In an interaction with Shweta Papriwal, Editor, indiainfoline.com Mr. C J Pathak, Wholetime Director Garware Polyester Ltd. said
"On consolidated basis, company’s net profit margins improved to 9.3% in FY20 from 3.9% in FY18. There are multiple factors responsible for improvement in company margins, primary being our shifted focus to value-added products which have a high margin".
What is the demand outlook for specialty films internationally?
The global demand for specialty films which includes sun control films for automobiles and our recently started paint-protection films for auto protection, is growing at approximately 6% annually across the globe. USA is the largest and most mature market, followed by Europe. The market of the future is the Middle East where the heat of the sun, makes sun control films essential, and the impact of abrasive sand on high-speed cars making paint protection films equally important.
Garware Polyester is one of the few companies in the world which has chip-to-film manufacturing capabilities giving us extreme control for making different qualities of films for various applications. Our R&D team is constantly scouting for new value-added film applications and our film ‘recipes’ are developed internally through rigorous research. For instance, we are one of two companies in the world with the capability to make dyed films, and we compete with global Fortune 500 companies like 3M, Eastman & Saint Gobain in the consumer product categories.
The industrial products division consists of several products and we are largely focused on the value-added category of thick films category (50micron to 300 micron), as compared to the rest of other film manufacturers who are largely in the mass-produced thin films category (10miron to 36 micron). Thick films have many important applications where we are preferred suppliers for many years, including electrical-grade insulation for hermetically sealed compressors which we export to China.
What are the new product launches in 2021 that investors should know?
Garware Polyester launched a new line of Paint Protection Films (PPF) for the global market of automobile paint protection in December 2020. This is estimated to add INR 300 cr incremental revenue for us by FY23, contributing nearly 20% of FY23 revenue. The new manufacturing line is highly efficient and flexible in the type of films it can manufacture. Our sun control automobile window films and designed for high performance in various applications. We are also expanding this category across safety, architectural and front window screen glasses.
The margins have improved significantly in the last three years, request you to share possible reasons for it?
On consolidated basis, company’s net profit margins improved to 9.3% in FY20 from 3.9% in FY18. There are multiple factors responsible for improvement in company margins, primary being our shifted focus to value-added products which have a high margin. The high margin consumer products division was only 35% of our portfolio in 2015-16, which we consciously grew to 50% by the last quarter. We also consolidated all our manufacturing at Aurangabad and this helped bring cost efficiencies adding to the numerous cost control measures we undertook. All these factors were planned decisions by the company, which were able to implement and improve our NPM.
What is your outlook on export markets for GPL?
GPL is one of the largest exporters of high-tech performance films in India. We export to nearly 80 countries and export contributes nearly 67% of our revenue. GPL has been the winner of PLEXCOUNCIL’s top exporters’ awards for the last 33 years continuously. Our brand has grown to become a force to reckon with the brand ‘Global’ and we are 3rd largest brand in USA & Europe. Our exports have seen continuous growth every year and we expect this trend to continue with our foray into new area of Paint Protection Films.
The key market is the USA where we continue to increase focus, wherein there is a growing demand for automobile window films and Paint Protection Films (PPF). Apart from this, the Middle East, or the sandy countries, also have a tremendous potential for PPF, as the sand damages paint of expensive cars. We have also observed an increase in demand from African continent & other Asian countries.
What are the key focus areas in 2021 for GPL?
Our focus now is on growth in this fiscal and beyond. With the launch of PPF in India, we are now expeditiously working towards a global expansion strategy to ensure our new PPF line is working to full capacity by Mar 23. We will continue to innovate making new and better products and continue to proudly be an Indian company making strides across the globe. Also, our aim to expand window films category across safety, architectural and front window screen glasses will contribute to the company growth.