Garware Hi-Tech Films Limited ($500655)

Ladies and gentlemen, good day, and welcome to Garware High-Tech Films Q4 and FY '26 Earnings Conference Call hosted by Go India Advisors. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinion and expectation of the company as on date of this call. These statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Garima. Thank you, and over to you, ma'am.

Thank you. Good morning, everyone, and I'm Garima Singla, and it's my pleasure to welcome you on behalf of Garware Hi-Tech Films Limited. Thank you for joining us today for quarter 4 and full year FY '26 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; and Mr. Abhishek Agarwal, the CFO. I now invite Mr. Deepak Joshi 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. I hope you have had a chance to review the presentation that was shared earlier. Let me take a few moments to walk you through how the year unfolded for us. Garware Hi-Tech Film is at its heart, a story of trust, resilience and long-term relationships built over generations. While we have grown into a global enterprise, what continues to guide us are the sum of core principles, innovation, integrity and a customer-first approach. FY '26 was a year that truly tested these values. The global environment remained challenging with geopolitical volatility and elevated tariff structure across key export markets. The impact was seen in FY '26 full year with most impact felt during the third quarter. In such a situation, our response was not reactive but measured. We calibrated our offtake to ensure supply chain continuity and more importantly, to stand by our customers and partners and that made the difference. Despite the challenging environment, we were able to maintain our market share across key geographies, reflecting the strength of our relationship and superior quality competitiveness of our products. As the year progressed, this steady and disciplined approach began to translate into stronger performance. We concluded the year on a strong and positive note. Q1 was the highest ever profitability quarter in our history. EBITDA at INR 157 crores, up 29% year-on-year basis and margins expanding to 26.2%. Profit after tax stood at INR 108 crores, up 39.1% year-on-year, a clear reflection of our operating leverage, improved realization and a stronger product mix. For the full year, despite the headwinds, we delivered our highest ever revenue and profitability with revenue at INR 2,120 crores, EBITDA at INR 500 crores and PAT at INR 338 crores. This performance reinforces the resilience of our business model and our ability to navigate cycles with discipline. While navigating near-term challenges, we remain equally focused on building for the future. We continue to strengthen our value-added product portfolio with the launch of sustainable TPU-based UV printable films, PDLC specialty films, enabling privacy on demand and advanced graphic solutions. During the year, we deepened our market presence across both international and domestic markets through strategic customer additions and channel expansion initiatives. We witnessed strong traction in the U.S. and U.K. with the onboarding of several established distributors from competition, reflecting superior quality of our product and unmatched distribution network. In India, we further expanded our domestic footprint by onboarding 4 large OEMs in automotive segment, along with 7-plus strategic addition in our architectural business segment, supporting our continued expansion in the fast-growing B2C segment and enhancing our overall market reach. Alongside, our brand building efforts are gaining momentum with around 18 lakh annual website visits and over 8 crore impression annually across Meta platforms, strengthening our customer connect. A key part of our journey has been getting closer to our end customers. Globally, we expanded our footprint with 11 new global application studios, including in the UAE and the U.S. In India, our Garware Application Studio network has grown over 250 locations, and we are on track to cross 300 shortly. In parallel, we are building our strong consumer-facing platform through Garware Home Solutions with 6 studios already operational. We are confident of scaling this to 50 studios by the end of FY '27. On the manufacturing side, we have taken significant steps to prepare for the next phase of growth. During last few years, we have developed over INR 500 crores towards capacity expansion across 2 PPF, 1 Sun Control, 1 metallizer and 1 TPU and other ancillary lines entirely funded through our internal accruals, reflecting strong cash generation and disciplined capital allocation. We announced an additional INR 191 crore investment in a new Sun Control Film line, adding around 1,200 lakh square feet capacity, supported by advanced robotics and automation. Even after these investments, our balance sheet remains strong and debt-free with a cash reserves of INR 774 crores, giving us the flexibility to continue investing while maintaining financial prudence. Looking ahead, the upcoming TPU line expected to be commissioned by October 2026, will further strengthen our innovation capabilities. We are also encouraged by the recognition we have received during the year, including the [indiscernible] Council highest Exporter award and being recognized among India's top value creators by [ Dun & Bradstreet ]. As we look forward, the next phase of growth for Garware High-Tech Films will be driven by our high-value innovation-led segments, including Sun Control, paint protection films, graphic solutions, Garware Home Solutions and TPU-based new products. When we step back and look at the broader picture, our marketing momentum, disciplined capital allocation, expanding B2C platform, accelerating B2B growth and continued product innovation makes us well positioned for the next phase of growth. Thank you for your continued trust and support. I would like now to hand over to Mr. Abhishek Agrawal, our CFO, to take you through the financial performance in detail. Thank you.

Thank you, Deepak, and good morning, everyone. Let me take you through the key financial highlights for the fourth quarter and full year ended 31st March 2026. We closed FY '26 on a strong note with Q4 emerging as one of our best performing quarters. Consolidated revenue for the quarter stood at INR 597 crores, reflecting a healthy 8.9% year-on-year growth, along with a strong sequential recovery. EBITDA for the quarter came in at INR 157 crores, registering a robust 29% year-on-year growth with margins expanding to 26.2%. While the PBT stood at INR 142 crores, up 31% year-on-year, while PAT increased to INR 108 crores, up 39% year-on-year, reflecting the strong bottom line expansion and improved operating efficiency. For the full year 2026, we delivered a steady performance despite a challenging external environment. Revenue stood at INR 2,120 crores, demonstrating resilience in face of tariff-related disruptions in the key export markets. EBITDA for the year was INR 500 crores with margins maintained at INR 23.6 crores -- 23.6%, sorry, reflecting our ability to sustain profitability across cycles. PBT came in at INR 446 crores, while PAT stood at INR 338 crores, with margins improving to 16%. Importantly, our balance sheet continues to remain a key strength. We continued to maintain a healthy debt-free balance sheet with cash and liquid investments of INR 774 crores at year-end. Our disciplined capital allocation and strong balance sheet give us the confidence to pursue this growth while continue to enhance stakeholder value. Thank you all. I will now hand it over to Deepak.

Over to the moderator.

Over to the moderator, please.

[Operator Instructions] First question comes from the line of Mahesh Bendre from LIC Mutual Fund.

Sir, one housekeeping question. I mean, for full year, what proportion of our revenue have come from the Sun Control Films, paint production films and rest the commodity products?

Yes. So thank you, Mahesh. So our revenues for last year, I mean, were almost 50% from Sun Control films and both 25% from PPF and 25% from IPD. So that's like a breakup for last year.

Okay. Sure. And sir, the latest expansion that the plan we have prepared, so when this will become operational, which year it will start contributing to our sales?

So this new Sun control Film expansion, commercial production will start by June 2027. So that is Q1 FY '28.

Okay. So this will be -- I mean, are we -- I mean, this will be carried in the existing plant or we are going to set up a new plant?

No, no. This is entirely a new plant at the same location, but it's a new facility. Our earlier Sun Control, the earlier line, it will be adjacent to that line. But this line will have more features in terms of automation and robotics to take us -- I mean, it will be a new experience for our consumers for kind of untouched material, which we are trying to make from this new line. It will improve our efficiency. It will improve our productivity. At the same time, I mean, it will be entirely new experience for our consumers as we are growing at a very fast pace in Sun control business.

And this entirely will be export focused? Or is it domestic also?

So our strategy, if we see we focus on the both markets, I mean, both are important. But the ratios which we expect, like growth all across the territories, though domestic market will also grow but ultimately, it will be like 80%, 75%, 25% or 80-20 ratio between exports and domestic market. That ratio will continue because of the overall growth, which we are targeting for the company.

Sir, last question from my end. Sir, last year, our revenue was flat, almost from revenue that we reported in '25. So if we were to look at for the next 2 years, what kind of growth do you anticipate in terms of sales? And given the backward integration project is going to come off, what kind of improvement in margin to see next 2 years?

Yes. So we expect, like we have been growing at CAGR more than 20% for last 4 years, except in FY '26, which has been purely because of certain 50% tariff and which was almost there till the whole year around February 2. this all went up. So we didn't get enough time to recover what was done in the last year. So that's the reason because if you see 9-month performance was around 10% below our previous year FY '25 performance. But we did a great jump in Q4 by taking revenues and profitability to highest level for us. So that means this year, we hope that such situation is not there, right? So we expect minimum INR 2,500 crore revenue for FY '27, right? And we will maintain 25% plus/minus 2% of the guidance. Earlier, we gave 25% plus minus 3%. Now we are doing 25% plus/minus 2%, and we expect some margin improvement when TPU line comes on stream and with the growth of the company strategy now to direct-to-consumer, D2C business. That's why we have emphasized that Garware application Studios, global application studios in U.S. and Middle East and Garware Home Solutions. These 3 are directly to the consumers. So if you really see our strategy, D2C is supported by our strong campaigns, marketing campaigns, digital campaigns, where you saw around INR 8 crore impression from meta platforms only and website visit, which used to be like 5,000, 7,000 in a month. It has gone almost close to 1.7 lakh, 1.8 lakh a month. So our digital drive and the focus towards the consumer is the key focus for years to come and the direct-to-consumer is the right strategy. And another 1 thing we are doing, we are selling direct to consumer in USA PPA business also. So all those things reflect like the key strategies, D2C, supported by digital marketing, and third thing with the innovative new products like in Home Solutions, we are doing all Sun Control Films, but at the same time, prevail on demand, which are switchable film that means you can make your windows like fully OpEx, semitransparent and full transparent by click of a button. So these kind of new technologies, which will -- we want to make this technology to go to every standard homes in India and then it will go to abroad. So with all those strategies, I mean, our major focus is brand building and direct-to-consumer focus.

Our next question comes from the line of [ Dikshi ] Jain from InCred.

Congratulations on these numbers. My questions were mostly regarding, first, are there any exclusive partnerships that we have done with several OEMs or brands for our PPS sales in India?

Yes, definitely. We have 4 big partnerships with OEMs. That means OE -- direct agreement with the OEMs, so they take our material through their showrooms. We have 4 such strong partnerships and 2 are already in discussion and samples are already approved. So that is already there.

And what are the current utilization levels at all our facilities.

Yes. So our Sun control lines are running around 75% to 80%. So with current expected CAGR of around 15%, 20% growth there, which we are expecting for this year. By next year, we will be fully utilized. So that's why we have announced this CapEx of INR 191 crores for Sun control lines. PPF, we are running at the rate of around 85% to 89% at the current rate. So that also, we expect to go full and we will use some sensibility of the new sun control line and think of future expansion, if required on that. And rest TPU line is on target that is coming on October this year. So that's the operating rate for us as of now.

Last question from my side. The antidumping that was supposed to come on the cheap imports that are happening from China and Korea. So any update on that?

See, that might be a question. I mean there may be some interest or confidentiality. But the news is that they're all hearing submissions and everything happened, all visits what government officials too, that has also been done. So we expect a positive news pretty soon as fast as maybe this month or next month.

Our next question comes from the line of Rahul Jain from Credence Wealth.

Am I audible?

Yes.

So first of all, congratulations to the entire team of the Garware to the promoters also wonderful set of numbers and in a tough environment for the last 1 year.

Thank you very much.

So Deepak, we have been talking in the previous 2 calls about our focus on Middle East. So just to and we had formed a subsidiary which was supposed to get completed in this quarter 4. And we have spoken that various other strategies are being put in place, including on the marketing side and also whether how this subsidiary would further be available for some other options, including sales across other regions as well as there was a discussion about some manufacturing plant. So first of all, if you can talk about where are we in terms of sales today in Middle East? What are the various steps being taken? And where do you see Middle East sales going up in the next 1 or 2 years?

Yes. So see, we consider Middle East, North Africa region MENA, which is a growth -- biggest growth driver for us. As of now, let me tell you, the sale of that is roughly around $15 million. And we expect that our growth of around 25% to 30% CAGR for the year. So we are targeting $20 million to $22 million in -- during this year, right? So that's growth pattern. Now how did this happen? Like we said, we have a separate team, which is -- which comes from the top competition and the entire team is built in the Middle East, and they are growing pretty fast. The subsidiary has already been completed. The work has been completed. Now there is some -- already some work has gone into some kind of, I would say, manufacturing or some kind of value addition. That work is going on. And the primary purpose of that of any kind of unforeseen situation from anywhere in the world, like we faced last year, we are -- we will be well poised to cater our customers with this kind of flexibility. So that was the purpose, and we are well on track for that. So I've shared you like the targeted numbers and what we are doing there. And this work is in progress. And when there is any further update, we'll update you on that.

And sir, with regards to this CapEx, which we have announced. So PPF, we are already at 85%, 89% utilization as what you mentioned to the previous participant. SCF is somebody around 70 to 80. So -- with that understanding, I would have thought you must have already decided or thought about or discussing about a new PPF line. But before a new PPF line, we are going ahead and building up a new SCF line almost 30% capacity addition. So just to understand the scenario behind this, is it because the demand is quite robust in terms of SCF and architectures, which is a part of SCF, which is why we have announced this SCF expansion to going for 1 more PPF.

Yes. See, I will tell you, the growth in SCF has been pretty rapid. Of course, PPF is also growing us very fast. But next year -- see SCF means we are a very well-known brand in India and U.S. Global is a well-known brand for automotive. So you see that growth is always there despite like we have hit a quite strong market penetration on that. But at the same time, all architectural growth also comes from there. And if you see our new initiative, which is -- which are coming from Garware Home Solutions, which is like architectural is in a big demand. I can always say that the sky is the limit for architectural business because everywhere there is a glass -- film can be put on that glass. In architectural, it is the word because if you see the normal Sun ontrolled films, safety and security films, the films which are only previously on demand, and finally, the -- I can say, when you can see -- I mean, we make the products, which are dual reflective or reflective. So you see options are unlimited in architectural segment. And we just started that work 2, 3 years back, right? So we are growing pretty fast there with GHS on board and architectural other brands like we are on all airports now, railways now and big hospitality chains are already under our contract in last 1 to 2 years. this growth we are expecting the fastest. We might grow around 25% to 30% as well with the support of GHS and architectural business. So that's why the need for Sun control film came first. And another thing is sun control capacity is bigger than the PPF when we put a new line. That means PPF lines because of its speed and microns, it produces roughly 25 lakh square feet in a month, whereas Sun control film can produce 125 lakh square feet in a month. So what happens is when we put some control plants, that means fungibility, wherever we are sure that PPF will also go 100% utilization by next year, but we can do the fungible business, which we have done in the past for PPF as well in sun control line. So that's the retiral behind putting a sun controlled line ahead of a PPF line.

Okay. I thought there is something to do with even 1 of our large customers who just on yesterday's con call, mentioned about the environment changing from demand limited to more of capacity limited. That's the statement made by 1 of our large customers in yesterday con call. So maybe we are trying to build capacity somewhere and keeping that in mind.

No, that growth, I think, let me tell you, our growth has been phenomenal. And the large customer may buy because these customers buy sun control as well, PPF as well, right? So Sun control is -- see, let me tell you, I just answered the first question, like 50% of our revenues are from Sun control. So anyway, Sun control is our #1 -- like #1 product. And if you see the growth is also the fastest in that. Everything is linked to that, right? And building a Sun control line, anybody can say anything, but it's 1 of the toughest challenge that people have. And our lines, I can't tell the details, but they are so advanced that people can't compete with that kind of the operations done at 1 go, like they are built by our own team. They are very unique operations with all of that much Sun control machine, which nobody has in the world. So we know our Sun control business is a unique model, which is growing very fast. There is no stopping to that. And PPF, of course, is growing very fast for us. And with previous participant asked about antidumping and similar many measures are going here, Middle East and U.S. and especially direct-to-consumer is 1 of the first priority in PPF. So that growth is unmet. I didn't say that we will not put another PPF line. but we are continuously growing in Sun control, in PPF and of course, TPU as the backward integration will have more demand. So that will also be decided by the company where to move fast, but we are on a takeoff mode on all 3 products.

That's very heartening to know, Deepak, sir. Last thing on architecture films, you didn't mention much about our architecture. In the previous call, we had mentioned that we are about to do about INR 300 crores in FY '26. And that INR 300 crore moving to INR 400 crores in FY '27 and further to INR 500 crore in FY '28. Now given the changes which has happened in terms of the tariff changes and also your thrust on Middle East, do we expect this architectural films to be higher than the number which we have given in the previous call?

See, it's very difficult to give each numbers ahead. So what I'm saying is like we are quite confident to reach INR 2,500 crores for the coming year. And whatever we add into new products like graphic solutions, PDLCs and printable PPF and all those things, this will be definitely on top of that, right? So the growth which we -- and whatever happens cannot happen in a year's time. We are building the ground. That's what I said. The important thing is company's strategy for the future. The strategy is direct-to-consumer. The strategy is building stronger new product development, R&D and a channel, which remains there with the help of consumers, right? All others are definitely there. We are strong in I mean, B2B segment, we are strong with OEs because they like the product. They like the quality and on much bigger hospitality and other industries, including railways and airport, right? But our ultimate goal is to penetrate everywhere, but it should be -- the brand should be visible in terms of consumers. So that's the first priority. It's a digital penetration. So I'm giving you this number of INR 2,500 crores plus, plus a growth of 20% CAGR, which we have done in last 4 years, barring last year, right? So that will include everything.

OI Our next question comes from the line of Saransh Gupta from Swan Investments.

Am I audible.

Yes, sir.

[indiscernible] on a very good set of [indiscernible]. I had a few questions. So firstly, I just wanted to understand like how is the industry dynamics right now like with the war going on in the Middle East. So how has -- if we talk about from post January [indiscernible].

Yes. See, on the word, like somebody said, I will repeat, this is not the first war and this won't be probably the last war. The world will go like that. We -- as a company, if you really see, we have seen a COVID time when we really performed well where shipping lines were not available, people were not available, but we performed and we guided the company to new heights. Then came to the tariff situation. Before that, Russia was a big market, then there was a conflict and then I said this tariff, which was the biggest like headwinds for us, right? So now this Middle East thing has come. But let me tell you 1 thing, the good thing about Garware is that it has got -- it supplies over 90 countries in the world. So when USA is in trouble, Europe and Eastern Europe helps us. when there is a issue in some other part of the world, the other part has. In the Middle East reason, whenever there is a problem, we have like other areas which really performed well because I think somehow the material reaches there, but through different routes. So we have all -- and we are in touch with our customers. This -- and we are not feeling any negative impact. I mean, it's a supply chain is difficult. But ultimately, business is going as usual there. Again, even if there is a -- I mean, more trouble into that, but we are poised to sail through that. And in terms of like our sailings, we are -- in the past also, we have avoided harbors, and we have also avoided Suez Canal. It takes longer route, a little more on expenses on -- I mean logistics and all, but that is only a very small part of our sales. Like I said in our previous conference calls, when things were very, very tough due to tariff situation, I said that the company has a motto that we will not lose a single customer whatever it takes because we know it is there will be a brighter time we held on to that. We made our inventories to sustain in a way that whenever the project comes, people can refill, the customers can refill their inventories to lead -- to saI'll through it successfully. So same thing with all those things, we always think for future like how we can cater that market in the best possible way. And in the current situation, we see it's not as big as like the last year -- as big as trouble it was last year. So it is being handled very nicely, I can say.

Just a follow-up on [indiscernible] in the last con call, you did mention that due to the tariff, our inventories are at the port and we are just waiting for the tariff to side so that we can export out we can release those inventories. So how is the situation from the supplier end right now? Like at what position we are in the inventory?

So whatever we said, actually, that held true, and that's why we did a good job in second half of February and March. We released most of the goods, I can say. I mean, required by the consumer at that time. We still have a good, I can say, roughly, if we talk of the U.S. territory, it's around 16 million is already there. in transit plus warehousing, plus we are making more goods for the consumer because the demand and the season is coming, and it is 1 of the best seasons which we have always Q1 and Q2. I gave you the inventory numbers, and it's a good demand cycle going on. That's all I can say right now.

And second question is, sir, as you mentioned that from 6 home studios, we'll [indiscernible] in this year. So how big of this segment can it be if I see for at least 3, 4 years, 5 years, can...

Sorry, I was not able to hear. You are talking of Garware Home Solutions or Garware global application studios.

No, no, sir. Home -- Basically I'm talking about [indiscernible].

Garware Home Solutions. Yes. So like we said, we opened 6 in a very quick succession. And around 4 to 5 are already in pipeline due to the time schedule, we are opening them, right? So by end of this year, target is 50%, right, to open the 50 studios in different parts of India, right? And this is definitely -- the concept of this is as our distributors, dealers are pretty big in size to cater these smaller home buyers, we are opening these studios in every -- in neighborhood so that the smaller ticket side job can be done. Of course, it's a higher-margin job, right? And this -- the ultimate idea is the direct-to-consumer strategy that fits into our D2C model, direct-to-consumer model, where most of the work will be done through, I mean, digital both. That means the payments and ordering and all flows will be digital mode. That work is still into, I mean, making, but the market is really responding well, and we are getting great responses from the homebuyers because this is something new for them. They were never able to get these kind of small ticket supplies from us. And I'm very happy when I was in Delhi and [indiscernible] region and we opened there. I met many customers, and they said, small ticket side business from Garware, which is a big brand name, this is helping us. And we are using a lot of influencers to update people about these kind of new offerings. And happy to share that we are getting outstanding response from the market on this.

[indiscernible] the kind of value-added products that you made and [indiscernible] like how big this segment can become in future [indiscernible].

So as I said, we just started it in nascent stages and it's very like a digital-driven business. So we expect, like by next financial year-end, we should cross around INR 200 crores from the Garware Home Solutions plus other new products together because this all mostly would be part of Garware Home Solution. And going forward, our aim is higher than that. But at least I can say for next financial year, FY '28, we should cross INR 200 crores of business from Garware Home Solutions and plus added new products like PDLC and others.

Our next question comes from the line of [indiscernible] from JM Financial Mutual Fund.

Sir, my question is related to refund of tariffs from the U.S. government, which implemented earlier actually. So what kind of amount we are expecting.

See, this amount is definitely whatever we pay is being refunded. But -- and we are in touch with authorities also and we have opened the account. But this is like I'm not sure, I cannot guarantee because this is a government matter. And the time it comes, definitely I mean, then only I can confirm about that because it's something which is accounting-related matter. But let me tell you, when from 50% tariff, we did such a great job. We've only like maintained what we could do in FY '25. We manage that in FY '26 as well. Without tariff, I think we have a big, I think, a big way to go, and we are targeting like 25%, 30% growth there. So, on that number, I'm avoiding because it may not -- when it comes, it's like accounting, we would like to be conservative and whatever is in our end, we are focusing on that, right? What is the strategy for the company, how big that -- we are focusing on something which is in our end, we will not let that go. Like in our hand was not to lose a single customer, which we did. Now this tariff, whenever it comes, that's great. And we'll have to see like on the accounting standards, how it is to be put into our books. And some of them we might have to give for the consumers also, right? So -- but definitely, there will be a positive news on that.

Okay. And sir, second question related to this input cost rise. So there is a significant increase in the raw material cost. So just wanted to know the kind of inventory gain, we will be having -- are we like reporting the better margins in the Q1? And how we will be managing this cost increase actually?

See, we have like very great agreements with our consumers because we are always transparent with them. Like in the during tariff time also, we were very transparent with them like what should be the number, how will compete into the market. We are not the people like if there is a 50% tariff, we will put on our consumers and our customers and do away. We have always been very understanding. Same way, our customers are also understanding because the situation, we have a scientific method where we see the correlation between the raw materials, which is [ PTA ] and MEG versus our IPD products versus our CPD product. So in all that likelihood, we went to the market and discussed with them, and we were able to get that kind of increase from our customers in a very healthy and ethical way.

Okay. Okay, sir. And sir, in PPF business, can you tell what is the proportion between the direct-to-consumer and B2B.

So you mean margins between D2C and the -- I mean, big customers, a distributor. That's what you are asking.

Yes, you mentioned B2B as well actually in the...

Yes, yes. So in D2C, it is usually, I can say, 30%, 40% higher than the distributor margin. It depends case-to-case basis, how do we negotiate. But B2C is always better because then there are no distributors or dealers in between. You are directly handling those things. But in that the real cost comes off or your digital marketing and penetration, of course, the margins are definitely 25%, 30% higher than the distributor margins.

So revenue front what...

I'm sorry to interrupt you, sir, but you may please rejoin the queue.

Yes. Just last question. Revenue share I was looking for a from the D2C and B2B in the PPF business.

Let me tell you, this is just -- we started this campaign maybe 2 years back with Garware Application Studios, but Global Application Studio is we started like 6 months back only. So as of now, I can estimate the D2C business is only 10% of overall our revenue. In India, it is like -- I can say it's like 40% as higher. But together with world market, I can say it is only 10% to 15% right now, right? But it's growing very fast, and that's the future for us.

[Operator Instructions] Our next question comes from the line of Nikhil [indiscernible] from Toro Wealth Manager.

Yes. Sir. Congratulations on a fantastic end to the year despite a challenging environment. I have 2 questions, rest of the questions have been answered. In the Q3 call, we had mentioned that we have some partnerships that are going on with the Chinese peers using our global brand. Any status update on any partnership that we have signed? And what could be the outlook with respect to these partnerships? And in the PPT, you have mentioned about 4 OEMs onboarded. Is it in the PPF business? Is it like a OEM like the Mahindra tie-up that we did -- that we had done a couple of quarters back?

So answering the second question first. So yes, it is the same tie-up with Mahindra and Mahindra, similar because I'm not naming name for the competitive safety for us. So we have now 4 in our books, and another 2 are already -- the discussions are going on. So you are right on that. And that's how the growth into PPF is continuously happening in the domestic market. So this is your second question. And first question, yes, the discussion is still on because honestly, after tariff, the situation changed for us and the order flow increased so big. In Q3, of course, that was like somewhere in February. We updated you on that. So that discussion is still going on because some of the agreements are still being discussed because that would be a long-term partnership. We are still in discussion. And we are hopeful that, that will definitely help us in PPF business going forward. it's not yet concluded, but we are making sure that it goes in the right direction.

Got it. Got it. And what would be the U.S. share in Q4? I guess it was not mentioned in the PPT. Middle East, you mentioned in 1 of the answer that it is around 15 million, Middle East and North African region, which is around 6% of the revenues. What would be the U.S. share for Q4 and full year.

Yes. So it is -- last year, it was 45%.

It was -- I mean, if you talk of FY '25, it was 48%. Last year, because of tariff and all situation, it was 45%.

Our next question comes from the line of [indiscernible] from [ ithirdpms ].

My first question is on -- customer has indicated plans to move towards the in-house manufacturing of PPF. So how should we think about the potential impact on our business over the medium term? And also, what is our medium-term goal with global application [indiscernible].

Yes. So that -- I mean, that kind of announcement, actually, that has been discussed, I think there is no direct impact because we are not the only supplier for them. And whoever you are talking, I mean, there are others as well. So we don't see any challenge in our volumes. But at the same time, we are always working because we always want to go to the market, and that's how we are now 40% into D2C market in the domestic market and overall 10% to 15% in our portfolio for PPF. So for us, we don't see any challenge on that. In fact, we are -- like we are now 85% ,89% of renewability, 85% to 89%. And we are full with order books on that. So there is no challenge which we see into that, right. Because -- and the second thing is our major market is a major thing is Sun control, which is 50% of our revenue generator. And that we are continuously growing even with the stronger -- with a stronger strength going forward, right? So that is there. And when you talk up about Global Application Studio that are like in U.S.A. and Middle East, so they are continuously in -- we have a target for both the places, like overall, we should have at least -- I mean, I can say, 50 for next 1 year, that's the target which we are keeping for Global Application Studios. And they will be -- when we say there will be like currently 10% to 15% volumes coming from them, Garware and Global Application Studios. And we definitely would like to go or 25% and then 35% as a target going forward for our business. And that will add our -- that will increase our margins. So that's the -- and the second thing is the brand visibility will increase more and more.

Got it, sir. And within the ACF sales in FY '26, can we know what is the contribution of architecturral film, sir?

Okay. Architectural, it is around 25% of total Sun Control sales. But that is growing. I can say 25% to 30% is moving towards that.

Our next question comes from the line of Riya Mehta from Equitas.

Congratulations on good set of numbers. First question is in terms of you were focusing that Garware will now become more of a D2C brand, et cetera. So what kind of investments are we doing because in terms of marketing and all ad spend, et cetera. So will that margin be lower than the B2B for some time?

See, our strategy is not -- we are not stopping B2B to grow into D2C, right? So what is happening, this work has been -- we have been doing this work since last 1 year, right. Where our D2C focus is increasing. And we already did a great marketing campaign last year. which was part of the current performance of FY '26, where our impression were close to INR 8 crores from meta platforms only. And apart from that, our -- we revamped all our websites and put a new effort so that everybody sees actually what we are doing into the market. And in Garware Home Solutions, we are directly building our channel, which is you can order online, these kind of things with the app and our website, right? These efforts, definitely, we have budgeted for this year as well. Last year, we already started spending on that. This year, also, we budgeted these kind of things into our numbers already. So I can say there is a slight increase in our marketing budget. But definitely, D2C is going to be 25% to 30% higher margin than B2C even for this year. And -- but the volumes for this year is not that great. I think the next year, it will be even bigger. But these numbers will not change, like the more spending on branding because we have done that as a mix of our business strategy where OEMs we are growing, right? And these hospitality industry, all big hotel chains are doing great with us. And then the airport authority, railways and all those things are helping us to grow on all around. So that's the strategy for us.

Got it. And in terms of the current results, what will be the currency appreciation in the entire result impact?

Sorry.

Regarding [indiscernible] impact of dollar appreciation, I the constant [indiscernible].

See, on the currency, we definitely get advantage. I won't say no on that. But our raw materials like previously asked like the raw materials, PTA and MEG and plus some of the chemicals and raw materials, they are either imported directly or on import parity basis. So I can say 45% to 50% impact is definitely nullified with that, right? So for the balance, definitely, we get an advantage of that. Exact number, Abhishek can we give? Do we have some kind of this this on that that. I'm just asking our CFO that. Definitely, as I said, 50% is naturally [indiscernible] because our import or import parity business is there. Balance definitely, we get advantage of that.

In terms of raw materials availability and pricing currently, are we able to pass on the entire incremental raw material price hike. This is for both the traditional business of funds as well as the PPA finance because maybe 2 questions, availability and ability to pass on the price hike.

Yes. I can tell you that we have been able to pass maximum of it because industrial product business is normally -- the consumer are directly affected, so we do that. So that is already passed on. In consumer, it takes time. But with the help of inventory, like everybody knows, it's no secret, the kind of inventory we get depreciation. And by the time price increase comes, we are good with that. So I can say no negative impact of that. In fact, slight positive impact might be there because of that.

Got it. And my last question would be that with the current interest rates going up and inflation also picking up in various geographies that you cater to? Do you see any impact of demand anywhere? Or are you see people curtailing down the cost because this is not a stable cost in more of a discretionary spend?

Sorry. Can you repeat the question, please?

With the current inflationary scenario and interest rate also hiking or there is an impact on demand? Or do you see any kind of slowdown coming in from any place because it's a discretionary spend after all?

I think the kind of segment we are in, it's not a commodity where people do -- this is really -- I mean -- if you're referring to kind of global -- you are talking about global warming in this situation.

No, no, no. I'm talking about inflation and interest rate...

Okay. So honestly, this -- whatever is happening is happening in the peak season, that's a summer for us. And in that, like demand really remains high for us in India for like 3 months, 4 months. And in the world, it is yet to come. So people have started building their thing. So we are not seeing that kind of impact. This might be more -- can be visible during weak season of Q3. But fortunately, for us, all those things is happening into the peak season. So we are not seeing the impact as of now. The demand is pretty high in this season. And in fact, unfortunately, wherever there is more buildings coming up, I can't refer directly. But if you really see, there is a lot of new construction is going on everywhere, including Middle East. So that's a good opportunity for the company. That's why we are focusing more into the Middle East.

Our next question comes from the line of Nilesh Jain from Astute Investment Management Private Limited.

My question was on the [indiscernible] line, which is going to come up in October [indiscernible] understand largely, this is in a [indiscernible] product or the 25% that you mentioned, we using apart from the PPF.

I mean your question is for the new -- sorry, question is for the TPU business, right? So like we said, it is -- it can be used 100% in the PPF for the margin improvement. But we have built a new team, R&D team, which is working on products and we have identified already 2 products where we will start our first foray into from the TPU business, right? One is the automotive product and 1 is the architectural product. So with that product -- with these 2 products, we are definitely -- we'll start our sales, which will be like because it's starting in the Q3 of this year. So in 3, 4 months, I think there will be a very minimal revenue, but we will set targets for the next year. So these 2 products, definitely, we are eyeing on from the start of the TPU business. And if that goes successful, then it will be -- I mean, a big potential. And let me tell you about 1 of the product is being used widely in U.S.A. and Europe market and not touched by anybody in India. So that can be a good product for us in architectural segment from TPU.

Okay. Given you mentioned you're adding capacity on SCF side, what I understand, given your current utilization [indiscernible] be fully utilized for this year and the adding capacity is going to come in next year, it can be close to 20% capacity. Don't you feel there's a constraint on capacity to grow some [indiscernible] line as well [indiscernible.

Like I gave you the example that the growth -- the major growth drivers are both PPF and Sun control, but D2C business from Garware Home Solutions is growing very fast. And the line size of [indiscernible] lamination is much bigger than the PPF, right? So we can use the fungibility for PPF business, definitely because it will also be full and then we will think of how the growth is going. We are conservative in that, but we are -- we know the right capital allocation. So the decision was between PPF and [indiscernible]. And we have taken the decision of window film lamination line because the size is much bigger. It's 4x production comes as compared to PPF, right? Because of the thickness and all those things. So we'll use that feasibility to make more PPFs. And here, the growth of our D2C business, GHS and architectural which is going very fast, will be catered directly from Sun control lines. So that's the rationale behind putting this line.

Just last -- and just 1 clarification -- what would be the standard tariff, which we would be paying right now?

Total tariffs. So I'll explain you. The original tariff between -- before, I can say before this administration came was 6.26%, right? That was the standard till last year, where it went added 10, then added 25, then added 50. So we'll talk of additional tariffs, which is only 10% now as compared to 50% last year. So 6.26% is already there. It was always there. But 50 was on top of that. Now only 10% on top of this.

Our next question comes from the line of Sunil Jain from Nirmal Bang Securities Private Limited.

Yes. Congratulations on good numbers, and thanks for this opportunity. Sir, my question relates to whatever the sales you are doing in your own brand, whether you are able to pass it on the whole price increase whole cost increase because of all these raw material price increases or B2B, you may have some agreement but B2C is that happening at a stretch or it will take some time.

No. Actually, honestly, we are able to pass that on because if you really see this -- when we talk of our product -- industrial product business, there is almost a big correlation. I can say, 45% to 50% directly into these raw materials, which is because of the crude oil jumping and all those things. There, the market reacts pretty quickly, and we were able to do that. So that was number one. Number two, when we talk of our consumer products and PPF business. PPF business is mainly driven by TPU and [indiscernible] and all those things. there, the increase was not that big because they are not directly linked to crude, right? So there, the increase was minimal, but still we were able to take our price increase there. Now the third sector is Sun Control business, which is based on polyester, there, the impact of overall whatever if INR 100 is increased is only INR 10 on the polyester film because rest of the components are high value addition on coatings, on [indiscernible], on nano dispersion and all those things. There, we have seen that correlation going to like between, I can say, of approximately 10%, 12% or 15% even. And there deliberately, we were able to take advantage of that -- sorry, we were able to take the price increase on a different, different situation from different customers.

So out of the total sales, how much is we are selling in our own brand like Garware and Global.

So if we see roughly 55% come -- goes into own Garware brands -- and Garware or Global. I mean, our brands and roughly 40%, 45% goes into the private labels. And that may be like direct private labels or neutral labels.

Okay. And sir, last question related to the coming quarter, seen last year, Q1 was impacted because of the seasonal rain and also duty, which came up in the U.S. Generally, you said that Q1 is a strong seasonal quarter. But if you see last year, there was a substantial decline from Q4 to Q1. So generally, Q1 is softer than Q4 or it's equal or better than Q4.

Sir, you answered the question. As we say, Q1 is the strongest because of the seasonal -- our major market is export. So for exports, it's like June, July, August, September, these are the strongest season in U.S. and Europe, right? So in such situation, this -- the -- I can say, April, May, that is Q1 is the right time for the ordering from us. So that's why it is always a strong season. And in India, this is like up to June is the strong season because of heat comes that season and then the rain comes, right? So last year, the situation this did not happen. There were 2 things. One, domestic market, the rain started coming in the month of April end also and beginning of May, and it never stopped, if it continues till the monsoon last year. And also the tariff situation made it very uncertain in U.S. for the ordering and everything, right? So in this year, we don't see that challenge. So you answered your question, sir, on your own.

[Operator Instructions] Our next question comes from the line of Swechha Jain from ANS Wealth.

Congrats on a great set of numbers. So my first question is on the new SCF to the new CapEx. So how much of this would be for the automated part? And how much of this would be for the Home Solutions, the sales that you are expecting on this CapEx, sir? And what would be the asset turnover from this.

Okay. So on the new CapEx, see, Garware, let me tell you, this. Overall, this addition is roughly 30% of capacity addition, right? So -- if we see GHS, we don't see like from this plant, how much it will go into which product line. I'll be very honest with you. When we put the line, we put the line based on what sales increase we are seeing. That is what is the CAGR, where we are going to grow and where I should need this capacity. So based on that current 75% to 80% will almost finish by Q2 of next year. That's what the estimate. Of course, we can do some debottlenecking on the old plant, and we will not lose any sales because of that. So that's the reason to put the new plant. Now GHS, we have a separate target where we are talking because the volumes won't be great, like imagine a home. I'll give you some numbers, like if you really see -- we -- our distributor dealers are the second guy, distributor buys like 5, 7 lakh square feet in a month and a dealer buys maybe 50,000 square feet or 1 lakh square feet. But a homebuyer [indiscernible] like 50 square feet or 70 square feet. So that demand, we can cater the idea to do that to reach every home means to make that even if that business goes to 20 lakh square feet, which is not even 7%, 8% of our business, but we will be catering a big part of the country and the revenue generation can happen anywhere between INR 50 crores for 1 year and the next year, around INR 200 crores with all the PDLCs and everything. So -- but that is the idea that to make the brand present everywhere and at the same time, increase the sales from different, different channels. right? Because if you really see the company, when we were doing only IPD and CPT in Sun Control, Sun Control and IPD business, our revenues used to be INR 750 crores, INR 800 crores. Then we strategically increased the CPD business towards architectural business, then we went to INR 1,300 crores, right? Then we added this PPF business -- and along with the growth in architectural and normal Sun control business, we reached a level of INR 1,600 crores in FY '24, right? And then is the growth in these 2 new lines coming and everything, we reach INR 2,100 crores last year. So the idea is our products when we increase the product basket, it helps us because when we were not doing PPF, many customers were not coming only for Sun control because it's a basket order. Now we are doing Sun control for -- automotive, we are doing suncontrol for architectural. We are doing Sun control for safety, security, decoration, and dual reflection. And then we are talking of now architectural in the home solutions then we are adding TPU for architecture and in automotive. So we are continuously increasing our segment. Each segment, even if it adds INR 100 crores to INR 200 crores value, that will drive our next growth of INR 2,500 crores, INR 3,000 crores in -- like this year and next year. So that's where we are moving.

Right. So sir, just a follow-up. So when you say architectural, so help me understand on the architectural side, what is the addressable market for us? I mean, I'm so sure we have [ chalked ] out an internal plan for us that what is the most attractive products for us in the architecture, what geography looks most attractive for us and help me understand, I know it's a very basic question that I'm asking. But whole solution, what I understand is a subset in architecture, right? So what is the strategy, like which geography, which product, what is the revenue potential? And what kind of margins that we have internally chopped out for us for the next 2, 3 years? If you can help me understand that, sir.

See, that will be like -- I'll answer the question in a strategic way because if I give the numbers, margins and everything, so the people who are just eyeing on these things will definitely -- that's -- we work -- everybody works with the strategy, right? So we have [indiscernible] in place. Now to answer your question, I'll give you in a broad level there is a big market potential in U.S.A., where we have like made a team from 1 of the #1 competition in U.S. Second big market or I can say, fastest-growing market, even more than U.S.A. is the Middle East because if you see it's an ideal market for Sun Control business because there is a lot of sun and there is hardly any -- there is no rain, and there is hardly [indiscernible] right? And the maximum development is happening. So that's why 2 years back, we took a call made a strong team there, and the team now working, I can say that probably that 1 of the segment of Dubai Mall is also done by us. So that's the quality of our product, but it was missing the kind of the team, which goes -- which has got relation, which has got that kind of drive. So we have done that. And now with that subsidiary there, which is directly working with all -- because if we are there, we can directly add value to our sales team there. I mean they can definitely take advantage of local things, right? So that market is -- now you can see the growth of [indiscernible] Middle East and North Africa region is like something a big target for us. Then coming back to India, again, we made a team, which was no focus on to automotive. It's fully dedicated for architectural business. Now architectures business, we already did railways, airports, all airports, railways and then best hospitality chains are working with us and also some OEs who make like your would redesign your entire home bathrooms and everything, we are directly tied up with them, right? Now next thing is how to cater to the smaller guys and make a brand, right? If you go to B2B, they will test your product, they will say forget about it. I will make my brand, you have product is outstanding. But how do I grow the business of Garware or Global to the end consumer. So that's where the Garware Home Solution and Garware and Global Application Studios come into picture, right? The product is great, but the name is also great. So there, the margin will be, like I said, will be 30%, 40% higher than distributor level and the branding will be there. And at the same time, there the strategy works, that there is a separate team. There is a -- now the question is you are talking of the TAM, right? Now the TAM in this you can create -- I mean, we have our targets. We know what it is. But to tell you, there is like we already catering such a big segment there and fighting with 1 of the like cheap imports coming from China and Korea. And at the same time, products imported from U.S.A. But again, put together, everything has not even it's like, I will say, tip of the iceberg because people do not know what architectural product can do for homes and buildings, right? Even the owners of many hospitality chains, they were not aware when I explained them, their eyes were like, oh, really, that's the thing. But again, we go to the basics like we did in PPF when we entered into PPF market, nobody was even aware what the PPF is. We made so popular in India, more than 50 participants are there importing product or buying from us and selling it to. Same way we are doing into this architectural business via Garware Home Solutions, and we will have the same strategy, guiding people, making those campaigns, going to have big buildings and putting canopies, making them explained. And this will be done all over India and in the Middle East. So that's the strategy for us.

Okay. Okay. So in products, it's not just uncontrolled, right?

So that is not only Sun control. There will be like surface protection films, which is for your furniture, which your kitchen sink and everything, other than Sun control and safety, security film, there will be a switchable film on demand that is called a privacy on demand. You can do like make it opaque, transparent, semi-transparent and so many lots of products are coming into that segment.

Okay. Sir, can I just squeeze in 1 very small question. I wanted to ask him last call also you allow me. Okay. So we were doing something with Vandebharat. I just want to just want to get an update on that. Are we doing something for Vandebharat?

We did during Kumbhmela last year, we did a full train to avoid -- so you know, we are doing.

Our next question comes from the line of Ankit Gupta from Bamboo Capital.

Congratulations for the great set of numbers, especially for the entire year, we have been phenomenally well. Sir, my first question is on the impact of declining.

Ankit, I'm sorry to interrupt you, but can you be a little loud.

Sir, my first question is on the declining U.S. automotive sales. So if you look at last quarter and even in the month of April, we have seen 5%, 6% decline in the U.S. new U.S. automotive sales. So what can be its impact on our automotive FTF sales as well as on the PPF sales because our majority of the business on the FTF, on the PPF side comes from U.S. So if you can elaborate on that and how it can affect us.

See, I mean I think that is quite understandable when the tariff was at peak. We were able to, I mean, make -- I mean, not lose the customer, but at the same time, the sales were a little affected because we were not able to do it really with 50% of the tariff, right? Now going forward, I mean we have like -- we don't see any such challenge this year. In fact, we see a growth -- good growth potential coming from U.S. market because the real challenge has gone from the market.

Sure. Sure. And just on the PPF side, we have seen a bit of decline in this financial year. And our biggest customer on the PPF is also setting up its own manufacturing plant. So how do you see your relationship with them evolving and it's a large part of our PPF here. So our sales will be impacted when their manufacturing plant comes online?

No. As I said, I mean, that's -- I think there is a lot of confusion on that, right? It's the PPF, they buy from other sources as well, and they got -- they get it manufactured, similar excise they might be doing in future. I'm aware of everything, but I can't say here. But at the same time, I don't see any impact on our business because -- our growth has been phenomenal. Our I mean, Global and Garware brand. We have doubled what we were doing last year, and we expect that to grow in a steep skyrocketing in the coming years. So we are not bothered with that, right? Because their volumes -- we were not supplying 100% to them because there are a couple of more suppliers as well, right? I know some of this thing looks like that we are the only supplier or we are like too much dependent on them on PPF. That is not the case.

Our relationship with them will continue...

No, no, definitely. We are a big like into Sun control and other business. See, it's not easy to change the product because our product has got a very unique properties in terms of Sun control. And let me tell you with -- I mean I can tell you with great pride that the product line is very different from what others supply. The base where nanodispersion facility and our adhesive technology is very unique and very different and it cannot be changed even if a brand wants to go for manufacturing and replace it, it's not possible because it is something like a prevailing product. And we have discussed that, and we are continuing with our relations. That's what their growth plan for the future. But of course, we have our plans, and we continue to be in great relationship with each other.

Our next question comes from the line of Vinay Nadkarni from Hathway Investments Private Limited.

Yes -- really good set of numbers in spite of a very, very tough year. Just wanted 1 -- 2 questions. One is how do you see your April volume growth given this summer seems to be better than last year?

See, I think that's a question related to current performance. I would like to avoid. I can only say that we have already given a guideline for the year for INR 2,500 crores. We will maintain that because we cannot answer -- because this is the current ongoing. It will be like beyond the scope of us talking about this right now.

Fine. Fine. I understand that. The other question was, when I look at your U.S. volumes, you have said around 45% of your business came from U.S. And last year, you had said that you had to absorb most of the tariffs because you couldn't pass on and you didn't want to penalize your customers. In spite of that, you have maintained your margins. So that -- I just wanted to understand how could that be achieved with 45% of your business peaking higher hit on margins.

Yes. So I think we discussed that even each quarter when despite 50% of 50% volume coming from there, about 50% tariff, we still maintained because we grew on the other geographies quite handsomely. At the same time, we -- I mean, we restricted our sales for just to continue without losing customers. That means we held our products in certain special conditions, right? And then in -- when it was available, the tariff went low. At that time, we cleared the goods according to the demand from the customer. So it was like a very strategically and well maintained supply chain where even we did not flush the material at the higher tariff. We tried to hold and navigated it through at the right time, right? And in fact, when this tariff was to come, we made more material and kept there. We had to avoid the tariffs. I mean, it was like prior to when we knew it was going to happen, we built up our inventory there. And at the same time, we liquidated when it was only -- I mean it was utmost necessarily to be done we did at that time. And once it was -- it went toward low tariff and weekly intervals. So this is like the strategy which we followed, which worked for us.

Ladies and gentlemen, due to the time constrain that was the last question for today. I now hand the conference over to the management for the closing remarks. Over to you, team.

Thank you. And I would like to -- on behalf of Garware Hi-Tech Films Limited management, I would like to thank all participants. And we hope -- I mean, we were able to answer all of your queries. And in case of any further explanation required, you can reach out to our IR team. And with this, thank you very much. And I have -- I wish a great year ahead for everyone. Thank you.

Thank you, sir. Ladies and gentlemen, on behalf of Garware Hi-Tech Films, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.