDLC and Graphic, we have already launched and maybe a couple of more products, you know, ready to continue. So, again, you know, we have had a very strong capability of developing product and then scaling up as demonstrated earlier. Do we think that each of the products that has 400, 500? 600 crore kind of a scale-up potential, and that is how you choose, or some of these are very niche products, and some are scalable. How do you look at the entire product that you are learning?

See, if you are talking specifically about TPU, so if you give us three years timeline, definitely this is a scalable beyond 500 crore business. There might be more capex needed for that, which we will do in time, right? So as of now, the focus is to commercialize both kind of products. It's a mix of some of them are like a high volume product. Some of them are a very niche product, right? But both quality remains at the top end of our mind, right? So that's how we design the product. Yes, it has got a potential beyond 500 crore. That's how we are targeting 3,500 crore in coming years.

Thank you.

The next question is from the line of Dixie Jain from InGrade Research. Please go ahead.

Hello. Congratulations on good numbers. My question, first question was regarding the raw material prices. How have the raw material prices moved in the last... And how much effect are we seeing on our margins because of that?

See, raw material on our consumer products, there is like the real impact. If I say correlation, if I talk, it's only 10 to 12 percent, direct correlation with the top and raw material, right? Because there are... 10 components which we manufacture on our own, right? So their raw material to the end product ultimately reaches only to 10%. The rest, there is a value addition, there is a lot of effort going on inside the company. So there is hardly any impact. But at the same time, when it is a direct impact, like when the crude oil chain, Nesca, Xylene, and all those prices increase, so raw material increases, that kind of impact is directly passed on to the consumer. Of course, after talking to them, convincing them, there are negotiations, there are discussions, but that is taken care of. So, there is, whatever impact was there, definitely that has been taken care of. See, we are no longer a company commodity where your raw material, if prices increase, you will take advantage, and then when it goes, you will take a hit on inventory. So, we are, like, beyond that. We don't directly, like I said, the correlation has only remained till 10%.

Next question is regarding a white labelling business. How has the mix changed for export for white labelling compared to our products in the last one year?

Both have got a similar kind of growth, right, because that is again a key part of our strategy, where we remain very high-quality producers for our customers, right, and they have been added into different geographies in the last quarter, but we also added a lot of Garware and global brands. So, put together, I see similar growth. I don't see any change in life. They have grown faster, we have grown faster. So, it's like a similar, what we are seeing.

Thank you for taking the question.

Thank you.

Thank you. The next question is from the line of Deepak Ajmera from IGE India. Please go ahead.

Yeah, hi, thank you for the opportunity and congratulations of course for the set of numbers. My question is, we have missed margin expansion in this quarter as addressed previously. So apart from, let's say, product mix, is there anything else as a major driver behind that?

No, like I said, this is like, sorry, so, in terms of, you are asking whether the performance of 30% plus gross, sorry, EBITDA margin has come from some exceptional items, if I understood correctly?

So, I want to ask, apart from product mix, has there been any other contributors which has contributed into modern expansion?

Uh... Not really. If you have a question, like, you know, this margin expansion normally has happened because of better product mix. But at the same time, you know, when you say better product mix, you are talking of the same basket where you choose the better products. But here, the strategic focus has been towards like high-end products. Of course, that is again a product mix. And the shift towards architectural business for us. So these two, one is the product mix, and then a strategic focus towards the growth, where we are creating market, making awareness, and selling more of such products, right? So that's the reason of margin expansion.

Got it. And since our new lines are coming into Q3, but yet we are guiding towards 2,500 kind of revenue, which let's say quadruple it this quarter. So are we not expecting any kind of let's say contribution from new line in this year?

No, because if you really see this TPU line, which is coming in Q3, so that, you know, that is mainly 75% goes to our PPF, right? That's a backward integration, which will add to market. That is one. And second thing, 25% is earmarked for the new products. And on their success, we will plan the further growth of the company, right? So, if you really see, there is no material impact in this year in terms of volumes because only TPU is coming this year. Now, the next is sun control, which will come next year, which will hit next year, FY28, which is H1 of 28, so say almost a year from now. So that will definitely add, which we have given already the guidelines that we are going to grow with the minimum, like average CAGR of 15 to 20%. So we have taken account of these things. Right. And just to remind that we are not a typical commodity company where, you know, one line comes and suddenly your volume will jump and margins will drop or revenues will increase. We are focused on a very high segment specialty product. The company's growth, whenever we are talking of these like 2,500, 3,000, 3,500 crore, these are all a very special product with a similar kind of EBITDA margins. Right. So, our focus is not just to run the top line by putting a line and sell the product at, like, you know, with the competition at a price world. All the products which we are producing and will produce will remain to be very niche and, you know, special, which will give a special experience to our consumer. That's the thought process.

Okay. Thank you. Thank you.

Thank you. The next question is from the line of Sanjay Shah from KSE Securities. Please go ahead.

Yeah, first of all, I accept our condolences on said demise of Saritana. So my question was first to appreciate the team Gharware on the... And more towards the R&D division and your sentence which I take that is seen differently. So can you, sir, elaborate, will it be possible to elaborate on that what other things what we see future, like what you explained about glass and PVC, TPU replacing PVC, anything else which you can elaborate where our thought process is moving ahead?

Sir, I would like to request a meeting through our IR, and I can explain. Because, you know, these things are beyond certain point, the strategy will become, you know, very public, which we can't say in the forum. But like I said, I just said, whatever I said, it's like just a thought process that the way the company thinks. Like I was just talking to the previous, answering the previous question. We do not want to be a company that produces products which everyone produces and there is no real value to the consumer. We think differently. We think like how we can give a new experience to a consumer in a different way. And the product, all the products will be very niche and that's how the company thinks. Like there has to be a value creation to the consumer. So that's the way we think. And in that process, we have lots of ideas where we are working, we do brainstorming, we do think differently. That's how we are here. And that's how we forecast that we would be in future. So that's the thought process.

Many other products what we have launched and what we are even planning to add the capacity. Which product you see which carries, which can highest become a meaningful revenue contributor?

That would be definitely TPU. TPU would be one of them.

Thank you.

Thank you. The next question is from the line of Gopal Krishna from Uttar Anush Investments. Please go ahead.

Yeah, thank you. Thank you for giving me this opportunity, and congratulations on an excellent set of numbers under extremely difficult, difficult conditions, and I can appreciate clearly because I hold shafts of some other companies which have similar exposure but different industries and they are struggling. So, really hats off to the entire team for fantastic numbers, I can tell you that. So, now confidence in our company grows from strength to strength now, in my case. No, actually, I have a few questions on Varvare Home Solutions. Actually, I see very low visibility in the market as a consumer. Supposing I buy an apartment, I don't know that I have some GHS product that can be installed and that will be beneficial in my apartment. So that visibility, maybe you can hire a brand ambassador or something to give more visibility to the product, and next, because you are talking about direct-to-consumer, I feel that visibility has to be definitely improved. Yeah.

So, sir, actually, the answer lies in your question. That is how we thought about Karware Home Solution, that even if a home buyer, when he wants to do something, he is not aware what to do in terms of his heat, which is coming to his home, how to control his air conditioning, you know, the bills, and how to make his entire experience, which is without UV rays. That means your fading of your sofas, curtains, and everything, and at the same time, saving your skin from skin cancer, right? So, all those things, like, you know, that's how the concept of Karwari Home Solution came to our mind. Now, since this is just, we just started, I mean, it's five, six months, a lot of, you know, we are just trying to make the right set of model for that, Which is already, we have started sales and we have like nine in pipeline, 50 will be like in next six months, there will be more 50 home solutions in this. And you will see what you are saying, you will see lots of influencing or videos where you can directly order these products online. So this campaign is going on. I mean, we'll just start maybe another 15-20 minutes that will go live. You might see them on OTT and all those places as well.

The second thing, now government has come up with some regulation reform regarding e-commerce, especially for export. The e-commerce service providers can hold the stock and do the export. And I find that Germany is the number three market in terms of luxury car. And I'm not sure how much presence we have in Germany. So, putting all these things together, the e-commerce talking and Germany market, will there be any, our country's, you know, FTA, proposed FTA with EU, all these things, will we have additional market in Europe? Which we already have, then that's fine. But in my view, I think, is it possible?

Very relevant question, sir. Let me tell you, like, that we have a dedicated person, a German guy, working in Germany for us. And he is one of the best installers in the world, we can say. And he has recently given us a really good volume. We are really growing in that market as well because we have people. We are there, right? Beyond that, I can't explain you much on that, but definitely this is a good point, and we are really, really going good in the German market.

Fantastic. And in the e-commerce talking, sir, can you, any advantage will be there for us? We will ask.

In terms of... And all, definitely we will be directly, this will be direct advantage to us. But in terms of e-commerce and all, we'll have to see because Europe, we don't do, see, one thing about our company, we can always think of best product and the way to sell it. But one of our major thing always is the compliance. We really want to check everything, whatever is the right way to do business in a country, right? That process is going on right now. And soon, there will be something on that. I mean, we are evaluating that option for us.

Okay, sir. And then one more question. The R&D expense at the percentage of sales, how much it is now, and what is the target going forward? The R&D is the key pillar for this company. That's why I'm asking.

Yes, sir. So, definitely, that's like a backbone, and that's how our R&D team is round the clock with us, understanding the concept and everything that they go back. So, there are different segments of R&D, right? So, just one second, I'll take from our finance guys, the expert.

Hello.

This expense, R&D expense, if we talk of our revenues, it's... It's, like, in the range of, I can say, 3 to 5 percent, and, yeah, so, but that is, like, very variable. We are continuously monitoring that in a way, because some of our R&D comes into, you know, manufacturing as well. So, that's why real, I mean, numbers is difficult to judge, because some of the products, when they are commercialized, they go to our production side. Okay?

Okay. And then about the sun control and TPA, what is the capacity utilization?

Sorry to interrupt Mr. Gopal Krishna, may we request you that you return in the question queue for any follow-up question?

Yeah. Okay, this is capacity utilization and that's all.

Sorry, sorry.

Keep going. Anyway, please proceed.

Thank you. The next question is from the line of Nikhil Chaudhary from Toro Wells Managers. Please go ahead.

Hi, Deepak Ji. Namaste. Thank you so much for the opportunity and congratulations on a great quarter in a challenging environment. I have just two questions. Most of my questions have been answered. Just wanted to understand the kind of opportunities that probably we've been targeting have a very large time and with our exceptional product quality. Just wanted to understand what is the bottleneck to growing beyond, like, say, 20%. We've been consistently guiding 15-20%, but the time for our work has been expanding in a very, like, considering the markets also you are entering and the products also that you are entering, including the Garwari Home Solutions. So, is it the manufacturing? Is it property distribution? Is it the applicator availability? Wanted to understand this. And the second. One is, just wanted to understand your thoughts on how do you plan to probably, like in the TPU, any kind of products that you can give quality on, like what kind of products will that be? I may have missed the answers on that, but if you could just help me understand that. Thank you so much.

Yeah.

So, uh... It's like you said about the TAM, right? So the biggest challenge in TAM is what you are considering is something which is like you are thinking, I'm thinking, right? A consumer needs to be educated for that, right? Sometimes I meet consumers or big customers who think like, you know, when I explain them about the glass, what a film can do, a glass, then he gets amazed. Oh, really? I didn't know that. So, you know, this is our biggest challenge. When we talk of TAM, see, again, there are two things in the market. When you say, I'll take the market, then if a new entrant comes, most of the people, they try to attack Garware. Let us do that. Similarly, we may be doing to some other company what they are doing from America, right? But our thought process has changed over a couple of years. I can't divulge this information, something where the addressable market, right, we are making those campaigns, we are like, there is one government authority, and we did, last month, we did, we called all of their employees, and in only one department, there were 75 people came, and some of them were with their families, right, so we explained them what we are, like how do we work, and what a film does to a class, Like I said, it can save the class right from spelling. Use the heat. Contact 100% from ultraviolet rays from the skin cancer. So, so many things can be done. So, we are taking those mass scale things, but we cannot go to consumer like Garhwari Home Services because it will take time where you need to educate the consumer. What we are doing is educating the authorities or the people who are influenced like thousands of people. So, such kind of campaigns are going. That's why we are conservative in our top line despite being tam. See, obtaining top-line growth, I don't think that's a challenge. We can do it tomorrow. We can sell so many products, run the line full, and do that thing. But what we want to do is we want to create some niche into the market, right? The product, because later on what happens, a product which reduces 99% of heat will be like 30-40% and we will sell it to everyone, right? So we don't want to do that. That's why we are taking time. But our addressable market, we will be, I think, in another one or two years time, it will be faster for us to gain our top line momentum into this market. So that's what the challenge for us. We hire people in terms of those who do study for us, and then we also hire people who really make it happen to make the product at a very, I would say, a cost which can be easily afforded by consumers.

Got it, got it, got it. And out of all the value added products that we have added in last few years, and we've been adding, what has been the, like, maybe say, like, assumptions that probably you feel that probably has been underestimated and it turned out to be even larger opportunity, considering that you've been creating market in a lot of products. So, because initially also, you are also not sure of how the market will accept and just time to understand how else our decision making evolved with those assumptions being probably altered and on the way we have also changed ourselves. Just wanted to understand.

See, what we do is like, you know, like our team, now we have a substantial team all around the world, right? We have like South America, North America, USA, we have a big thing, we have offices in. People in Europe, many European countries, Middle East, right? So our session is like two different things. We do not have only salespeople. We have a business development team, right? So what they do is they try, they understand the challenges into the market. For example, if a product is there, I tell them, okay, what is this, what do you think about this product? This happens on a daily basis, right? Say, go to the market and they come with a different challenge. This is a, if we have the product with this particular property, right? So, it will be like. Everybody loves that. Then we re-verify with other places. So there is a team, business Product development team in the R&D, right? And then we decide like there are, let me tell you, we have 20 product lines as of now in our mind, right? So we prioritize based on their commercial nature and based on their time, like which makes more sense. But we do not want something which is, which cannot be like there has to be a value proposition also. If you make something, we should get returns on investment because R&D works so hard day in, day out. They need the real output of that, right? So, that's how we work. Like, we have a product line, then we prioritize on them, then we see what is, like, the addressable market. So, all things are there. Manufacturing capability, selling capability, and the real requirement by the market. So, there is a process which is evolved. We were not doing these things maybe a couple of years back, but now we are thinking like the global giants have increased their presence. Good thing is that they are now, because they are into the markets like most advanced markets, U.S. and all, so they have stopped thinking that way because that makes it a very difficult proposition in terms of chemical manufacturing in U.S. and then with a lot of compliance and all those things. So we are doing these kind of jobs for them.

Got it. Got it. Understood. Thank you so much and Abish.

Great. Thank you.

Thank you. The next question is from the line of Ishid Desai from Ford's family office. Please go ahead.

Yeah, thank you for the opportunity, sir. And congratulations on a very good set of numbers. Sir, my first question is on the Garhwari home solution side. Just want to understand that the product range we have, does all of them also need an applicator layer or an expert layer rule then? Or are we also working towards do-it-yourself sort of products as well? I mean, what does the product market look like?

Yeah. See, we have most of the products where you need a professional applicator, because some of the products are really expensive, and doing yourself definitely doesn't work, especially in countries like India. But in the U.S., we have a lot of products which are DIY in nature. They are sold online, and of course, they buy two times. One, they try and fail, and then they buy. So, a couple of products are there, which are really game-changer for there, right? This is one of the highest selling products in US is like that. And another thing we have like some developments, good developments in PPF where we can do such kind of things for, not for the full car, but for at least some parts where you, which are prone to damage and all. There we have DIY products because then you don't need so much of, you know, expertise in terms of wipes and in terms of water, in terms of elision and all those things. So, we are working in that direction as well because when we go D to C, we need to have more of such products. So, we are aware of this fact and working on that.

I find my second question is on the utilization of cash, given that we are at about 850 crore balance already and more, and given that our incremental internal capital employee is also very superior with the new investments, any plans around devolving the shareholders with anything on dividend or buyback or even probably aggressive marketing towards, given that we are now focusing also on D2C, So, any thoughts around utilization of cash?

Yeah, it's a combination of these things. I think in a couple of months' time, there will be, like, first of all, we are working on some of, like, inorganic growth, where we have evaluated in the past. We are still evaluating if something makes sense for us. That's number one. Number two is we also want to make, you know, this system much more reliable in terms of our manufacturing capabilities because one of the reasons of our high margins is like we are fully backward and forward integrated, right? So, that's the key thing because we maintain our quality. No producer in the world has that capability where you make all the products by yourself so that you can control the quality and you can arrive at the best of the margins in that. So, to have that, we will need more capex, which we are working aggressively on. So, this is item number two. And after that, if you think, give us maybe this growth journey will intensify. Intensify, like I said, more like we are going to do more and more, you know, better things, top line growth and bottom line growth that is going to come. And this will be only possible when we have like to support that we need the real right CAPEX. We are working on that and we will come up with that. So, that's the priority of the company because we would like to utilize the cash to the right way so the company system becomes robust, right, from raw material to end product. So, there are many things which we need to do. We'll do that in coming... Thank you. Thank you very much.

Ladies and gentlemen, due to time constraint, we take that as last question. I now hand the conference over to the management for closing remarks. Thank you, and over to you, sir.

Yeah, thanks. So, before we conclude, I would like to reiterate our margins are fundamentally driven by our product mix as we continue to increase the share of... Our high-value specialty products, we expect our margin profile to continue improving over time. We remain focused on executing our long-term strategy, investing in innovation, expanding our specialty portfolio, and creating sustainable value for all our stakeholders. So, thank you once again for your continued interest, trust, and support of Garhwari Hightech Films. We look forward to updating you on our progress in the coming quarters. Have a great day, and thank you for joining us.

Thank you. On behalf of Garvare High Tech Film Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.