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Published on: July 26, 2021, 5:43 a.m.
GHFL consolidates its leadership
  • Garware with daughters Sonia, Sarita & Monika: moving up in the value chain

By Arbind Gupta. Assistant Editor, Business India

Garware Hi-Tech films Ltd (GHFL), formerly known as Garware Polyester Ltd, has continued to strengthen its position in the market. The Rs990-crore company, the flagship entity of the Garware group, is a pioneer and one of the largest exporters of polyester films in the country. It was co-promoted by SB Garware, chairman & managing director, and his father & founder, the late Bhalchandra Garware (Abasaheb) in 1957.

In the last few years, the company has proactively moved its product portfolio towards high-margin specialty films, even as it has consciously diversified its product basket, as well as its market presence, where it exports over 70 per cent of its production to over 80 countries. It is India’s largest exporter of polyester films, winning Plexcouncil’s top exporter’s award continuously for 33 years. GHFL is the third largest brand for sun control films in leading markets like the US, Europe and the Middle East. 

The Mumbai-based company, one of the leading manufacturers of sun control films globally, which has also launched its automotive paint protection films (PPFs) line recently, has changed its corporate brand name to Garware Hi-Tech Films Ltd (GHFL) from Garware Polyester Ltd (GPL), w.e.f April 20 this year. 

Over the last few years, the company, has successfully moved up in the value chain from commodity films. Today, the value-added films contribute over 75 per cent to its revenue. This move has also seen the company’s net profit growing at a CAGR over 50 per cent in the last five years, though its topline has moved rather slowly at about 3 per cent.

Despite the Covid-related challenges, the company has pulled off an impressive performance in 2020-21, because of the strong demand for its products in the export market. As against 2019-20, it saw over a 46 per cent surge in the net profit at Rs126 crore in 2020-21, while its revenue increased moderately to about Rs989 crore from Rs925 crore. All this has been well-reflected in its stock price, which has surged by more than four times in the last one year on the BSE; currently it is hovering at about Rs900.

However, the recently-commissioned (December 2020) automobile PPF line is expected to add an additional Rs300 crore to the revenue by 2022-23. The company is witnessing good acceptance of its PPF films in the export market. These films, clear and self-healing, are designed to give automobile paint coatings the highest level of protection and impact resistance. T

he highly-specialised films protect a vehicle’s paint from scratches, dents and damage caused by road debris and rocks, as well as from environmental elements, through its force-dissipation properties. PPFs are made using a specially formulated thermoplastic polyurethane film, which offers high reliability and consistent performance. GHFL is the only manufacturer of PPF in the country. 

“We have built a strong reputation as a global brand, with high-quality products, value addition, innovation,” says SB Garware, chairman & managing director, GHFL. “And, we want this to reflect in our name. We are a high-tech company investing in new innovations and technologies and hope to attain a strong leadership position in the years to come. This is now captured correctly in our new name. The new identity is a reflection of our commitment and focus to grow in different product categories and geographies.”

Along with the new PPF line, the company has modernised its existing facilities too and is putting up a new metalliser at a total capex of Rs135 crore. The company possesses patented technology for dyed polyester film in India and the US. Besides, to meet the growing demand for window films in the export market, GHFL has announced another planned capex of Rs135 crore, to set up a new lamination line of 180 million sq ft per annum. Because of this expansion, the company expects the topline to rise by Rs300 crore by 2023-24.

“The next few years will be quite exciting for us, as we are looking to substantially boost our topline,” says C.J. Pathak, whole-time director, GHFL. “Our modernisation of plants along with the recently launched new facilities, particularly the PPF line, as also the expected new lamination line for window films, will contribute significantly to the company’s performance. Garware has been a pioneer in polyester film making since 1974 and we would like to maintain our leadership position, going forward as well.”

GHFL is among the few companies in the world that has vertically-integrated chips-to-films facilities, with multiple adaptable manufacturing lines that can produce a highly flexible product-mix in its state-of-the-art facilities. The company has two manufacturing plants across two locations – Waluj and Chikalthana in Aurangabad, Maharashtra. It has four lines for polyester films (total capacity: 41,000 tpa), as also 3,600 tpa capacity for thermal lamination films; 14,400 tpa for BoPP films; 240 million sq ft for sun control films; and 30 million sq ft for a newly set-up paint protection films.

Besides, the company has 74,000 tpa capacity for polyester and SSP chips and 3,600 tpa capacity for metallisers. Having achieved 100 per cent utilisation of its existing capacity, the company is now in the process of increasing the capacity of sun control films by 180 million sq ft per annum. The expansion is expected to be commissioned by April 2022.

Diversified offering

The company is engaged in the making of polyester films ranging from 10 micron to 350 micron. These films are used in a variety of end applications, such as packaging, electrical & motors and cable insulations, shrink film for label applications, coloured polyester films for window tint application, TV screens and safety. GHFL has been a leading exporter of polyester films and holds patented technology for making UV stabilised dyed films, which are sold under the brand name ‘Sun Control Films’ and ‘Global Window Films’ in the domestic and exports markets.

These films find application in commercial/residential buildings and automobiles in a big way. GHFL holds a 90 per cent market share of shrink films in India, while in sun control films for automobile applications, it boasts of having the largest capacity in the world. Its automotive window films are 100 per cent exported.

The company operates these activities under two divisions – Industrial Product Division (IPD) and Consumer Product Division (CPD). Under IPD, it makes a variety of films (polyester films/BoPET) such as PET shrink films for labels; lidding (peelable), compressor & motor insulation; packaging application and release liners; thermal laminations for book covers, magazines, digital print and label applications and also metallising and coatings for PET and BoPP labels.

Under CPD, it makes films for architectural applications, which are ideal for any glass trait. These architectural films reduce the excessive exposure to sunlight and keep residential and office interiors cool. Besides, it also makes a variety of films for automotive applications, which are available in different varieties – VLT (visible light transmission), UV and heat rejection. The company also makes safety & security films which give additional strength, reduces glare and prevent glass from splintering on impact. Its recently-added paint protection films protect car paint from external damages.

Backed by a DSIR-approved modern R&D facility, with continuous focus on increasing efficiency as well as introducing new value-added products, the company has put up an integrated operation and the ability to make a variety of polyester films. In fact, it has the capability to produce about 300 variants of different thickness and features. The ability to modify the thickness and features of its products helps GHFL to adequately cater to the diverse needs of its customers. 

“To maintain the quality and consistency of various polyester film products, GHFL had undertaken capital expenditure for integrating backwards in the past,” says a Care Ratings report. “Through backward integration, GHFL has now developed a capability to change the properties of polyester chips beforehand, to derive a variety of films from its lines. GHFL also has the capability to undertake value addition on plain films so as to make them suitable for application in electrical grade and high shrink films, sun control films and BOPET-based thermal lamination films.”

The rating agency has recently revised the credit rating (as regards bank facilities) of GHFL to CARE A+ from A and outlook to stable from positive. “The revision in the ratings assigned to the bank facilities of GHFL factors in the overall business risk profile, driven by healthy topline growth and improved margins backed by improved product mix and healthy capacity utilisation,” adds the CARE release.

“The improvement in the margin is also on the back of a decline in raw material prices, which are crude oil derivatives. The ratings also factor successful commissioning of the new product line for paint protection films, which is expected to further support revenue and margin growth, going ahead. The rating revision also considers that GHFL will sustain the improvement in its financial risk profile, over the medium term, supported by steady cash generation.”

Proven track record

The agency adds that the rating continues to derive strength from the company’s established track record of more than five decades in the polymer value chain industry, a diversified product portfolio with wide geographical presence globally and integrated manufacturing facilities. It also takes cognisance of the fact that the debt coverage metrics continued to improve in 2020-21, driven by improved profitability and improved net worth. 

“The company’s performance over the last few years underscores our focus on world-class execution, operational excellence and emphasis towards new innovative and niche products with an aim to enhance customer value,” observes Monika Garware, vice-chairperson & joint managing director, GHFL. “We have planned our product lines carefully, to acquire global leadership in any product that we make. As a responsible high-tech performance film maker, we seek to deliver long-term economic value to our stakeholders, while continuing to contribute to the environmental and social well-being of our communities. GHFL is rooted in innovation and high-chemistry in-house R&D. We concentrate our focus on growth and see a robust and secure future for the company.” Monika is the eldest daughter of chairman Garware.  His second daughter  Sarita  Garware Ramsay is joint managing director,  GHFl, while Sonia  Garware, the youngest, is the non-independent and non-executive  director.

GHFL traces its origin from 1933, when Garware Motors was promoted by the late Bhalchandra Garware, father of the current chairman. The company was in the business of trading in imported cars. In 1956, it took the new name Garware Plastics, with a view to enter the business of plastic moulding and extrusion.

A new company, Garware Motors & Engineers, was incorporated by Bhalchandra Garware and his son in 1957. In 1976, the two companies – Garware Plastics and Garware Motors & Engineers – were amalgamated. In 1977, the company was renamed Garware Plastics & Polyester, with the company venturing into the business of polyester film making.

In 1981, Garware Plastics & Polyester got listed on the stock exchange and, in 1994, it was renamed Garware Polyester, as it decided to focus on the polyester film business, discontinuing the plastic moulding and extrusion business. The coming years saw the company emerging as one of leading players in the polyester firm business. In the last few years, the company has tweaked its product mix in favour of higher-margin yielding, specialty polyester films. And, to showcase its differentiated category, it renamed itself Garware Hi-Tech Films in April this year.

As the company decided to reduce its mix of commodity grade products, GHFL stopped production of commodity products in 2017-18. During the next two years, 2018-19 and 2019-20, the production of thermal films was curtailed, to focus on a value-added product mix. The contribution of value-added products like sun control films and shrink films, part of plain films, has been proportionately rising (y-o-y). 

From 36 per cent in 2018-19, the contribution of sun control window films went up to 46 per cent of the overall revenue in 2020-21. The company makes a wide variety of window films, which cater to different segments of the automotive business and the architectural space. It has also added a new value-added product, paint protection films, to its well-diversified portfolio. The company is also looking to increase the share of consumer division to 70 per cent from the current 50 per cent. 

GHFL has a dedicated R&D department, which focusses on increasing efficiency, while also introducing new value-added products. The company has developed PCR shrink film and has dispatched its first commercial consignment to Europe. It has also developed a facility for recycling pet bottle crush in its polymerisation plant to increase the PCR content in its product.

“In the last few years, we have made conscious efforts to move up in the value chain,” adds Pathak. “High-margin value-added products form a significant portion of our business and, as a result, we are witnessing consistent improvement in our bottom line. This, along with our other initiatives, like modernisation of our facilities and addition of paint protection films into our portfolio, will provide us the much-needed momentum, going ahead.” Pathak has been associated with the company for the last 40 years. With his experience in dealing with matters of business affairs, he is actively involved in the day-to-day affairs of the business. He holds a master’s degree in commerce, a bachelor degree in law and a diploma in business management.

Expanding footprint

GHFL is also looking to diversify its market presence. It is exploring opportunities in Australia (current share 1 per cent in export basket), New Zealand, Africa (4 per cent) and Canada. Currently, the US (30 per cent; here, GHFL is the third largest brand in the window film category) and Europe (13 per cent) are the major markets for the company’s products. The company has developed a strong distribution network, with a presence in about 80 countries via more than 9,000 tinters spread across the globe. It is the third largest brand for sun control films in leading markets like the US, Europe and the Middle East. 

GHFL’s products are marketed in the overseas locations by its wholly-owned subsidiaries: UK-based Garware Polyester International and the US-based Global Pet Films (a step-down subsidiary of GPIL). Further, GHFL has representative offices in strategically important markets like Russia, China, Brazil and Australia. GHFL’s international accreditations and certifications for different products, namely European Chemicals Agency, EU Regulation, etc, have resulted in the strong marketing of its products. The company has developed patented technology for making UV stabilised dyed films, making it one of the premier window film makers globally.

“Over the years, we have placed ourselves strongly in the export markets, where the US is our largest market,” says S Krishnan, director, sales, GHFL. “We have a strong network of 5,000 tinters across the US for all automotive applications. While we are ramping up our presence in the existing markets, we are also closely looking at other markets. Our recently launched paint protection films have been well-accepted in the international market.”

With all these developments in place, GHFL, a market leader and the only sun control film maker in India, has positioned itself strongly in the market. In the last few years, the company, which exports over 70 per cent of its production, has successfully tweaked its portfolio in favour of valued-added specialty films and, now, more than 75 per cent of its revenue comes from high-value products.

This has already started bearing fruit, as the company’s profitability has grown at a CAGR of over 50 per cent in the last five years. Even as the topline has moved slowly, going forward, initiatives like the addition of paint protection films into its portfolio as also a proposed expansion of sun control film capacity by 180 million sq ft, will boost its revenue significantly. The leading polyester film maker has a proven track record and, going forward, it is all geared up to maintain its leadership position in the market. 

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