In an interaction with Dr S B Garware, Chairman and Managing Director of Garware Hi-Tech Films Limited
To increase our presence in India, we are developing unique products tailored to the local market, focusing on performance, specifications, and cost-effectiveness, asserts Dr S B Garware, Chairman and Managing Director, Garware Hi-Tech Films Limited (GHFL)
In recent quarters, the company’s revenue and profits have surged. What were the contributing factors to the company’s performance?
We started the year on a solid footing, despite the industry facing global economic challenges and oversupply. Our financial indicators remained strong, driven by a significant increase in demand for Paint Protection Films (PPF) in both our domestic and international markets. However, this positive momentum was somewhat dampened by weak demand for Solar Control Films (SCF) in key markets, largely due to economic, geopolitical and destocking factors.
Approximately 70 per cent of our sales come from international exports, of which North America accounts for 35 per cent and Asia (excluding India) for 20.3 per cent. Approximately 30.6 per cent of our sales are generated domestically, with the remainder coming from the rest of the world.
What is your outlook on the global and domestic polyester film market? What are the emerging trends and opportunities you are focusing on?
There are two major trends in solar control films: Firstly, there's a growing demand for designer films, which offer a wide range of colours, patterns and designs, allowing architects and designers to incorporate them as decorative elements into building facades. The second emerging trend is the development of security films, which strengthen windows against burglary and provide protection against flying glass in emergencies.
Innovations in the PPF industry span aesthetics, technical specifications and product performance. These innovations include self-healing coatings that repair minor scratches and scuff marks while preserving the gloss and underlying paint. Advanced UV protection prevents yellowing and fading. Finish options, including gloss, matte and satin, continue to evolve. Improved adhesives and liners simplify application and reduce imperfections. Tailored PPFs for specific car models and customised options for electric vehicles and high-end two-wheeler segments are also emerging trends.
Finally, the shrink film industry is prioritising environmentally friendly shrink films to meet sustainability requirements. In line with this focus, Garware has pioneered recyclable shrink films. Notably, GHFL has been certified by the Association of Plastic Recyclers (APR) in both the US and Europe for these environmentally conscious efforts.
For the past 2-3 quarters, GHFL's sales and net profit witnessed steady growth compared to its peers in the polyester film industry. What factors have contributed the most to your outperformance?
GHFL's consistent outperformance in the polyester film industry underscores our strategic focus on value-added films, which include products such as automotive window films, architectural window films, paint protection films, shrink films, low oligomer films and more. These speciality films accounted for a significant 83 per cent of our Q1 FY24 sales. With a wide range of high-quality speciality films, a fully integrated chip-to-film manufacturing facility and the ability to supply premium customised products to global customers, GHFL has shown exceptional resilience in the face of global economic headwinds. This is particularly noteworthy as the polyfilm industry continues to struggle with intermittent demand and capacity constraints.
Could you elucidate on the products you have launched recently as well as new product launches in the pipeline?
GHFL has re-introduced the 'Safety Glazing' window film to the domestic market in response to strong demand. This film offers improved fuel efficiency, exceptional UV rejection and protection against skin cancer and injury from shattered glass. This innovative product seamlessly combines advanced safety features with effective solar control, in line with government regulations on light transmission.
In addition, in response to the growing demand for environmentally friendly shrink films, we are pleased to introduce two new variants - 'Pearl Float' and 'Solid White' shrink films. This shift in customer preference, driven by a preference for sustainable materials, has led to increased demand for recyclable PET-based shrink films over traditional PVC options.
Our new product pipeline has immense potential in architectural films, supported by our strong R&D team. Trials are already underway for selected product lines and, most importantly, we've begun commercialisation in the European market, which is an important milestone. In the architectural segment, we're passionate about creating decorative and designer products that complement our flagship automotive films. This underlines our unwavering commitment to innovation and meeting the diverse needs of the market.
With inflation leading to a rise in input costs, what cost rationalisation measures are you implementing to safeguard profit margins?
GHFL benefits from long-term contracts with its raw material suppliers, which provide a degree of price stability. In addition, GHFL's speciality products give it pricing leverage, allowing it to pass on any raw material price increases to its customers with a time lag of a few weeks.
The Indian PPF market is still in the early stages. How does the company plan to tap this market? Also, what is your outlook for this segment for the next few quarters?
To increase our presence in India, we are developing unique products tailored to the local market, focusing on performance, specifications, and cost-effectiveness. We are also building an extensive network of business partners and distributors to ensure broad product availability, especially in the major Indian automotive markets such as Mumbai, Delhi NCR, Bangalore, Hyderabad, Pune, and Kolkata. Our partnerships already include more than 350 OEM brand dealers and we have plans for further expansion. To ensure flawless product application, we're building a robust ecosystem of trained applicators and state-of-the-art Garware Application Studios (GAS). We're also taking a leading role in promoting the PPF and SCF ecosystem in India by providing hands-on training to over 500 applicators through our applicator training programme.
The outlook for the domestic PPF market is promising due to increasing customer awareness of its benefits, including scratch resistance, hydrophobicity, and self-healing properties. Driven by rising incomes and the expanding premium and luxury car segments, there is a significant opportunity for PPF adoption. In addition, the rapid growth of the EV segment will further boost PPF adoption, as advanced PPF technology not only helps protect the exterior of vehicles but also improves battery performance, extending range and efficiency.