Garware Technical Fibres Ltd Management Discussions

Overview of Company

Established in 1976, Garware Technical Fibres Limited (GTFL) is a leading manufacturer of technical textiles, with manufacturing facilities in Wai and Pune, Maharashtra, and a presence in over 75 countries worldwide. The Company delivers value-added solutions across sectors including domestic fisheries, international aquaculture, shipping, geosynthetics, and sports surfaces.

GTFLs continued investment in research and application engineering, backed by a dedicated R&D team and a broad portfolio of SKUs, has supported its ability to address evolving needs across a diverse customer base.

FY26 was marked by a challenging operating environment, shaped by geopolitical developments, global shipping disruptions, raw material price volatility, and evolving US tariff policies. The global salmon aquaculture industry also experienced a temporary slowdown due to one-off environmental factors, leading European customers to defer capital expenditure plans.

While the impact of the challenging conditions was recorded during the second quarter, demand recovered progressively during the second half of the year, and our operating performance improved accordingly. Overall, revenue and profitability recorded only a modest decline compared with the previous year, and we retained our strong presence across all key markets. Aquaculture continues to be our largest business segment.

The international fisheries and value-added ropes businesses also delivered strong results, including continued momentum in Chile and new customer breakthroughs earlier in the year.

The geosynthetics business was a consistent source of strength through the year, sustaining strong growth in profitability and return on capital employed, and remains well positioned for further growth in FY27.

From March 2026, the escalation of conflict in the Middle East introduced a new source of disruption, driving an unprecedented increase in raw material prices and a sharp rise in goods in transit as shipments were affected. The Company continued to pass on higher input costs to customers, albeit with a time lag, while building inventory to safeguard continuity of supply.

Against this backdrop, the Indian economy maintained its position as the fastest-growing major economy, supported by resilient private consumption, sustained public capital expenditure, and inflation that eased to historic lows over the course of the year. Globally, growth conditions became more challenging as the conflict in the Middle East escalated, adding pressure on energy prices and financial conditions.

Despite this more demanding environment, the Companys diversified portfolio and disciplined execution supported continued resilience through the year.

The geosynthetics business continues to be a major pillar of growth, delivering sustained profitability and strong returns on capital employed, and remains well positioned for continued growth in FY26-27. Sustained government investment in infrastructure, including roads, railways, coastal protection, riverbank stabilization, continues to support demand for the Companys geosynthetic solutions used in soil reinforcement, drainage, and erosion control.

Deepening customer engagement and international expansion remain strategic priorities, as reflected in the Companys continued participation in international platforms such as HavExpo, its expanding presence in the UK aquaculture market, and ongoing engagement with global aquaculture majors. The continued shift within the aquaculture industry towards diversification beyond salmon presents further opportunities for customised, species-specific solutions aligned with sustainability and productivity objectives.

The escalation of conflict in the Middle East from March 2026 resulted in a sharp, and unprecedented increase in raw material costs and disruption to goods in transit, the impact of which remains uncertain as the Company enters FY27. The Company continues to monitoring the situation closely and take proactive measures, including a calibrated build-up inventory and the considered pass-through of costs, to minimise disruption.

Rising consolidation within the aquaculture industry and increasing domestic competition continue to reshape the competitive landscape. In response, the Companys strategy remains focused on innovation, new product development, and value addition to the customers.

Entering FY27, the geosynthetics business is expected to sustain its growth momentum in profitability and capital efficiency, supported by continued government investment in infrastructure. Order flows in the salmon aquaculture segment and the U.S. market, having normalised through the second half of FY25-26, are expected to continue on this steadier footing.

The Company continues to closely monitor the evolving impact of the Middle East conflict on raw material costs and logistics, and is taking all necessary proactive steps. Supported by its diversified portfolio, strong financial position and disciplined execution, the Company remains well -positioned to pursue long-term growth.

The Company registered total consolidated revenue of Rs. 1528.79 crores for the year ended 31st March, 2026, a decrease of 0.74% over the previous years consolidated revenue of Rs. 1540.11 crores. Consolidated operating EBITDA is Rs. 269.7 crores against Rs. 318.8 crores of the previous year.

• Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA): 20.8%

• Net Profit Margin: 13.0%

• Earnings per share: Rs. 20.01 (previous year Rs. 23.32)

• Interest Coverage: 20.87

• *Current ratio of the Company: 2.74

• **Debt-equity ratio: 0.03 (previous year 0.05)

• ***Return on average net worth: 15.3% (previous year 18.7%)

• ****Return on Invested Capital: Pre-tax (RoIC) 37.3% (previous year 58%)

In the near term, the global business environment is expected to remain challenging, shaped by geopolitical tensions, volatile commodity and energy prices, and evolving trade dynamics. The resurgence of trade tariffs and protectionist policies in key markets threatens to disrupt global supply chains and increase operational costs. These pressures are compounded by logistical bottlenecks, regulatory uncertainty, and the impacts of climate change. Navigating this environment will demand heightened agility, strong risk mitigation frameworks, and a sustained focus on operational resilience.

GTFL continues to operate within a robust internal control framework designed to support operational effectiveness, compliance obligations, and financial reporting accuracy. These controls are aligned with GTFLs strategic growth plans and are reviewed periodically to ensure they remain effective, relevant, and responsive to evolving business needs.

The Company utilizes a global-standard SAP ERP system to manage its day-to-day operations, enabling seamless integration with financial records. Ongoing investments in IT infrastructure have enhanced process automation and strengthened embedded controls across key functions. Additionally, GTFL has implemented a dedicated tool to monitor critical regulatory requirements. The Company remains proactive in aligning with changing policy landscapes, reinforcing its commitment to sound governance and risk management.

At GTFL, people are central to our purpose and performance. They remain our most valuable asset and the foundation of our continued success. The Company remains deeply committed to the health, well-being, and holistic development of employees and their families. Grounded in the belief that every individual has untapped potential, GTFL invests significantly in capability-building initiatives that enhance current performance while equipping talent for future leadership.

Our organisational culture is built on trust, transparency, and empowerment. Open communication channels encourage employees to share ideas, voice concerns, and actively participate in collaborative problem-solving.

Human resource practices are thoughtfully crafted to foster a high-performance environment that nurtures innovation and recognises excellence.

GTFLs sustained focus on building a people-first, values-driven culture was once again recognised in the 2025 Great Place to Work? Survey, where the Company achieved an exceptional trust index score. Reinforcing this achievement, GTFL has consistently maintained a Trust Index above 90 over many years in the Building a Culture of Innovation by All Large category and among Indias Best Workplaces in Textile and Textile Products. These accolades reflect the strong alignment between leadership and employees in cultivating a workplace where talent thrives and innovation is a shared pursuit.

Cautionary Statement:

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, and expectations may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied.

**Mainly due to an increase in current investment and a decrease in current borrowing.

**The change is primarily driven by a reduction in outstanding borrowing as compared to the previous year.

***Primarily attributable to a decline in profit as compared to the previous year.

****RoIC=EBITDA excluding other income and exceptional / (Capital Employed less Treasury Surplus Investment and Cash & Bank balances).