Garware Hi-Tech Films (NSE:GRWRHITECH) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Garware Hi-Tech Films Limited Q2 FY 'twenty seven Earnings Conference Call hosted by Go India Advisors. As a reminder, all participants' line will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand over the conference to miss 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 the Garware Hi-Tech Films Limited. Thank you for joining us today for q two and h one FY twenty seven earnings conference call. This call is being hosted by Go India Advisors.

0:53 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 of 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 and 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 extend my warmest wishes to all of you and your families on the occasion of the festive season. I hope this period brings happiness, prosperity and good health to everyone. I hope you have had an opportunity to review our financial results and investor presentation.

1:43 Q2 FY 'twenty seven was another important milestone for us. We delivered our highest ever quarterly revenue of INR $6.96 crore, up 22% year on year and ten percent sequentially, which is nearing the INR 700 crore mark. EBITDA increased 42% year on year to INR 189 crore with a margin of 27.2%. Profit after tax also grew 42% to INR 129 crore. This performance was achieved despite geopolitical headwinds and a slowdown in The Middle East. Demand improved realization and a favorable product mix and operating leverage supported growth and helped offset higher raw material and logistic cost.

2:40 Our business follows a seasonal pattern, with Q1 typically benefiting from stronger summer demand for sun control films and a more favorable product mix. Q1 EBITDA margin of 30.3% was consistent with the strength typically seen in the quarter and should be assessed against prior year Q1 performance. As our product mix evolves, we believe margins of around 30 in Q1 represents a sustainable seasonal level. Against this seasonal backdrop, we delivered our best ever Q1, followed by our best ever Q2, with Q2 EBITDA margin at 27.2%, expanding three seventy seven basis points year on year.

3:32 For H1 FY 'twenty seven, revenue increased 25% to INR $13.29 crore. EBITDA grew 49% to INR $3.81 crore and profit after tax rose 50% to INR $2.62 crore. Profit before tax increased 51% to INR $3.50 crore with PPD margin expanding by four sixty four basis points to 26.30%. Cash profit grew 46% to $2.93 crore. Our H1 revenue mix comprised 73% from CPD and 27% from IPD, while value added products accounted for 86% of revenue, highlighting the growing contribution of the niche, differentiated and higher value products to our business. Yes.

4:32 Thank you very much, and I'm really sorry for this interruption. So our balance sheet remains strong with cash of INR $9.33 crore as of 09/30/2026. Working capital stood at twenty nine days compared with twenty eight days in FY 'twenty six. This financial flexibility enables us to invest in growth while maintaining disciplined capital allocation. At Garware Hi-Tech Films Limited, our focus remains on building a premium technology led material science business. We are moving up the value chain through specialized applications, product development, stronger brands and deeper customer relationships with an emphasis on revenue quality and profitable growth.

5:22 During this quarter, we advanced our switchable privacy film capabilities through our PDLC facility. This technology allows us allows glass to transition between transparent and opaque states, creating applications across automotive, commercial and architecture environments. In our car care portfolio, we introduced Ultra Series window film chips. We also enhanced customer accessibility through digital e warranty services and no cost EMI option in partnership with Finelabs. We continue to invest in capabilities to support our next phase of growth. Our thermoplastic polyurethane or TPU film line remains on track for commissioning in Q3 FY 'twenty seven.

6:12 The strategic MoU with Lupizol supports our ambition to develop advanced TPU based solutions in India and expand into specialized applications. In parallel, our INR 191 crore solar control field capacity expansion is progressing with a focus on robotics and automation. Commercial production is expected in H1 FY 'twenty eight, adding approximately 1,200 lakh square feet of fungible capacity. Together, these products will strengthen our technology and manufacturing platform. Our international business remained an important growth leader. We saw customers across more than 90 countries and continue to strengthen our presence through distribution and application led support.

7:01 During Q2, we opened two additional global application studios in The United States, taking our international network to 14 studios. We also added our global distributors during this quarter. We added four global distributors during this quarter. The expanded network helped us to demonstrate our products, support channel partners and develop new market opportunities. In our Garware Home Solutions business, we are expanding direct customer reach through a growing studio network. From nine studios in Q1, we increased the network to 14 and plan to add another 12 studios in Q3, including locations across Delhi and CR and Mumbai.

7:47 Our longer term target is to reach 50 studios by December 2027. In the Architecture and Graphics segment, we added three channel partners during the quarter and are pursuing opportunities with leading malls and hospitality chains. These initiatives are intended to extend our reach across new customer segments and applications. Digital enhancement continues to support our brand building efforts. During the period, our Instagram following increased by 25% year on year and Facebook grew 10%. Our global LinkedIn following increased 400%, while website traffic reached as high as 1.1 lakh visitors in a month.

8:36 Our annualized digital footprint touched INR 18 crores, reflecting the growing reach of our digital platforms. Our H1 performance reflects the strength of our business. The growing contribution of premium products and our ability to translate strategic investments into profitable growth. With strong execution across products, capacity and markets, we entered the second half well positioned to sustain our growth momentum. Reflecting this confidence, we have upgraded our FY 'twenty seven EBITDA margin guidance by 200 basis points to 27% plus minus 2%, while reaffirming our revenue target of more than INR 2,500 crore.

9:23 Our priority remains to deliver on these commitments through disciplined execution and prudent capital allocation. Having started the year strongly with sustained momentum through Q2, we have delivered a robust first half. We remain focused on building on this performance in the second half while strengthening our trajectory towards the landmark year for Garware Hi-Tech Films. We thank you for our shareholders for their continued support, and we remain committed to creating sustainable long term value. Thank you. We will now open the floor for question and answer. Thank you very much. We will now begin the question and answer Anyone who wishes to ask a question may press star and one on the touch tone telephone.

10:12 If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. The first question is from the line of Mahesh Bindre from LIC Mutual Fund. Please go ahead. Hi, good morning sir. Thank you so much for the opportunity. Sir, just wanted to know the basic, I mean, is the contribution from the export for this quarter? And what is the contribution from Sun Control production film during the quarter? Yes. Thank you,. Thanks for your kind words. So this quarter, our export was 80% and domestic was 20%.

11:05 And out of we in Sun Control, it is 51%. Just one second. Just one second. So it's 51% from Sun Control and balance from 25% from 24% from and balance around 25% from IP. Sure. And sir, we have a strategic technology partnership with Lubrizol. So what is I mean, any details about the same how this will help us? Yes. So the strategic partnership with Lubrizol because Lubrizol is a global company, and they are helping us with the product development.

12:03 One is the product development for our normal TPU film called paint production film, which is they have a special grade, which make paint production film a superior quality with that TPU. And at the same time, they are helping us with many other products. Like, for example, one of them is we have identified as air bladers, then LED applications, then front windshield, all those very special kind of resins they are providing us. So then we can supply other than 75% of backward integration from TPU line, 25% of these products will be sold into as a merchant seller into the market. So they are helping us with all those new developments to us. I mean, Lubrizol is helping us to achieve this.

12:54 Sure. And sir, last question from my end. In the presentation, we have mentioned that we are entering into a new growth vertical, that is PDLC Films for a smart architecture. So currently, what proportion of our sales come from the architecture side? So presently, like I said, it is a very good success story for us. We started with 10%. Today, we are roughly 30% of our sales is coming from architectural business. So from window films. So this business vertical is roughly INR 400 crore for us as of now, annualized basis. So what we had done in terms of pen production films over the last two, three years, can we assume similar story also panning out in the No, we are more I think we can do much more than that because we believe as a company, we complement the glass really well. That means where there is a glass, there can be a film. It can be a safety film.

13:58 It can be a sun control film. It can be reflective, dual reflective or a safety film. So all sorry, decorative fit. So all these are like part of our architectural film business, which we believe is like a very high potential, and we can do I mean, we can do much more than any other business in this. Because we started with 10% of window film, now we are around 30%. But we hope that as the business grows, it will reach to 50% of our window film business. Sure. Sir, last question, I mean, sorry. Given the strong demand and the output from the factories, are there any further plans of adding capacity, any manufacturing expansion we are looking? Thank you so much.

14:47 I mean, we have already done six CapEx in last six years. That is amounting to roughly INR 900 crore, and that all has been funded by ourselves. So we will definitely aim in next three years more investments. But as of now, I can't tell unless it is approved by the Board, and we'll come up with that. But definitely, company is working towards because the growth momentum which we are seeing now in architectural film business than CPU film business. And we need to support these businesses with more CapExes, right? So they will as and when they will come, we will announce. But definitely, company is looking into that because as we guided, like after this year of twenty two thousand five hundred plus plus growth, we definitely look forward for much more growth in coming years and which will definitely come from new verticals, new products and new Sure. Thank you so much, sir. Thank you very much. Thank you.

15:51 Thank you. The next question is from the line of Viraj Parekh from Carnellian AMC. Please go ahead. Good morning, sir. Congratulations on a great set of numbers. Just picking up on the previous participant last question. You said that, you know, next... Given the CapEx we have done for TPU and generally, SCF, which will come on stream in H1 of next year, what is the peak revenue potential we can generate from the existing capacity? With this both these two CapEx coming in, we can reach up to INR 3,500 crore. This number actually varies a little bit based on the product mixes, but we can reach INR 3,500 crore with full potential of these two capacities.

16:44 If we keep that current product mix the same as '51, 2425 between HDF, PCF and IPD, it's a fair assumption how this would ramp up to 3,500 crores? Yeah. With this, I mean, yeah. You Because, of course, the percentages will change. IPD will go through give a number in architecture you only give a number in architecture currently contribute to approximately 30% of our sales. 30% of --. The Okay. 30% of SCF sales? Yes. Yes. Yes. Right. Just wanted to understand if you could help me understand the journey of three years before, like, how architecture has been scaled up from, you can say, last three years to what is today? What are the numbers, like, the last two or three years?

17:37 So I mean, honestly, the numbers which we have a run rate of around INR 400 crore, we expect like this business to be as big as INR 1,000 crore, right? So there is a big headroom available here. And then we have headroom available in And automotive, definitely, we are growing. So if we if the second new line, which is our new Sun Control line will be on stream in H1 next year, roughly by June 2027, which is H1 FY 'twenty eight. And this capacity mostly we are targeting to go into architectural segment only. So that's why I'm saying with this capacity, we are all set for INR 3,500 crores. Of course, the sales and other things are there. I'm talking purely in terms of capacity, full utilization, which we are aiming for, of course. And then we have our targets to reach higher numbers, which we will come with the CapEx whenever they are approved, we'll come to the market and update about that. But we are on course of that journey already.

18:49 Right, sir. So one other thing is that I think recently I read that there is customer concentration of 30%, one customer currently has roughly 30 of revenue. Just wanted to understand if that number is true and how do we plan to address this customer concentration risk for us as well? The customer concentration is definitely there, and there are more customers of not that big size, but of course, half of that size, there are a couple of customers or onethree of that. But we have a long term association with them, and the agreements are there. And the product is already approved into various, for example, a best car or EV car seller in U. S, right? So they have the agreement there. And when they approve the product, it goes with what kind of base film is there, which does not fade in long lasting because of its dying properties, then because of our own higher nanoparticles, which reduce the heat and then the special kind of adhesive which lasts for minimum fifteen years. So with these kind of capabilities, the product is approved by them into some top companies in the world. So these agreements, so we are not worried about they will go down or do that because they are definitely growing their business, which is good for us. So but our focus is always,

20:21 this is one business, but we have other business where the different teams are working. So irrespective, without compromising the growth in that customer or worried about that customer, we are definitely growing all across, right? So our aim and that customer does not do any of the architecture. So we are focusing a lot on the architecture. So company has our structure is we have different team for Sun Control, automotive, and architectural. And then IPD. So all people focus on their job. Nobody is like growing or degrowing at the expense of others. So our focus is very clear. Our manufacturing is also working in this, like which line is working for which. So irrespective looking at others, they are growing on their pace. So and same with R and D, we have now new center of excellence, which used to be one fixed R and D for us, which has taken us to this level. We have identified we have made a new center of excellence, which is taking us there. We have like six new people, and the top one is having 60 plus international patents under his name. So these kind of top talent we have attracted, and we are working to take the company from this level to next growth option.

21:43 Last two questions from my end. Firstly, I think over the last few years, I've just seen, you know, our inventory the inventory days increasing, that's that's a conscious call that the company has taken. Just wanted to understand in terms of inventory days, what level are we comfortable at going forward given the current issues that we face? And second is the sensitivity of ours to crude at what level it is at approximately 114 today? Yes. So two questions. I think number one is related to inventory. So inventory, we have increased intentionally on raw material part because the way current geopolitical tension is going, we do not want to lose any sale or any customer because of nonavailability of raw material because as we are fully we make most of the things by ourselves, but we buy chemicals and similar particles from outside, right? So for that, we have raised their inventory levels intentionally so that we do not get affected even there is two months no supply, three months no supply.

22:52 We are well poised to absorb that shock, right? So that's why we have increased our raw material. At the same time, inventory to our Europe, USA customers, which is our major market, their inventory has increased because number of days have gone by 15 to 25. So roughly twenty days overall company export level inventories have increased, right? So this is a practical scenario, but we have done that intentionally to avoid any shock from tomorrow that one country is not able to supply some of the raw material. Absolute number, let me check how many numbers inventory do we have? 58. So we have like fifty eight to sixty days inventory in absolute I mean, that's the number which we have right now.

23:44 And we are comfortable with that. Even I think if any situation comes, we had ten more days, it doesn't make much of a difference for us because all the products are either over already sold out with advances or raw material is kept for continuous business, so it doesn't affect us. Okay. And the last question was about the sensitivity to crude right now in the level that you... Yes. Okay. Sorry. So last question, when you talk, see, we have taken when it comes, like I'll just give you a number that our raw material cost increased in this quarter by around 4% and logistic cost increased by INR 9 crore in absolute. Put together, there is a total INR 37 crore was like a headwind for us or we were challenged by extra cost of that.

24:39 Despite that, we have performed this. So we are very confident of our resilience that despite all those difficult times, we are able to perform with these kind of numbers, right? And think of a situation when this situation goes, like how much can we benefit out of logistics and this situation. So very customers. Normally, we pass on in some cases easily, in some cases with difficulties. So we'll have to pass on. But on a longer term, think of a situation where we do not think of our company performing only one quarter or one year. Think of a situation where the world is moving towards EVs and a lot of alternative fuels are coming in the world, where after, I think, one or two years or three years where diesel, petrol and everything demand is going to definitely go down and the crude realistically may not be even 50 to 60. That is as per the market estimations, which I've heard about our long term three to five years.

25:53 And then you think of the company, which is now doing this great numbers at $100 and $110 crude, what it will do at those numbers. So we are thinking of these kind of things. And short term, we easily absorb like we have performed despite INR 35 crore plus negative cost increase to us, we performed this. So definitely, if the situation changes, we are definitely taking advantage of such situation. Thank you. The next question is from the line of from Monarch Network. Please go ahead. Yes. You. Thank you for giving me the opportunity.

26:38 So my first question is, what is the current utilization level level of and and how do you see utilization trend evolving going forward? Yeah. So Sun Patrol this quarter was 75% and was 73% in Q2. And this since this line, line is just not even a year old now. So we expect in next six months, this will almost go full up to 90% because 90%, 95% is the full capacity because of maintenance and everything. So by next year, I think this will go full. And Sun Control will also go full by Q2 next year.

27:27 But at the same time, our new plant is coming. So we'll continue this growth momentum with that. And for we have a fungible leasing. If this capacity goes up, we will use some of the Sun Control plant for the basic the first pass or fungible capacity to continue the growth momentum on both Sun Control and Okay. Understood. Also, and sir, how much money we have received from tariff reversal? Yes. Okay. We received till date, we have received around INR 31 crore. And out of that, the refund to customer has been around INR 20 crore and INR 11 crore has been in our books. And we expect in Q3, another refund of around INR 30 crore. That is the last one. And out of that, roughly INR 16 crore will come to our books and INR 14 crore will be refunded to the customers.

28:23 Okay. Sir, what kind of opportunity do we see in the Indian market? And how do you expect the domestic business to perform? And what are the initiatives we have taken in order to strengthen the company's presence in India? Okay. So for India business, I'll start with Like when we started, there was no in 2020, a 0.1% of the penetration was in Today, the penetration is roughly 3% of each car sold. That means three cars and 100 cars is done with If we talk of USA and China, they are closing towards 20% of the penetration. So we feel there is a big headroom available for to grow in India. And we being the only manufacturer with such kind of backward integration, we will take advantage of this situation. That was number one. Second thing, as it's on record, we applied for antidumping duty because the imports from China were coming at very low prices.

29:28 So that was approved by Ministry of Commerce. However, Finance Ministry did not apply it. So we are taking some necessary steps to make that happen. So we are working in that direction. So that is step number one first. There is a natural growth potential from 3%, the country is definitely going towards 10%, right? So there is a big headroom for Then we have our own advantage because of our scale and quality. We are the front runner having 60 of market size with us, rest goes to imports. So we are trying to increase that also by doing those taking actions against those products, which are coming very cheap. So that is about So there is a big headroom.

30:14 We go to Sun Control Films. We are already a market leader with 60% to 65% market presence in that. So that business is growing with the car sales in India. But the third and most exciting thing about the architectural business, where we have a full dedicated team working on this, which was like not there three years back. They come from a top background, a top head, and he has got a full team. And the last three years, we did 3x on the top line on almost 4x, 5x the bottom line in architectural sales in India. Now the next phase where we are now competing with the glass, right? We are trying to tell the market like film comes with a lot of benefits. It is like 20% to 30% less expensive.

31:04 It gives you more UV protection, 99.9% against the glass gives you only 70. Then we talk of heat rejection, which can be 20%, 30% more than the glass. And finally, it gives an additional benefit of safety. So the glass does not shatter. I mean, it will not flow on somebody's face or something in case of any unforeseen situation. So with these awareness campaigns in the market, we are quite excited about the third growth as well. So I've explained you all three verticals for us in the domestic market. Okay. So sir, in the next two, three years, how much we can expect India business to contribute from the current level?

31:50 See, the way we are growing right now, if if we have said, like, the company level, we have 80% export and 20% of the domestic. But this, we are talking INR 2,500 crore plus revenue as well. So as we grow, we are definitely going to have the run rate of INR 3,003 thousand 500, where this ratio will be maintained or slightly up and down, but the growth has to be there by 25% to 30% CAGR on both exports and domestic also. Okay. Understood. And sir, how are we placed in the global market in terms of pricing? At what discount of premium are are products are... As compared to global leaders in terms of competition?

32:39 Yeah. So our products, if you talk like, we share a very interesting story here. You know, when we started our architectural business, we understood that we were selling, like, around 30% of the top world leader into this market. We were priced at only 30% of that. While selling the market, we understood our product is really good, but we were not marketing that well. So we did all those efforts, and we added the full product line. We had three issues. Number one, in architectural, there was like there are like a product basket. So we were missing two products in between. So we added those two products. Then we found that our marketing, it was like towards more towards automotive.

33:25 So we created a whole new set of marketing team in India, in Middle East, in U. S. Are continuously working only on the architectural segment. And third and most important thing, we thought that we are only 30%, 40% of the top guy into the market. So interestingly, we raised our price to 80%, 85% of that one player. So in a way, we doubled our prices in certain cases, right? So right now, we are 80% to 85% of the global player. I'm not talking of the imports from China and Korea. I'm talking of Americans and mostly American or sometimes European producer. So we are 85% to 90% in some cases, and there are certain products which are so good that we are even 10%, 15% or 20% higher than the American players.

34:14 So there is no question that we are like at discount or at premium. It depends on the merit of the product and the way we market it. So we have achieved in last before years from a level of 30%, 40%, we are now 85% to 120% of global players. We are not few products, we have like 100 different products. Like I'll just give you example, don't think like there is one product we can simply say this is 85. Like for architectural, I told you there is a safety film, safety and security film, there is a sun control film, there is a decorative film, there is dual reflective film and there is a reflective film. So there are these are like five vast categories I'm talking. Similarly, in automotive, there are various kind of products. So each product has different dynamics, and we work scientifically on each product, what is the demand, supply, quality aspect.

35:07 So based on that, we decide. But broad number is 85% to 120%. Okay. Helpful, sir. Also my last question. So the tariff reversal that we have received, where are we reporting it? So we are reporting it because this is our subsidiary. So as per the laws there, we are reporting it I mean, we are reducing it from COGS, but we are not counting in the sales. We are reversing in the sales and adding it into COGS. The next question is from the line of Rahul Jain from Credence Wealth.

35:58 Congratulations to the entire team of Garware for a wonderful performance once more. So my first question is with regards to TPU. 25 external sales at full utilization could amount to what kind of sales in the TPU division, given the kind of product which we are talking about? And so I'll talk more about the active number, the 25% external sales, which we are planning to do, 75 is using for captive and the 25%, what kind of sales is possible in that to 25%? Yeah. And also with the Yeah. Yeah. And also with the margins of TPU, we understand our highest margin product among the various products is architecture films followed by SunContor and followed by So where will the margins for TPU, the sales which are being done externally live?

36:54 Yes. Okay. So first of all, thank you for your kind words and appreciating us. So the first question, about 25% will lead to in next financial, we expect INR 75 crores to 100 crores of sale. That's what we are targeting, right? So this is the initial estimate with us. So we go with that. Now in terms of margin, as of now, I think we can rate them with like if I talk of EBITDA margin, I can say roughly around 35% as of this is a very because we nobody makes these products. We are I mean, one thing we can always say that we always create our market. Like for Sun Control, we created our market. For we created our market in India. Now in architectural, we are creating our market.

37:46 So we have been successful on three occasions by creating because we give solution to the market. We don't give product. I mean, we just don't go to the market. Some of the aid supplying, I want to also supply, so I will take that share. No, we try first with creating a market with a value product, right? So for that, we have identified, and we expect that somewhere around 35% should be the targeted number. But as of now, I'm not sure because nine is yet to start its commissioning, everything is going on. So rough number is 35% And expected revenue, FY 'twenty eight can be INR 75 crores to INR 100 crores. That's what we are expecting. Great, sir. The second question is with regards to the top line. Given the current rate, I think we are headed towards somewhere around INR 2,600 crores of top line for the current year, which you have mentioned in your presentation as well as opening remarks of INR 2,500 crores plus.

38:39 Now given the expansion of TPU, additional INR 100 crores coming in and also SPF expansion. And you also mentioned that there is a thrust on architecture for higher growth. So next year, FY 'twenty eight, can this number of top line be around INR 3,100 crores to INR 3,200 crores sales? See, exact number, I can't quote, but yes, we are targeting INR 3,000 plus. Okay. And sir, just to clarify the margin part. In your presentation, we have given that medium term, 28 crores to INR 31 crores, the margin guidance has been given as 27% plus. And I think given the higher margins of CPU and also architecture films, higher proportion coming in FY 'twenty eight, are we talking about 27% margin roughly plus another 1.52% coming from TPU backward integration?

39:35 That 1.52 is over and about 27%? This guidance is for this year. So definitely, we will talk this number, like we said, we are expecting 1.5% to 2% of expansion in FY 'twenty eight, right? So we talk definitely 28% plus in any case, right? So see, again, what we have these guidelines because our sales depend on the product mix, like when IPD sells more or slightly sun control goes a little down. So this market percent change. So exactly we can't comment, but definitely 28 plus we are targeting. So this 27 plus minus two, we have I mean, this year's guidance was 25 plus minus two. We announced it to 27 plus minus two. So definitely next year guidance, we will elevate from this level for sure. So we are talking 28, 28.5 for sure.

40:32 Great. Great. And just one Sir, that we have heard a lot of comments like margin sustainability on 30%. So if you remember, when there was no tariff two years back, we hit first time 27% in Q1. So the same question arose like this is like too high, is it onetime? We said no. Because quarter one, typically, we'll see these kind of things. We are like a one company in the world of Sun Control. And this is like a peak season for us. So we always expect these kind of margins in Q1. And having said that, we performed best ever Q1 for us. And even this Q2 is the best ever in our history in terms of margin, in terms of top line, in terms of bottom line. So we continue to perform like that because we can never perform like Q1. So that shows that we are continuously growing, but we can't grow on quarter on quarter basis because there is like Q3 will be seasonally low, but Q4 will be back again.

41:32 So we should be valued I mean, like it's a two season. There is sun, there is a sun control. And there is no sun, there is no sun control. But still, we move on. No, no. So I do understand, sir. My question regarding clarification on because in our presentation, released with the quarter two results, we had mentioned the medium term guidance for margin size 27% plus. And down below, you have mentioned, plus one no, I'm talking about medium term target, not for the current year. Yeah. Yeah. You have given both the guidance for the current year, which is 27 plus or minus two. And for medium term, 28 to 31, you have mentioned 27% plus. And down below, that you have mentioned one fifty to 200 bps plus for TQ backward integration.

42:20 So this is why I was trying to clarify, we are saying 27 plus, one and a half to 2% is a possibility. That is what I was trying to clarify. It's very clear. We are clear in our mind that we will add once the CPU comes on the stream and it starts contributing to PPA. Overall company revenue should go up by these numbers. That is you are right, 27 plus minus plus INR 1.5 to 2 crores and then this number goes up and down. Sure. And just one last request, sir. And it was kind enough of the management to allude to our shareholder request when we had been at the AGM about two, three years back with regards to increasing the dividend with the kind of cash which we have in the balance sheet and also the cash expected to be generated over the next two years, given the kind of products which we are getting into, given the kind of growth, given the kind of goodwill which we have for our business.

43:14 If we could increase some kind of dividend, that would really help, not just from the point of view of extra dividend, but I think also looking at higher valuations for the company, sir. Okay. Okay. Noted. We have like a lot of CapEx we expect to come, but definitely, I'll put forward this within the management. Thank you for your search. Sure. Thank you. You. Thank you. The next question is from the line of Bhavika Singhvi from Navishare. Please go ahead. Hello. Am I audible? Yes. You are. Yeah. So thank you for so much for the opportunity. So the first question I have is on the utilization.

44:02 Basically, what are the current utilization going on in the both sun protection and the pain protection plans? And also wanted to understand the timeline of the new capacity that's going to come for the sun protection film. So if you can throw some light on that. And once that will be live, how much potential revenue we can expect from the SCF full capacity and also from the on the optimum utilization? Okay. So current utilization in Q2, 75% of Sun Control and 73% of right?

44:47 And we expect because now next year because the growth continues and next year, Q1, we will hit almost 100% of Sun Control and similar for almost 100% for So in that case, our new Sun Control line is coming. We'll try a little early as well. That is coming in June 27. That is Q1 FY 'twenty eight. So by that time, we are towards the exhausting our all capacities. By the time, we will have a new Sun Control line. So this is the plan, and it is going perfectly. That's why we built it. And this plant can make both, like if we need more of we can make it. But this is primarily, we are expecting Architectural business to grow faster, and we will we have provisioned all those, I mean, items into that new line, right? So this is your question number one. And second thing is, this new line will is able to contribute roughly INR $4.50 crores to INR 500 crores, depending on the product mix, right? And CPF can add around INR $2.50 from the current level. So we are safely we can say with all those things, full utilization, we can reach roughly INR 3,500 crore with the current capacities, which are upcoming with us.

46:11 Okay. Thank you. And sir, also on the I wanted to understand on the studio business, which I think in the last quarter, you have mentioned that we will be able to do INR300 crores revenue from the home solutions and the new products by FY twenty eight. So are we are we in line to do that? And also wanted to understand our strategy on the home studio because we are also... Like, as we are diverting into the b two c segment, wanted to understand that how aggressively we are doing that and by what timeline we can expect it to be a major in our revenue we can see going forward? Yes. So of course, we are very aggressive about D2C business because the company from B2B has gone to B2C. Now we are targeting D2C.

47:01 The primary reason is we want to create a brand among each of our consumers. That is like we call top of the mind. And in that with that reason, we opened 48 studios in H1 this year. And we are very careful in identifying those because they should have a good grip on home solution products or home furnishing and similar who are directly connected to that. We don't give it to someone who just want to spend money and all those things. We are very careful on that. That's why we are we added 14 studios. And we are targeting now 50 studios like in next, I would say, nine to twelve months, not in next six months. So that's our target. And plus revenue wise, it's still since it is a new business, less than a year old. And we the target is to reach, of course, INR 50 crore, then INR 100 crore and INR 200 crore. So that was not one year target. That was actually a three year target. I think I was very clear on that. I didn't give INR 200 crore for one year. So the target are like INR 50 crore first year I mean next year, then INR 100 crore and then INR 200 crore. So that was the target.

48:25 Got it. Because it's a small ticket size business, and this is done directly. So it is not like see, for us, volume raising is never a problem. We can sell any product in big quantities at lower prices. But what we want here, we want to create value with each homebuyer or homeowner who wants to buy these products. So that's why this is a very niche segment where we are putting products which are really, really good to showcase like PDLC, you can do switch on, off with make it transparent, opaque and all those things. So that's why we have set targets like this, 50 crore, INR 100 crore and INR 200 Got it. The reason I asked is because and I think in the last call, you explained that the B2C holds a comparatively higher margin than our B2C.

49:19 So if like, we can expect the... It also contributing on our margin side as well. Yeah. And also, sir, just one... Yeah. Sorry, sir. Please go ahead. Yes, sir. So the second question I have is on the... Because we are into multiple products. I just wanted to understand that of which product competitively hold higher margin, like the Comprotection competitively hold higher margin or the And also wanted to understand what... Where we see the industry going, like, fast competitive to the other. Like, basically, just wanted to understand where we want to focus ourselves more in terms of sun protection or the pain protection?

50:10 Honestly, again, we have like a team who focus on their business. And depending on the requirements, we add talent to that, and we made products accordingly. So we feel the architectural architectural segment is going to be like something which we are targeting as number one. And then paint protection, of course, all our efforts, our team is already there. So but all have got different teams, and they are focusing irrespective of others group. So but what is more exciting or what is giving you more leverage is architectural distance because it's natural. There is so much of glass around the board. So we are targeting that segment as a top segment for us.

50:59 Sir, can you share the margin percentage what we make in the sun protection and the pain protection? See, margin, if I talk, is like Sun Control, there are various products. When we talk of top of them, they go up to 40%, 45%. I'm talking EBITDA margin. And we go when we go to the medium kind of product, it's 30% to 35%. Remains 20% to 25. The next question is from the line of Dwanil Desai from Total Capital. Please go ahead. Good afternoon, and congratulations for a fantastic show quarter after quarter.

51:50 So most of my questions have been answered. Just one clarification. You said that, you know, we are making this kind of a margin despite crude at, you know, this $110. And if crude goes down, then maybe, you know, maybe there is some benefit. So in terms of pricing strategy, how does it work that when is it possible to retain the pricing despite RM falling, maybe not fully, but partially? How does that entire thing works across different products? Yes. So when you talk our like 25% business, which is IPD as of now, there the cost goes up and down, they are usually passed on, right? So you if it is like all our peers in India, we don't compare on that. But that 25% business is similar. If crude is high, you will try to pass on. Sometimes we are not able to pass on because it's a commodity kind of business.

52:49 But mostly, you do. And when it goes down, customer ask you, it is go down, so do that. But for the rest of the business, there is no I mean, it's a very the correlation goes as low as 10% to 12% for Sun Control and paint protection film, it is even lower, 5% to 7%, right? Because they are not crude linked products. In Sun Control, there is only a base film. But there are so much of value addition in terms of adhesive, in terms of nanoparticles, in terms of coatings, in terms of headliners. So all those things, if you really add, the correlation goes very low. I can say the maximum when it goes, maybe 15%, right? So that's why if it goes down, then it helps you a lot because your costs go down maybe by 5%, 7% or 10%, right? But when it goes up, it adds prices.

53:46 But the correlation is lower. So and it is not easy, like every month, you can't go to the customer and ask for a price rise or price decrease, right? So normally, these things happen in a quarter or six month period, and we already did that when crude went 100 plus in a couple of months ago, right? So we are struggling sorry, we are staying with that only. But if it goes further down, we have to go to market and ask for that. So it's a but there are a lot of other components other than crude in our major business, 75%, which affects us, right? So that's why the correlation is low. But in terms of IPD business, it is directly passed on to the consumer.

54:31 But even if everything goes low, like when we talk of crude going to $55.60 dollars in that case, your everything goes down. Your packaging cost also goes down. Because of transportation, everything is affected, then your packing costs go down. Then your other costs like chemicals and everything go down. So you definitely take advantage of that situation. Got it. Got it. Thank And my question was my assessment was that if we are able to do at $100 and $110 these kind of numbers, definitely, we are poised for much bigger and better growth for future. Got it, sir. Very good. Thank you. Thank you. Thank you. The next question is from the line of Vedan Serda from Nirmal Bank Securities Private Limited. Please go ahead.

55:25 Am I audible? Yes, you are. Thank you for the opportunity. My first question is with respect to the INR 25 lakh MTCD penalty, which was for considered validation. So can you just give some more color on that, what exactly happened and why? Yes. So there was one boiler, which was very old because normally plants are pretty old. And in that situation, MPCB said that it needs modification. So we were doing the modification. While doing the modification, I think we restarted and took trial on that, which was noticed, and we accepted that. So that was the real issue. I mean, there was a boiler, which was old, and it was asked by MCCB to modify it, which we have done already. But in between, while taking trials and everything, we had to run it. But because of some miscommunication and everything, I mean, they asked us that this was run despite told not to run, but we accepted this is okay. I mean, we abide by the rules, government rules and everything.

56:36 Okay. And my second question is the extension of the previous participant's question. Like we did a revenue of INR700 crores around in this quarter. If the prices of crores were INR60 crores, so can you just give a rough calculation what would our revenue of the finished product? See, if it is I mean, you are talking of revenue, you are talking of your top line, right, if it is crude goes down? INR 7 Like 100 crores revenue is really like 25% of your business will be directly into crude and 75% will be 10%, So 15 what the revenue would have been? I think if I go roughly by that, maybe INR $6.50 crores, $6.60 crores.

57:25 Only INR 40 crores, 50 crores will be affected because major business, 75% is not linked to crude because it is made out of so many other components, only 25% with that. And that, too, when it goes down, even I remember when the crude went $40 or $45 so during COVID, But the price cost of price or selling price do not go that down because there are certain right now, it looks like major component around 50%, 45% to 50% component is the raw material. But rest 50% is also there. There is power, there is manpower, there are so many things. So that's why I expect INR $6.50 crores to $6.60 crores should be the realistic number. Thank you. The next question is from the line of Nilesh Chien from Astute Investment Management. Please go ahead.

58:21 Hi, sir. Thank you for the opportunity. My question on the IPD division, I we have got a good understanding at least on the CBD side. This quarter, obviously, we've seen the commodity business grew quite well. It's almost like INR 100 crores revenue. How are you seeing the IPD overall division growth for this financial year and also in medium term? Honestly, we are a company which focuses more on consumer product business. IPD because there are a lot of component goes to us in consumer product, like some base film, liner, cap sheet, all those things we manufacture in IPD. That's why we keep it very relevant to us. Otherwise, honestly, the whatever market is because nobody can stay in that commodity. Sometimes they can make double the profit. Sometimes they will go in red.

59:17 They have gone in red in, I think, prior to COVID and immediately after COVID. During COVID, it went really high. So I mean, it is directly linked to the supply demand in India, which is oversupplied market. And there, if you are making purely on packaging, you are at the mercy of like how you are passing out the cost to your consumer. So we are focused only to a very limited. We are talking of revenue of 25%. But in terms of margin, it is only, I would say, 10% to 12%. So it doesn't affect much, even if it goes to a little lower, our margins won't be affected. So honestly, we are not a major player there, and we go by whatever is happening into the market. Our focus is to support our consumer business from industrial product.

1:00:11 Sure. And the second question is on the D2C side, where you obviously mentioned you want to scale from INR50 crores to INR200 crores. Broadly, if you can give us what are the incremental margins here as compared to maybe the base architectural firm margins we make to distributors on the B2B side? See, base we can say, we can we had around 10% to 15% on existing margins of which I already said roughly 40%. Sorry, I lost your voice, sir. I'm saying we like the top products on Architectural, they attract as around 40%.

1:00:57 And there, we can add around 10% from D2C because it is already a very high niche pocket. And since we are developing that, we add around 10% to 15% on top of that. Sure. Thank you so much and all the best. Thank you. Thank you. The next question is from the line of Svecha Jain from A and S Wealth. Please go ahead. Hi, sir. Thank you for giving this opportunity. So I have couple of follow-up questions from the previous participants. One was with the Lubrizol tie up, you know, I wanted to understand... You mentioned that, you know, we are taking some reasons and all from them. So wanted to understand what exactly is this partnership.

1:01:48 Are we just taking some raw materials from them, or we are doing some joint development with them? What exactly is this partnership? And, you know, with this partnership, what kind of incremental top line are we expecting from this? And will this also do some kind of EBITDA expansion? What is the deal structure exactly, if you can just explain these contours of this tie up, sir? Yes. So this TPU is our business, which is very unique business, right, where, for example, the plant which we are doing, it's a aliphatic TPU, which nobody has in India. We are the first to do this in right? So for that, know how is like the kind of resin which runs into our line because we have very advanced line, and you just you need a right quality of the raw material, which is resin means we make the films, but we will buy these resins from, right? They make the best. They are the one and the best into the world to supply those resins. So number one question, 75% of this TPU will go to our where we expect a good margin expansion of 1.5% to 2%, it's 150 to 200 basis points for consolidated level for the company because it will reduce the cost of manufacturing for the TPU.

1:03:14 So that is number one, right? And second thing is there are our ambition to grow the company. We cannot like we our strategy, we had only two verticals in the past where we had industrial product and Sun Control Film for automotive. Then we added a third vertical called Then we added a fourth vertical called Sun Control for architectural. Now we want to add a fifth vertical, which is a thermoplastic polyurethane, TPU based product lines. So there are many products in the discussion, which is there are certain products which are used in the front windshield of cars and buses and big trucks where if you see like the luxury buses and all in U.

1:03:59 S, where they if they get a small stone chip, the entire windshield gets cracked. So we produce those kind of front windshield with that. Then there are a lot of air sledders in high end cars, right, which is the resin has been developed by them because any resin won't work for all those things. So they have developed these things, and they are giving that technology to us. And the understanding between us, we secure we have an understanding with them that we buy this much of resin from them. So this is their margin. And of course, we sell it to the market. It is our margin. Now they are also going to the market, saying that we are the best GPU manufacturer in the world, but they don't manufacture the film. So Garware makes film from them.

1:04:46 So they're going to OEs and saying that our product is going there. We give you these kind of guarantees that this is our product and this goes to the market and this has got these properties. And they are introducing us with that into the market. And it's not only in India. We are doing the same thing in SEMA show. We got a very good response from participants in U. S. That, I mean, we have a partnership with SIMA with which will help us to grow our business in all the business. Okay. So this is only for the 25% of the TPU, which we are going to make the production, the external sale. Only for that... The partners or both, right, for 75% of 25% of. But when I talk 75%, it will only because it is internal sale, it will add to the margin expansion.

1:05:47 But the 25% will add the top line also, which I just said, around INR 75 crores to INR 100 crores, we are expecting in the coming year, not this year. Understood. Understood. And the products that we make with this, are the products going to be sold to across the world or it's only for some specific market with the? We have our channel, 90 plus countries. We will do this thing. And we see, this is just the beginning. If it all works, we'll think of further expansions and all those things because this is the first trial for us. And we are now planning to move ahead with that. So as soon as these things come on paper, so it will come to you. But definitely, we want to talk only on this.

1:06:34 Okay. Okay. And sir, you did give the revenue breakup in terms of value for the SCF and the IPD. Can you give the volume breakup for these segments for the q two? And also, geographically wise, how did we do in The US, Europe, India and rest of the world? Volume wise, I mean, revenue wise is the volume wise only. Because we sell like industrial products in KT. We sell our consumer products in square feet. So the volume so that's why we give revenue numbers, which I gave you, right? And you want to talk with you guys, yes, U. S. Has been to 51%, right? And EU has been 15%.

1:07:20 India has been 20%, which we discussed. And rest, 12% is basically Middle East and nearby countries. Okay. So how has the growth of Sun Control been in The U. S? See, Sun Control in U. S. In all, like it is growing. Definitely, we are targeting for each segment to grow minimum 20%. And special segments like Architecture, we are targeting to grow by 35% to 40%. And we saw this is in line with what we have targeted. Thank you. Ladies and gentlemen, due to time constraint, that was the last question. I would now like to hand the conference over to Mr. Deepak Joshi for closing comments.

1:08:08 Over to you, sir. Yes. Thank you, everyone, for your continued interest, trust and support in GSFL. We look forward to updating you on our progress in the coming quarters. Have a great day. Thank you. Thank you. On behalf of Garware Hi-Tech Films Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.