Garware Hi Tech Films Ltd Management Discussions

1. MACROECONOMIC OVERVIEW AND OUTLOOK

Global economic growth is expected to inch up modestly amid easing inflation but faces significant downside risks from trade tensions and policy uncertainty. The IMF slashed its economic forecasts for the U.S., China and most countries, citing the impact of U.S. tariffs now at 100-year highs and warning that rising trade strife would further slow growth. It forecasts global growth of 2.8% for 2025 and 3% for 2026, a cumulative downgrade of about 0.8 percentage point relative to IMFs January 2025 WEO update. Global inflation is revised up by about 0.1 percentage point to 4.9% for 2025 and 3.6% for 2026, yet the disinflation momentum continues. Moreover, escalating trade tensions particularly U.S. tariff measures pose a material downside risk, with global trade growth expected to decelerate sharply to 1.7% in 2025. In this context, multiple central banks have maintained restrictive policy stances to anchor inflation expectations, keeping rates near multiyear highs even as growth moderates.

Against this backdrop, India is poised to lead the global economy once again, with the IMF projecting it to remain the fastest growing major economy over the next two years, underpinned by resilient private consumption and rural demand. According to the April 2025 edition of the IMFs World Economic Outlook, Indias economy is expected to grow by 6.2% in 2025 and 6.3% in 2026, maintaining a solid lead over global and regional peers amid heightened external headwinds.

On the sectoral front, the global automotive industry valued at USD 4.35 trillion in 2024 is projected to expand with a 5.66% CAGR through 2032, buoyed by accelerating electric-vehicle adoption and robust passenger and commercial-vehicle demand.

This recovery is creating significant growth prospects for speciality film manufacturers and is expected to grow with a CAGR of 4.45%, driven in part by demand for advanced automotive coatings and lightweighting solutions. In India, the automotive market is forecasted to grow from 5.1 million units in 2023 to 7.5 million units by 2030 a CAGR of 5.7%—further amplifying demand for speciality films in coating, glazing, and protective applications.

2. COMPANY OVERVIEW

Garware Hi-Tech Films Limited is a manufacturer of specialized solar control films & paint protection films for the automotive segment, sun control films for architectural applications, and high-end BOPET films for industrial applications. Also, it is the sole manufacturer of Solar Control window and paint protection films in India and perhaps the only company in the world with fully backward integration for manufacturing. The company leverages its state-of-the-art nano-dispersion and other cutting-edge technologies to maintain its market leadership. The Company has established itself as a trendsetter in the Solar Control Film industry, backed by over six decades of technological development. The Companys well-established global brands, Sun Control Window Films and ‘Global Window Films are known for their high-quality standards and continuous innovation.

The Company offers a wide range of products with diverse end applications, including Solar Control and Paint Protection Films for automotive applications, Bi-axially Oriented Polyethylene Terephthalate (BOPET) Films, Thermal Lamination Films, Low-

Oligomer Films, and high shrink films etc. for industrial applications and specialized solar control films for architectural applications.

The Company has streamlined its production of Paint Protection Film at its facility in Waluj Aurangabad, ensuring internationally approved product quality. The company is now officially ASTM standard compliant in both solar control and safety films. The Company has successfully navigated its supply chain through the impact of geopolitical tensions, especially in the Middle East and Eastern Europe.

The industry faces challenges related to the volatile prices of basic raw materials such as PTA and MEG, which are impacted by crude prices and demand-supply dynamics. However, the Company has long-term agreements on import parity pricing for its main raw materials, and it has helped to mitigate risks associated with price fluctuation. With integrated manufacturing facilities, a dedicated R&D center, and a portfolio of value-added speciality products, the company is well-positioned to cater to various applications. After achieving full capacity utilization of its first dedicated PPF line, the board had approved an investment of INR 125 crores to set up another state-of-the-art manufacturing line for PPF. The new line is expected to start commercial production in Q2 FY26.

With the vision of being vertically integrated in all product segments, the company manufactures all key components of window films and other speciality films. In line with this, the Board has approved to setup a new TPU extrusion facility of INR 118 crores at its existing location, which is first-of-its-kind in India. TPU manufacturing will be the final step of backward integration in PPF. This facility is expected to be operational from Q2 FY27.

Leveraging a well-developed marketing network, the Company has established a wide customer base across 90+ countries, including regions such as USA, Europe, Far East, Middle East, Africa, South America, Australia, and New Zealand and has appointed marketing executives in each region. The company services overseas customers through established subsidiaries in the USA and UK. Its important to note that there have been no changes in the nature of the Companys business during the year under review.

3. INDUSTRY STRUCTURE AND OUTLOOK

The BOPET film industry serves a broad spectrum of end-use segments including automotive films, architectural glazing, speciality industrial insulation films, shrink-label applications, and others—each demanding tailored performance characteristics and regulatory compliance. With rising environmental and quality standards from customers, the company has aligned its manufacturing lines to emphasize value-added products such as high-end window films, paint protection films, various architectural films, shrink films, and electric insulation materials, etc. thereby reducing dependence on low-margin commodity segments.

However, volatility in crude-oil prices continues to pressure feedstock and logistics costs necessitating active hedging and procurement strategies. While escalating geopolitical tensions and shifting trade policies introduces risks of supply disruptions, the companys consumer-centric suite of automotive sun-control and paint-protection films, and architectural glazing products positions it to capture these growth dynamics and deliver sustained, value-accretive performance

4. OPPORTUNITIES AND CHALLENGES

With the uncertainties around the tariffs, the company is presented with a great opportunity to grab a bigger market share of the automotive and architectural films and expand its brand presence around the globe. The Company can strengthen its presence in the high margin markets like US, Europe, Middle East. The companys more than three-fourths of the revenue is coming from speciality films outperforming the industry significantly. In response to the challenges posed by excess capacities and price competition in both the Indian and international markets, the Company is actively pursuing cost reduction measures. While the strategic focus is centred around increasing the share of speciality value-added products, PCR and eco-friendly products, and reducing the volume of commodity films. The Companys strength lies in its integrated manufacturing facilities, established track record, experienced management team, and diversified customer base in all the segments across the globe. The network includes world renowned applicators, tinters, detailing studios, dealerships as well as marquee OEMs. A comprehensive product portfolio, dedicated R&D, and well-recognized brands position the Company for future growth. The company has diversified into the architectural film segment, a complementary business to the automobile window film industry. Owing to low market penetration, the Company envisages significant growth opportunities for architectural films in emerging markets. The companys aim is to not just be a supplier for the architectural segment but provide comprehensive solutions for the sector. The Companys focus on speciality films and value-added products positions it well in a competitive marketplace, while its commitment to sustainability aligns with the growing demand for eco-friendly solutions. Despite the challenges posed by geopolitical tensions and volatile market conditions, the company remains focused on delivering high- quality products, leveraging its expertise, expanding its presence in key markets and maintaining its position as a leading player in the global speciality films industry.

5. EXPORTS MARKET: Sun Control Film:

With a dedicated history of over 30 years in technological development, the Company has emerged as one of the premier manufacturers of Solar Control window films and a trendsetter and leader in this segment both for the automotive and architectural segment. By serving customers across North America, South America, Europe, Far East, Middle East, and Africa, the Company has gained a strong foothold in international markets. Its brand ‘GLOBAL WINDOW FILMS is registered in the USA and is amongst the leading automotive window films brands. Currently, the Company exports its products to more than 90 countries worldwide. To further expand its global presence, the Company has appointed sales personnel in key markets such as the USA, UK, Mexico, Brazil, Germany, Far East, Middle East, UAE, Malaysia, Singapore, and Australia. This diverse product portfolio provides ample marketing opportunities for distributors worldwide.

The global solar control film market is experiencing steady growth driven by increasing awareness of the benefits offered by solar control films. These films contribute to energy cost reduction, carbon footprint reduction, protect against harmful ultraviolet (UV) rays and infrared emissivity.

Paint Protection Film:

The PPF manufacturing line was overbooked in the last year. The products are well accepted in the domestic and overseas markets.

The company has launched a new coloured PPF series to cater to the niche segment in the international market.

To fulfill the ever-increasing demands, the second PPF line is expected to be operational from September 2025.

Shrink Film:

The Company has a dedicated line for shrink films, in addition to this its fungible capacity is to the level of 30-40% of total capacity. The business has witnessed robust growth owing to consistent product quality and marketing efforts to grow the product in the international market. There is a strong customer preference in shifting from PVC-based films to more recyclable PET-based shrink films.

Thermal Film:

The Company offers a wide range of high-quality products in the thermal lamination segment. The Company has expanded its product portfolio by adding Lidding film, Feather Feel films which led to an increase in export volumes.

Plain Film:

The Company has consistently maintained its leadership position as the biggest exporter of polyester films in the Country and has been continuously honoured with the Top exporter award from Plex council for more than three decades. By delivering high-quality and variety of product offerings and its ability to satisfy customers worldwide, the Company is confident in maintaining its prominent position in exports. To expand its market reach, the Company is actively exploring opportunities in new markets and aims to further grow its customer base in regions such as the USA, Europe, Far East, South America, Africa, the Middle East, Australia, and New Zealand as these markets hold strategic importance for the Companys BOPET-based products. The recently added products such as Silicon coated film are in great demand in Export market.

6. DOMESTIC MARKET

In addition to its success in the international markets, the Company holds a dominant position in the domestic market enjoying strong brand recognition in all its product segments. The retail sector is witnessing growth, driven by increasing consumer preference for high quality packaged items on the back of expanding middle class. This trend is expected to boost the consumption of BOPET, sun-control, and PPF Films. There is a growing demand for window films in the real estate sector including residential, commercial buildings and malls for their safety, energy efficiency, and UV protection. The Company, with its premium segment of window films, is poised to leverage this trend for continued growth.

In the automotive segment for PPF and solar-control Films, the Company is looking for an attractive growth supported by the consumer awareness of the benefits and the aesthetics. The Company has introduced a unique concept called Garware Application Studios (GAS), a specialized detailing and car care center focused on the installation of PPF and solar-control Films on both new and used vehicles. With dedicated efforts to create the market, Company has trained more than 900 PPF applicators so far and continues to build the tinting and installers community in India.

7. MARKETING:

To increase product awareness and to increase brand awareness in domestic as well as international markets, the company has hired professional and reputable marketing agencies. The company has increased the marketing efforts in multiples, and it has shown desired results in terms of brand visibility, customer engagement, and finally, on its overall revenue growth.

8. REVIEW OF OPERATION

The standalone financial statements have been prepared in compliance with the requirements of the Companies Act, 2013 and the applicable Indian accounting standards

Particulars	2024-25	2023-24	%
Net Sales	1,995.45	1,581.65	26.16%
Other Income	76.19	38.72	96.77%
Profit before Interest,	494.32	288.19	71.53%
Depreciation
Interest & Financial Charges	6.47	10.10	(35.91)%
Depreciation	40.34	38.16	5.71%
Profit before Tax	447.51	239.93	86.52%
Provision for Tax	108.59	59.00	84.05%
Profit after Tax	338.92	180.93	87.32%
Other Comprehensive	16.74	7.50	123.20%
Income (OCI) Net Of Tax
Total Comprehensive Income	355.66	188.43	88.75%
For The Year Net Of Tax
Earnings Per Share (Basic/	145.88	77.88	87.32%
Diluted)
Market Capitalisation	9145.43	4057.19	125.41%
Details of significant changes in key financial ratios:
Particulars	2024-25	2023-24	Change
1 Debtors Turnover No of	25	24	4.17%
Days
2 Inventory Turnover No	46	47	(2.13)%
of Days
3 Interest Coverage Ratio	76.40	28.55	167.60%
4 Current Ratio	4.20	3.31	27.00%
5 Debt Equity Ratio	0.00	0.01	(56.60)%
6 Operating Profit Margin	24.77%	18.22%	35.95%
(%)
7 Net Profit Margin (%)	16.98%	11.44%	48.48%
8 Net Worth ( in Crores)	2,311.03	1,978.60	16.80%

9. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has sound systems of internal control and checks, which are supplemented by a regular internal audit commensurate with the size of its business and the nature of its operations. The Audit Committee of the Board meets at regular intervals and actively reviews the internal control systems, which are reflected in the internal audit reports. Suitable corrective actions are initiated wherever necessary.

10. MATERIAL DEVELOPMENTS IN HR / INDUSTRIAL RELATIONS

The Company has a highly qualified and experienced team of professionals who have greatly contributed to its overall performance. Their expertise and dedication have been instrumental in driving the Companys success. The Company values the skills and contributions of its employees and strives to provide a supportive and conducive work environment that promotes collaboration and innovation.

The Company is pleased to report that labour relations across all its company locations have remained harmonious and cooperative. As

a result, the Company has not experienced any incidents of industrial unrest or disruptions during the review period. GHFL believes that maintaining strong employee relations is essential for the long-term success of the organization and will continue to prioritize the well-being and satisfaction of its employees.

11. ENTERPRISE RISKS MANAGEMENT

Risk is an inherent component of business, and in the current dynamic and competitive landscape, it is crucial to proactively address and mitigate potential risks. The Company recognizes the importance of risk management and has conducted a comprehensive exercise to identify key risks that could impact its performance. These risks encompass various aspects such as changing regulations, intensifying competition, business uncertainties, technological obsolescence, investment risks, financial challenges, environmental concerns, and talent retention. By identifying and understanding these critical risks, the Company can implement effective risk mitigation strategies to safeguard its operations and ensure sustainable growth.

Some of the critical risks identified by the Company are as follows:

Operational Risk: The Company recognizes the potential impact of operational risks, particularly equipment obsolescence, on its production. To mitigate these risks, the Company closely monitors equipment performance, conducts timely upgrades, and implements preventive maintenance measures. Significant investments have been made in equipment modernization to ensure operational efficiency and minimize disruptions.

Competition Risk: The Company is sensitive to industry capacity, output levels, economic conditions, and changes in consumer demand. The addition of capacities by competitors has intensified competition. To address this risk, the Company focuses on product differentiation, expanding its market presence, and adapting to evolving consumer needs. Continuous market analysis and proactive strategies help the Company to maintain its competitive edge.

Fluctuation in Raw Material Prices: The Companys major raw materials, PTA and MEG, are derived from crude oil. Fluctuations in crude oil prices directly impact raw material costs. The Company regularly assesses these changes and passes on any increase to the extent feasible and required. Effective cost management and proactive procurement strategies help to mitigate the impact of raw material price fluctuations.

Market Risk: To manage market risk, the Company diversifies its presence in various markets and aims for deeper penetration in existing markets. The Company focuses on launching new products and staying abreast of market trends. By adapting to changing market dynamics, the Company minimizes the impact of market risks and capitalizes on growth opportunities.

Logistics Risk: Logistics risks encompass transportation challenges and the availability of shipping containers. The Company has successfully improved its exports despite geopolitical challenges posed by the Middle East and Eastern Europe.

Currency Fluctuation: Given the Companys significant export revenues, it is exposed to currency fluctuations. To mitigate currency risks, the Company has appointed consultants who advise on global economic events and their impact on currencies.

The Company hedges its net exposure through forward contracts, reducing its vulnerability to currency fluctuations and ensuring stability in financial performance.

RISK MANAGEMENT AND MITIGATION

The Company has implemented a robust Enterprise Risk Management System to proactively identify, assess, and mitigate risks to achieve business objectives. Internal control systems and response strategies are in place to handle risks and protect the interests of shareholders and stakeholders. The Board of Directors holds overall responsibility for the Companys risk management framework, supported by the dedicated Risk Management Committee. According to Regulation 21 of Listing Regulations, 2015, the Risk Management Committee was constituted to overall manage the Companys risk management process.

The primary objective of the Committee is to control and prevent unacceptable losses by identifying, measuring, and monitoring the Companys risk exposure. An Enterprise Risk Management Policy has been formulated to guide risk management efforts, outlining objectives, approaches, and organizational structure for risk identification, management, and reporting. The Policy assigns clear roles and responsibilities to key stakeholders and personnel, ensuring a systematic process for risk identification and management.

There are no risks which, in the opinion of the Risk Management Committee & Board, threaten the existence of the Company.

DISCLOSURE OF ACCOUNTING TREATMENT

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind- AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) (Amendment) Rules, 2016 read with Section 133 of the Companies Act, 2013.

CAUTIONARY STATEMENT

The statements in the report of the Board of Directors and the Management Discussion & Analysis Report describing the Companys outlook, estimates or predictions may be forward- looking statements within the meaning of applicable securities laws and regulations. The actual results may differ materially.