Ladies and gentlemen, good day, and welcome to Garware Hi-Tech Films Limited Q3 and 9 months FY26 earnings conference call hosted by Go India Advisors LLP. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded.

I now hand the conference over to Ms. Garima Singla from Go India Advisors LLP.

Thank you, and over to you, ma'am.

Thank you. Good morning, everyone.

I am Garima Singla, and it's my pleasure to welcome you on behalf of Garware Hi-Tech Films Limited. Thank you for joining us today for quarter three and 9 months of financial year '26 earnings conference call.

This call is being hosted by Go India Advisors. 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, Sales and Marketing, and Mr. Abhishek Agarwal, the CFO.

I now invite Mr. Deepak Joshi to present the company's business outlook and performance, after which we will open the floors for Q&A.

Thank you, and over to you, sir.

Thank you, Garima. Good morning, everyone, and thank you for joining us to discuss the performance of Garware Hi-Tech Films Limited for the third quarter of FY26.

To start with, wishing you and your loved ones a very Happy New Year. Garware's business model, true to its 90 years of heritage and innovation, integrity, and customer-first approach, remains resilient in the face of uncertain global macro conditions.

Geopolitical volatility and successive tariff actions by the US administration continued to pose a challenging environment for exporters. During the quarter, we experienced the full impact of 50% tariff structure.

The offtake was calibrated to maintain undisrupted supply chain. Even in this challenging environment, GHFL largely maintained its offtake.

Revenue declined marginally by 1.6% YoY. Even for 9-month FY26, revenue decline was limited to 2.4%.

Our order book continues to remain robust. Despite a 50% tariff, the EBITDA decline has been contained at 7.4% on YoY basis in Q3 FY26.

For 9-month FY26, the decline is around 8.3%, primarily on account of tariff-related cost absorption. Export continued to form a significant part of our business, contributing 74.3% of total revenues for this quarter.

Our sun control segment witnessed a strong demand. Our architectural films business continued to expand rapidly in all geographies, including Middle East and Indian markets, backed by focused marketing initiatives and premium product launches.

Recognizing the growth potential in the Middle East market, the company has announced to establish a wholly owned subsidiary in UAE. The new entity will manage trading and exports of films, ceramic coatings, and paint protection film across the MENA region and other international markets.

We also set up two-of-its-kind Global Application Studio in UAE, and we are in process of onboarding more partners across the globe to strengthen our brand equity. This strategic step meaningfully strengthens Garware Hi-Tech Films' global footprint, expand export capabilities, and enhances long-term growth visibility in overseas markets.

We had successfully doubled our paint protection film capacity to 600 LSF in September '25. The capacity is ramping up as per the plan.

The expansion has enhanced manufacturing efficiencies and unlocked additional capacity headroom for our future growth. The upcoming TPU manufacturing line, which will be commissioned by October 2026, will further strengthen our backward integration and innovation capabilities, with 25% of the capacity earmarked for new-generation products.

In addition, we launched Garware Home Solutions, a new D2C business vertical aimed at expanding our domestic footprint and cater to unmet consumer demand in the architectural film space. We opened our first GHS studio in Chembur in Mumbai.

It is in collaboration with a local interior design firm, and we plan to follow the same approach to increase our presence to all towns in India. This platform will help GHFL directly engage with consumers and premium real estate projects, while enhancing brand visibility and driving higher margin growth.

Our Garware Application Studio network, which acts as a direct-to-consumer channel for premium PPF and glazing films, continues to expand rapidly. We are targeting to cross 300-plus studios by end of FY26 and have already crossed 250 stores in Q3.

This will strengthen our presence across Tier 1, Tier 2, and Tier 3 cities in India. Overall, despite external challenges, this quarter reflects GHFL's resilience, adaptability, and strong operational foundation.

Our continued investment in capacity expansion, product innovation, and brand-building initiatives will ensure we remain well positioned to capture emerging opportunities and deliver sustainable value to stakeholders. Thank you very much.

Now I hand over to Mr. Abhishek Agarwal, our CFO, for financial commentary.

Thank you, Deepak, and good morning to everyone. Let me now take you through the key financial highlights for the quarter ended December 31st, 2025.

For Q3 FY26, our consolidated revenue stood at ₹459 crore compared to ₹466 crore in Q3 of FY25, reflecting an 1.6% year-on-year decline, primarily due to the tariff-related disruptions in the key export markets. Despite this, exports remained stable at 74%.

EBITDA stood at ₹86.7 crore compared to 93.7 93.7 crore in Q3 of FY25, showing a decline of 7.4% year-on-year. EBITDA margin stood at 18.9%, down only 118 bps year-on-year, maintaining a healthy level despite tariff headwinds, which has primarily been driven by cost optimization initiatives.

PBT came in at ₹73 crore, down 9.8% year-on-year, while the PAT for the quarter was ₹55.8 crore compared to ₹60.8 crore in Q3 of FY25. On 9-month basis, the 9-month of FY26 revenues stood at ₹1,523 crore, marginally lower by 2.4% year-on-year, while EBITDA was at ₹343 crore, down 8.3% year-on-year, reflecting the cumulative impact of tariff volatility.

On the balance sheet front, GHFL continues to remain debt-free, with a robust cash and liquid investment balance of ₹669 crore as on 31st December 2025. This strong liquidity position provides ample headroom for our ongoing strategic capex, including the TPU line, as well as future innovation and expansion initiatives.

Despite short-term headwinds, GHFL continues to maintain a strong financial foundation and steady operating cash flow generation. With new capacity additions, continued focus on value-added products, and improved manufacturing efficiency, we expect to gradually enhance our revenue visibility and profitability in the coming years.

Thank you, all. Over to Garima.

Over to you, the moderator.

Thank you very much. We will now begin the question-and-answer session.

Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two.

Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

The first question is from the line of Mahesh Bendre from LIC Mutual Fund. Please go ahead.

Hi, sir. Thank you so much for the opportunity.

Sir, despite of soft quarter and tariff issue, we were able to hold on our gross margins really well, so—

Sorry to interrupt, Mahesh. Can you please speak a little louder?

Yeah. Am I audible now?

Yeah. Please go ahead.

Thank you.

Yeah. Sir, my question is despite of such a soft quarter, still our gross margins were not impacted that way for the quarter, so?

Yeah. Normally, like you said, Q3 for us is a soft one because the seasonality.

There is no sun, no sun control kind of theory, we say. We have been working on this because after the impact of tariff, which was hit full of 50% in this quarter, we managed our operational efficiencies pretty to the best of our possibilities.

We went with lot of changes for operational efficiencies and plus the product mix, which we tried to keep it at a very high level, that means the more of a high-end products. That's how we were able to maintain this.

Sir,

the tariff that we are paying now, where it is booked? It is in cost or is it in sales?

It's a mix of both. We are passing some of it to our distributors, dealers, which ultimately goes to pass on to consumer, but a very small fraction to end consumer.

Some of it is passed on to our distributors and customers. Rest, we are absorbing with our operational efficiencies and product mixes.

Hello. My question is, sir, suppose we were paying ₹100 last year selling the product.

Now, because of the tariff, the price has gone up. That incremental amount that we are paying as a tariff, that is gone into what?

Where that is booked in sales or it goes into expenses?

No, that—

Mahesh, it has both the impacts. The increased sales price to our dealers and distributors, it reflects into our sales numbers, while the tariff which you are paying, that becomes part of our expenses.

Okay. Sure.

Sir, given the current outlook, we are trying to set up a new plant in Middle East. When that plant will come up, and will that have an impact in FY27?

See,

we have set up this subsidiary because our growth in Middle East, North Africa region has been phenomenal, I would say. We have doubled in 1 year the sales to Middle East region.

We need a strong subsidiary, which can take all the contracts from big companies, local companies, because especially for the architectural business, Middle East is continuously growing, and there is a need to block the sun, the heat in many cases. The primary objective is to cater to that region.

Then, the structure of duties from that subsidiary always makes it more attractive. Third is, with this growth, this is the ideal location for future growth.

We have multiple objective with this particular subsidiary in UAE.

No. When this will become functional, next year?

There are many steps to that. One is setting up, which will be completed during this quarter, that is quarter four, right?

The full impact of that might be seen in the later half of FY27.

Okay. The tax for this will be zero nil, right in Middle East?

Because this is being set up in free zone. The tax to earned by that subsidiary is almost nil.

Sure. Thank you so much, sir.

Thank you.

Thank you. The next question is from the line of Rahul Jain from Credence Wealth.

Please go ahead.

Thanks for the opportunity. Sir, congratulations to you and the entire team at Garware, given the environment, for the kind of numbers we have been reporting.

Sir, just to add to the previous question, yes, the gross margins have remained flat and, in fact, they have improved year-on-year as well as quarter-on-quarter. You explained that some of it is due to the product mix change.

Firstly, sir, the entire 50% tariff impact, has that been visible in this quarter, quarter three? From here on, how do you look at the gross margins going ahead?

See,

first of all, yes, we have seen almost full impact of 50% tariff. If you really see, again, we are controlling the sales, that means only absolute necessary product are being sold into the market to our distributors and dealers, because in any case of any favorable decision, we tend to gain that, so that's the purpose of that.

That's why we said there is inventory into the bonded warehouses, which can be at a click away whenever the need is there by our consumers. Now going forward, full impact is there in Q3.

Now going forward, the margins, because if you see the Q3 margins versus Q3 margin, there is very less impact. We think in Q4 and Q1, the margin should remain around 20% or so, depending on the product mix, but we expect to that range.

If any good things from Supreme Court of USA or any trade deal happens, even to 25%, which we were hearing, this is all in public these things, there might be a removal of 25% against Russian oil or something, so that also will give us a big positive boost. Scenarios are different, but definitely in main season, margins will improve, and if anything goes away like 25% or so, will definitely go between 20 to 25%.

Fair enough. Sir, with regards to the inventory at the customer level, the end-customer level—

Yeah.

How is that situation currently? I understand from all the channel checks in other industries key that is probably at the lowest end.

Given the tariffs, two scenarios or let us put that tariff remains at the current level. How do you look at the inventory at the customer's level and thereby the sales growth going ahead for us?

See,

if this remains there, the sales volume is definitely bound to increase, because still we have got very good numbers, and we are keeping the inventory in the bonded warehouse. Now the season is coming.

If you really see, this quarter it starts, from the March onwards, March sale reflects the seasonality. Sale will definitely increase, right?

That goes without saying, because we are not losing any sales. We have protected our consumers from any, I would say, substantial increase in the prices.

That was our end goal. If you remember our last con-calls, we have always maintained that we will not lose any consumer.

We will continuously to grow. Ultimately, you are right that there has been a decrease in inventory into the chain from our side, between the consumer side.

There has been a decrease because we are expecting any good thing, any trade deal or something will save us a good amount of money, right? That's why we are trying to keep it at the lower levels.

If it does not happen, any deal does not happen, no decision comes into favor, still the sales growth will continue.

That means this year we can be around ₹2,100-plus kind of turnover, as what we have been targeting. Next year, can we look at 15%-20% growth over and above ₹2,100 at current tariff of 50%?

See,

again, for that, this is a subjective question that we remain at 50% tariff and what happens, because we definitely expect something better or some action from our end. Definitely these numbers what we are seeing is almost sales is stable despite all those challenges in 9 months, right?

We would be close to that number. In fact, this quarter can be stronger, and it all depends on if we feel nothing is going to happen, we can release the goods from US bonded warehouse, which will reflect in our sales.

We can reach to the numbers what we did last year, because we are already at the same number in 9 months.

Last question.

When it goes, yes, given the scenario that nothing happens, but if you talk of the sales, definitely it will have a 15% to 20% CAGR growth next year, because this year we have tried to curtail everything, but we'll find other ways. We have found or we are finding other ways to continue this growth.

Right.

Sure. That's nice to hear, sir.

Last question from my side, with regards to the new PPF unit which has come in, what is the current utilization and what kind of ramp-up we see going ahead in next 2, 3 quarters, 2 to 4 quarters?

Yeah. PPF also, right now, it is running around 65% utilization rate, and going forward—

Sorry, sir. This new line, I'm talking only about the new line.

New line I'm talking, 60 it is running at 65% capacity. Old line is running full.

The thing is that is again, if you really see, we are growing very strong in certain regions, that is Middle East, North Africa, India, and there is definitely PPF being a high value. If you really see, the absolute price of PPF versus absolute price of sun control, PPF is at a much higher prices, right, absolute pricing.

The duty impact, tariff impact is pretty high. We are seeing some challenges from the US market.

Despite that, this capacity is currently 65% utilized.

Sure. Thank you so much, sir, and all the best.

Thanks.

Thank you.

Thank you. The next question is from the line of Viraj Parekh from Carnelian Asset Management.

Please go ahead.

Thank you for the opportunity. Am I audible, sir?

Yes. Yeah.

Sir, first question is probably if you can give me some insights on this quarter's growth in terms of US and non-US, and also 9-monthly for US and non-US growth. Yeah.

US is like same quarter if you see last year, there was almost 40% 43%-44% was sale was to US. This this year, Q3 FY26, it is around 40%.

There is a marginal 3% drop, but that all has already been more than that is already there in the warehouses to be sold, against orders. Real sale we'll see a 3% degrowth in this market, in US market, but in absolute terms it has grown because we have dispatched the material against order, but not yet it is it is in the bonded warehouse and wait waiting to be invoiced.

That's why we have maintained. Like I have been saying, we have controlled the sales to avoid any impact.

So 43% and 40%. Then if you talk of other geography, like Middle East was used to be around 4% last year, it has crossed 8% already in 9 months, right?

EU has been stable, around 10% to 11%. India, around 25%.

You said Middle East, EU, and India numbers are for 9 months, right?

Yeah. No, no.

What would be the 9-month— 3 months,

3 months. You asked for the last quarter, I'm giving you last quarter number.

Right. What would be the 9-month number, if it's handy with you?

Just a second. Numbers are similar because we have started seeing this kind of trend since if you remember, the March this tariff thing started, almost the same numbers.

Got it, sir. Just a follow-up

on a previous participant's question. If you need, you can ask offline, but the numbers are similar.

I gave you absolute, exact numbers of Q3 versus last year.

Sure, sir. I'll take it offline.

Just a strategic understanding if I wanted to understand on a previous participant's question, he was asking in terms of the inventory at the channel level and in different geographies. Since Q3 was the first quarter with 50% tariff, at strategic level, how are we looking at production in a normal versus a tariff environment?

At what kind of inventory levels are we maintaining in a normal versus tariff environment? Just wanted to understand that what is the range between the two?

How have we pivoted to navigate the tariffs, because we've been doing an exceptional job with our margins.

Yeah. Had there been no tariff, our inventory levels remain roughly 1 month in US and around 1 month in transit.

It's a 60 days inventory you can say at our warehouses plus in transit from India, right? This ranges between I can say 60 to 75 days.

Right now, if you add everything, this goes almost I can say around 100 days. You can just see 60 days versus 100 days.

There is 30, 40 days more inventory is lying with us in the warehouse. Transit remains the same, only in the warehouse inventory has been increased.

That has been done purposefully.

Got it, sir. How are we looking at our production level?

Capacity utilization across our lines in a tariff and non-tariff environment?

Yeah. Now in case of current situation, India, the manufacturing and everything, lines are running full and we are not changing anything at the level of production, because orders flow is good and lines are being utilized at optimum level.

However, we only control at a warehouse level in USA. As I told you, the aim was not to lose any customer, all the orders are there.

Only release of the material, just to see any kind of gain in 30, 40 days will fetch us additional revenues, so that's why we are keeping it like that. So 30, 40 days more inventory at the warehouse level, however, factory is continuously producing as per the requirement.

Because we only produce against the orders, and we have enough orders for this quarter and going forward.

Just a follow-up on that, currently growth is a little bit muted because of the tariff situation. If we are maintaining our lines at full for the we can say last 1 and 1/2 quarters, there would be some time where our production would kind of reduce if the tariffs don't go away anytime soon over the next two quarters.

That time would we have to revise our strategy, or we'll continue in the same thing, because you're anticipated demand growth is strong. Despite 100 inventory levels, you're seeing growth at 15%-20% for stronger Q4 and Q1.

Yeah.

Like I said, there are some other alternative ways are being worked where, if we can mitigate the impact of this tariff. At the same time, even if it continues, we are maintaining the margin like this quarter, if you see, being the seasonally low quarter, we have almost touched, I can say, close to 20%, right?

Given a situation like this remains and nothing else happens, of course, there will be many factors will change: geopolitical situation, tariff situation, and our situation to cater the market. There will be all three places, there will be definitely some changes, right?

Let us assume nothing happens, like nothing changes, still our we will maintain a growth of 15%-20% because we'll not hold inventory in in in our warehouses. We will do whatever sales naturally happening, which will which is at the rate of 15% to 20% CAGR, right?

Why do we curtail then our productivity? We'll continuously grow, because we are still making margins on that.

Right. Sir, this last question, I'll get back in queue.

For Q3, I think the CFO sir said that our margins in terms of 18%. If I just remove the other income portion and just look at EBITDA excluding other income,

Yeah. it's

in the range of 15 15%. Just wanted to know that in our impact on the drawing board, when we look at all the possible scenarios in terms of downside, will you see that if a challenging environment persists going ahead, the margins can see further decline because of stressful demand environment in, especially US?

No. Because as I'm saying, the scenario for Q3 is always different because it's a seasonally low.

Every year Q3 is like that. If we see Q1 and Q2 are strong season for us, the margin will definitely improve, that directly linked to more higher production or high-margin products in Q1, in Q4 and Q1, right?

The margin maintenance definitely will improve. Now your question was yes, if this situation remains, we continue to produce.

However, there are some strategies which are being worked out to mitigate the impact to some extent. That definitely will come.

We're all the time working on this situation, how do we navigate through this situation. Though everyone of us, including our exporters, thought it's a short-term phenomena, but we are prepared for a long-term as well.

Like that remains, that became stable at 50%, then too we will maintain 20-plus margin and this with a sales growth of 15% bare minimum at CAGR level.

Thank you so much, sir. All the very best.

I'll get back in queue.

Thank you.

Thank you. The next question is from the line of Jai from PhillipCapital.

Please go ahead.

Hi. Just two quick questions.

One is on the product mix compared to Q2 with respect to your window films, PPF, and IPD. Has that stayed stable, or is there any change in that mix?

The second one is with respect to architectural films. How has the growth been in that area, and what sort of revenue can we expect over the next couple of years?

Yeah. In the question of product mix, right?

What happens is in Q3, normally the lower range of window films sell more, right? When it goes towards high season, more higher product demands comes, which is near-infrared infrared blockage of the film.

They tend to have very special films with our nanoparticles into that. That generally carries a high margin as compared to the mix.

That's why we are talking of product mix in Q3 versus Q2 and, of course, in Q4 as well. Q4 goes better in terms of product mix, right?

That is a general phenomena with us under certain variables, right? It goes up to extreme in Q1 and slightly lower in Q2, extremely low in Q3, then again goes back in Q4.

This is the phenomena which we always track, and we are well under control for that particular thing in going ahead, right? What was the second question, sir?

With your architectural films, I just want to understand how is the growth been in that segment, and is there any ballpark revenue which we can expect in that segment over the next 2 or 3 years?

Yeah. If you see, we started this architectural journey at around 10% of our total CPD sale, right, which was roughly ₹15 crore last year, ₹1,500 crore last year, right?

Now currently we are at around 22%-23% of architectural sale, but with ultimate aim is to reach around 30% of that. From current level of ₹300 crore-plus, we will reach by next financial year to around ₹400 and then ₹500 crore out of it.

Sir. Got it.

Thank you. I'll just jump back in queue if I have any further questions.

Thank you.

Thank you. The next question is from the line of Vinay Nadkarni from Hathway Investments Private Limited.

Please go ahead.

Yeah. Thanks for the opportunity.

Just a couple of questions on the UAE plant. You said that it will be commissioned in Q4 '26.

Am I right?

That's the subsidiary, yes.

No, the plant, the manufacturing plant will be commissioned in Q4?

We have not announced any plant in UAE, right, to be very precise. There are some plans which we are working, but this is as of now, it's only a subsidiary which will cater the business to MENA region and other exported to other regions.

It will be a trading subsidiary primarily?

Yes. As of now, to start with, it will be a trading subsidiary.

Okay. Secondly, on your GAS studios, now that you have more than 250, are they operationally profitable?

Yes.

They contribute to the bottom line? They are

profitable, but they are not standalone ones. They are the ones which are with other product lines like auto accessories and all.

They are profitable. Which are in retail generally.

As a

product, it is.

Okay. In as far as your US tariff impact is concerned, in this quarter did you see any prices getting dropped because you were absorbing the cost or how was it?

Or did you maintain the price and absorbed the cost? See,

the tariff impact, like I said, is 50% additional. In that case, in the 50%, we absorb most part of it, but there is some portion which is being passed on to our customers, right?

We cannot specify the number because that a lot of questions come to us on the parity and all those thing

on

the

Understandable. Understandable.

at one time.

Right? One portion is passed on.

Another portion is absorbed on. We have mitigated that successfully.

Again, if you see the numbers of Q3, on the sales of that particular amount which we sold to USA, which is 40% of total sale, right, out of that if you add roughly 40% of the tariff and minus whatever has been passed on, there has to be a ₹50 crore impact on PBT, right, which we did not see. We saw only ₹7 to ₹8 crore impact.

We have successfully navigated by our efficient manufacturing process and efficient product mix strategy. Some of the products which we diverted to the territory where it was going to USA then being diverted to other territories, we have really managed that well by sending it to re-exported cargo kind of things.

Lot of strategies has made us to navigate the impact of roughly ₹40 crore for the quarter. That's how it has gone to a PBT level of ₹73, ₹74 crore.

That's how we managed it. Yeah.

Basically what you're saying is there was a ₹50 crore downside, but you managed ₹40 crore from other areas to make it

There was a possible. If we really

Yeah, yeah, yeah. and

everything. Of course, we pay the duty, but I'm saying if you see plain and simple, you have a product sale and you have this additional duty, you would have that kind of impact.

Right.

Correct. We have successfully navigated through by passing on to something and then efficient improvement, product mix change, and all those and selling to the territories where earlier it was going through USA, now directly going.

All those strategies we have worked out to mitigate that impact.

Okay. Just one last question.

Given the fact that this uncertainty in US is going to continue for the next 2, 3 years or till the time this present government is there,

Yeah.

what are your plans to expand in other areas? Have you accelerated those?

Which are the areas that you're looking at in expansion?

First and foremost, we have grown really well in Middle East region. The sale which was last year versus this year has doubled.

If you see last 3 years, 2 years where tariff was not seen, but if we compare versus 2 years versus to now, the growth has been almost three to four times, right, in terms of sales from that particular region, from Middle East, North Africa region. That is continuously growing.

We are also growing in the markets like China. There are a lot of plans where we are doing partnership with some top players to gain advantage of that market, because our product is really good.

Only thing is our brand global really does well there. That area we expect to grow really well.

Even in US, like I said, in terms of orders and everything, we are continuously growing. We are targeting, we are taking share from top of the peers.

That growth is also there. Any moment, any positive thing from USA, even if it is 25%, will really be a great thing for us.

Even if we assume that 50% is going to remain there, we are confident that we will navigate through really well in Q4 and then next year onwards, because we have strategies in place which will be announced shortly.

Okay. Lastly, does this impact your white labeling business, or is it impacting your brand business, this US tariff?

See, it impacts both because the tariff is applicable for both. If you really see, on white labeling there are possibilities, because white label people sell all around the world as well.

We are directly selling them from India. In that case, we are able to distribute these things really well.

Thank you very much.

It does not go to US territory. Yeah.

Understand.

Yeah. Thanks a lot.

Thank you for your answer.

Thank you.

Thank you. The next question is from the line of Priyank Agarwal from Equirus Securities.

Please go ahead.

Hi, sir. Thank you for the opportunity.

Thank you.

Am I audible?

Yes. Yeah.

My question is that in Q3, we have seen revenue being stable despite that the margins have declined. How the margin was impacted?

Because of the temporary investments in D2C, UAE subsidiary branding, or it was because of the structural cost pressures? In the coming quarter, how do you see the EBITDA margins going forward?

Yeah. See, EBITDA margin, the primary reason is, of course, tariff situation in US, which was 50% additional.

Like I explained, had that not been there, we would have really done well, but we have to accept the fact whatever it is it is, right? That's number one.

Number two, in Q3, our margins are usually in this range only, like 18.59% 19%, but when the seasonal mix changes, it will improve. It will go 20-plus easily with even with 50% tariff, right?

That is number two. Number three, we are doing lot of activities like we have opened direct-to-customers Global Application Studios in Middle East.

Two of them has been opened in last week, and there are more in pipeline. That will really boost our brand image and direct-to-consumer business where margins are good with the brand visibility.

Then we are doing Garware Home Solutions in India, we just launched one in Mumbai, but there will be many more to come. That will again create a demand in India market.

Then Garware Application Studios, which are 250 right now and will reach to 300, this is again direct-to-sale. In US market also, we are signing up lot of such studios, which we are in the process of doing so.

That will also boost our sales and profitability in US market when we go directly to consumer. Right?

All those things we are actually, if you really see, the company's focus is to become more of a consumer driven. If you see each and every steps of ours, which is Garware Application Studio, Global Application Studio, Garware Home Solution, Global Home Solutions, this will really really we are trying to become more as a consumer brand than as a B2B kind of business.

Thank you. One more question I have.

Regarding this Garware Home Solutions, what is your revenue model here? In terms of franchise versus company-owned?

What kind of capex you are looking at this, and opex if you want to scale the D2C over the next 2 to 3 years?

Yeah. See, I can give you some highlights of that, that the Garware Home Solution model is a channel, which is e-commerce-based model, right?

There consumers will directly pay to the company, and company will have those franchisee models or those, I would say, outlets where they do the work, applications, and others, and they will be paid accordingly, right? It is full under Garware company's control, right, right from their database till payment and everything.

It is more of a, like I said, it's a e-commerce-based model, because physically this model cannot work, because the ticket size are very small, but the number of consumers are enormous, right? That's the primary model.

These platforms and everything have been created, but still into the testing modes. Now on capex, there is hardly any capex into that, because company already does these kind of products.

The main products are sun control film, surface protection film for your furniture, for your kitchen sink, and etc. There will be more products like switchable films, there are some coatings which are required for the home.

Most of the products company already makes, but it needs a different kind of attention, which we are doing. It's mainly a selling platform, selling and a branding platform for the company.

Hello?

Mr. Agarwal, do you have any more questions?

Thank you for that clarification. Okay.

Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all the participants in the conference, kindly limit your questions to two per participant.

Should you have a follow-up question, please rejoin the queue. The next question is from the line of Swechha Jain from ANS Wealth.

Please go ahead.

Hi, sir. Thanks for giving this opportunity.

Sir, I have couple of follow-ups actually, because most of my questions have been answered. My first question is regarding the Dubai subsidiary.

I believe you said that right now what we are looking at is mainly from a trading point of view to cater to those geographies, but I also heard you saying that we might set up a manufacturing kind of a unit somewhere down the line. If we ever decide to set up a manufacturing plant outside India, I wanted to understand would it be in this subsidiary or any other geography that we are looking at, sir?

See, first of all, the basic thing is if you really see versus the tax proposition and the growth into that region. The growth has been really great, so that's why it makes very obvious choice for us to open a subsidiary, because we have tripled our numbers in 3 years and much more to come, because we are signing good agreements with top companies in real estate and architectural space.

The business is growing. Then it is ideal for the duty structure in the free zone,

right?

That's one. Third is there are opportunities to export from these regions at a good these things.

These setups are being made. The subsidiary opening is pretty fast and this will happen in next 1 or 2 months.

There are other actions onto that, the manufacturing means what kind of manufacturing. There are a couple of options there, which has been evaluated and being worked out, right?

There is no timeline and there is no commitment from us as of now, but definitely we are making the decision in a way to take maximum advantage of that region plus other geographies in terms of taxation and other purposes, and growth is the forefront of everything, the company's growth numbers in that region. Yeah.

Would it also mean that once we start manufacturing here, we can also sell it to US, and then would it also help us from a tariff point of view is what I wanted to understand basically?

See, I will answer in this way. Middle East is very near to us, right?

Setting up a facility to sell in Middle East is maybe one of the reason, but the main thing is not looking into the geopolitics and everything. That's we are in India, and one thing in Middle East always makes good sense for us to reduce the geopolitical impact or to reduce that impact to us.

That's very important, so that's why we are working on this. As of now, I can't say this much only.

Whatever is there, we will announce properly and let you know. As of now, we are opening a subsidiary.

That's very open. We are exploring all opportunities.

Like we said, we have maintained 18% to 19% EBITDA margin, which will go to 20-plus. Of course, we want to go back to the numbers where we were, 25% plus minus 2%.

Ultimate goal is that, we have to reach there and we will do that.

In this EBITDA margin, the 20-plus that you're saying, this includes the other income, right?

The

margin that you guide is considering the other income, right, is what I want to understand.

Yes.

Okay. Understood.

Sir, my

Sorry to interrupt, Shweta. Please rejoin the queue for more questions.

This is my second question. Sorry.

Okay. Go ahead, please.

Yeah. My second question was, just want to understand on the architectural side, how much we are planning to invest in this business in terms of people, in terms of the marketing, if you could just broadly help us understand our overall strategy for this business in the medium term, or also in the long term, like what geographies and what products,

and

what kind of revenue potentials this business can have for us over 3, 4 years, and margin guidance for this business specifically, and what kind of ROI can we get from this business, sir?

There are seven, eight questions for me. Okay.

They only give us two questions to ask, what to do?

No problem. I'm happy to answer.

Let me tell you, the journey like we said, we started 2 years back when the total business was around 10% of total consumer product sale in architectural business, right? Right now we are at the level of around 22% to 20 23%, right?

How we have grown and what are the strategies to grow faster, that architectural products are little different in nature as compared to automotive. Garware is very strong in automotive business, but with slight change investment, which we have already done in last 2 years in new lamination line, is helping us to grow in this business.

Architectural business needs many kind of products that includes your sun control, which reduces the heat and controls the glare, reduces the ultraviolet rays, UV rays, to avoid the cancer. Then there are safety security films.

That means whenever you are seeing the school, colleges, banks, which are high-rise, especially in the markets like USA, there they need a very high protection. These are safety films.

This may be transparent in nature, colored in nature, but nobody should fall from that height. Even in some cases, from the distance range, nobody should get hurt if there is a shooting or such incidents like in USA, right?

One more thing is there are certain products which are decorative in nature, like interior decoration and all those things. Now these kind of product range 3, 4 years we were missing, but last year everything has been completed.

We have a complete range of products, right? If you ask out of these products, they are available and manufactured by us.

Because of this, we have been able to attract good distributors in USA, Middle East, and other region who were doing the business with the top of our peers, right? We have attracted them because of our entire product list.

Then our pricing, because we make end-to-end product by ourselves, that means we are fully backward integrated for all those products. We have a competitive advantage.

We are not far off. I'm talking of only 10% to 15% as the prices, we have a full range of product and at a best, I would say, pricing, best distributors in Middle East, USA, and India from our peers, they have moved to us.

The last and not the least is the team, which was earlier there used to be only one team, now we have separate architectural teams all around the world that includes in USA, we have a top person from a peer group. He has really done well and got some big distributors converted to our brand.

Same in Middle East, we are growing, and one of the major major growth area is architectural there. In India, we have done almost all top hospitality hotels in India and all airports, railways, and everything, we are working under this segment.

One of the most important thing, like I said, there is people, good resources from our competition. Then we have all product lines, we have good pricing.

This is really working really well for us. If we see the revenue size, we are targeting now around ₹500 crore by FY27.

I can say similarly if we talk of by FY30, we have an aim, ambition to make it to around ₹1,000 crore with Garware Home Solution in it.

Okay.

Thank you, sir. This really helps a lot.

Really appreciate this, sir.

Yeah.

Thank you. The next question is from the line of Suruchi Jain from Opportune Wealth Advisory.

Please go ahead.

Hello. Am I audible?

Yes, you are.

Yes. Thank you so much, sir, for taking my question.

I want to know more about the working capital cycle and other

Sorry to interrupt, Suruchi. We are unable to hear you.

Your voice is breaking, ma'am.

Am I audible now? Yeah.

Please go ahead.

Yes. In view of the pricing difficulties, I wanted to know how this has impacted your working capital cycle.

Say, have the receivables gone up or have your payables been a problem? Any cash flow constraints or cash cycles extensions?

What are you also seeing on the competitive side? While you are finding solutions at your end, what are competitors doing?

As I understand, your product is of high quality and high prices as well. It's a premium product.

There are always competitors looking to undercut and take away share when things like this happen. If you could share a little bit on both these aspects, please.

Thank you. See,

I'll explain you on the aspect of quality and whatever competitors are doing, right? The other part, we'll try to answer, but the question was not clear.

Let me answer you first competitive landscape. The product which we make, it is made out of very high base films, which is normally available with only few people in the world, and the reason of that is this we are fully backward integrated, that means we make our own base film, we do metallizing, we do other nano dispersion facility and some preparation on the base films, adhesives, and our topcoats like surface-resistant coating and everything into window films, right?

All those processes have been developed in-house, and this has been a work of last 30 years, which is working very well for us. The machines and everything has been designed by our engineers with the help of experts from big companies who gave us the machinery, but not a single machinery manufacturer is there.

There are many many involved in that. There is a big entry barrier if somebody tries to copy, right?

There are many of them, more than 10 patents are there, which are very essential part of our manufacturer, right? This is what we are.

Now and that's how many companies around the world who want to partner with us to have our basic films, but we have chosen the path to growth by ourselves, right? If you see the journey in last 4, 5 years, we have shown the kind of growth we can do with our products, right?

The so if you really see the product comparison if we do, it's only with some of the US manufacturers, right? We have partnership with many of such manufacturers as a white box in USA, right?

There are very limited people who make similar films like us, but fortunately for us, unfortunately for that, the growth in US market for manufacturing is really challenging. They're not able to grow that fast in that market.

In terms of manufacturing capability. There we are coming into picture and we have lot more opportunities where we are filling the gap by supplying to them or looking for opportunities where we can do some kind of partnership with them into these advanced markets.

Okay. Got it.

Sir, my first question was about how the pricing and the environment on the buyer side has changed sort of your selling power if you say. Pricing power we know about, but say, credit cycles, have they got extended at any part of your working capital is under pressure?

Anything if you could share internally how this has impacted you and your negotiations, to say, with new clients?

Yeah. Actually, nothing has changed.

Let me tell you, because of this situation, because like we said, we have managed this situation by our operational efficiencies, all right? That is a product mix, making the product with higher efficiencies and everything, and plus only a limited tariff impact has been passed on to our customers, right?

Rest, we have absorbed by the ways which I just told you. No change in terms of credit or this thing has changed.

We are the cash flow is really strong, and we don't have any such challenge with us. We did not witness any degrowth.

Whatever we are seeing here is already we have orders, but we are keeping the material, so that any whenever it is like just-in-time kind of model we are working now in US. No sale drop has happened, no customer has been lost, right?

Only the impact, slight impact which we are seeing on our margins, which is quite well and open, but the growth is there and will remain there. No change in that.

Okay. Just one small question on what you

Sorry to interrupt, Suruchi. Please rejoin the queue for more questions.

I'll do that. Thank you so much.

Thank you. The next question is from the line of Ankit Gupta from Bamboo Capital.

Please go ahead.

Thanks for the opportunity. Sir, firstly, if you can we had a sales of around ₹325 crore for CPD, for our consumer division, if you can give us the breakup of sun control films and PPF in that for Q3 as well as 9 months?

Yeah. Q3 40% of sun control, right?

Just 1 second.

No. It's a 44% sun control, 26% PPF, and 30% of IPD.

Okay. Sir, the other question I wanted to ask was when you say 65% capacity utilization of the new PPF line also, this is primarily because our PPF sales have largely remained flat on a 9-month basis and so we would have the SCF facility that we were utilizing for manufacturing the PPF, that would have now moved to the new PPF line, and we would have more spare capacity on the SCF side.

Is that the right understanding?

Yes. The whatever we were running like 130, 140% in old line with the help of sun control line, you are bang on that now we have moved all the product to PPF line and all the sun control is there.

Both lines are growing on their own, both plants. There are five-odd plants in sun control line and two plants at PPF, both are running on their own.

That's why we are seeing this growth as a minimal growth or I would say. As I said, the real one of the real reason is US market, the PPF prices, absolute prices are very high.

Impact of tariff on PPF seems to be pretty high as compared to sun control, because absolute prices of sun control are lower as compared to PPF, right? That's why PPF challenges are more, but despite that, our growth in markets like India, Middle East, Europe, and other markets has been really really good, South America, for PPF, which has offset the difficulties of the US market.

Sure. When we're looking for

Sorry to interrupt, Ankit. Please rejoin the queue for more questions.

This is the part of the second question only. When we look for expansion, sir, now will we be expanding on the PPF side or SCF side

for

next phase of expansion? See,

we will expand on the first on TPU side. One TPU plant is coming, which is barely for one PPF line.

We will be doing another not yet announced, but we will be working. Once that is successfully done the TPU line, we can do more of those lines.

Definitely, having said that, the kind of growth we are seeing despite the tariff, if any situation comes, I think the next one in line maybe sun control, but this all as of now we have not decided. Since you asked what looks more plausible for us, looks plausible for us TPU and then sun control, and then after that PPF.

We are on a good growth trajectory despite the tariff situation. Sure.

Okay. Thank you, sir, and wish you all the best.

Thank you.

Thank you. The next question is from the line of Dhwanil Desai from Turtle Capital.

Please go ahead.

Hi. Good afternoon, Deepak and team, and congratulations for a very good set of numbers in this environment.

Deepak, the first question is on the TPU side. I think we have reserved the 25% capacity for the new product.

I'm sure that now because next year it will get commercialized, the TPU line,

if you can October,

yeah. October,

yeah.

Given that, if you can talk about the kind of product slate that you have, and we have a history of creating large product of the tune of ₹500-odd crore, like we created PPF, then now we are creating architectural films. Do we see product basket where one or two products can really scale to those kind of numbers in terms of potential, in terms of positioning, if you can elaborate on that, maybe without taking names or applications?

Yeah. We have updated in the call that October '26, October this calendar year, we are starting this plant, and we have kept around 25% allocated for the new products.

That has been done strategically to make products for some architectural application, some of the medical applications. The R&D is going on, but the idea is because we just don't want to be a backward integration to PPF.

Of course, PPF business is going to grow like anything with this, because we are expecting by next year with this favorable trade deals with EU and other markets where the luxury car segment might see a good boost in sales, which will directly impact the numbers of PPF. That means PPF definitely will grow, because PPF sale happens more towards cars which are luxury segment, I would say, right?

That will see a very positive impact, and at the same time, TPU will help us to make the right product without depending on external quality factors, right? We can do lot of innovative products for existing PPF line.

That is one way to look at it with margin improvements, okay? That is one way.

Second is 25% for making new products and doing R&D for those products, especially in the architectural building and medical segment. Third, once we are I think in 3 to 6 months when all operations are streamlined and we are onto that path, we'll look for the growth into that area.

Yes, to answer your question, once again, we are looking at the similar size of this new vertical from TPU.

Got it. I think if I

Sorry to interrupt, Dhwanil.

That was my only one single question, right? It was only one question.

Yeah. Please go ahead quickly, yeah.

Yeah.

Second question, I think you talked about India being a 25% of the overall revenue. If you can give some color in terms of the architectural, PPF, and the IPD, and that's now a substantial number.

How do we see that growing into next couple of years from here? Yeah.

Let me give you the number. PPF is roughly I can say close to 20% in India market of for all PPF.

I'm talking of PPF in the PPF segment, right? Because this number looks bigger because IPD sale is IPD sale is mostly into India, right?

The rest, so that's why you always see numbers 20% to 25% in India market. If I talk of PPF, we have never discussed that, but around close to 20% PPF sale happens in India.

As we have like created this market. There was hardly any market before we entered into PPF India business.

We still see like with the current rate, it is estimated around 1.5% of 1.5% of total car sales are being protected with PPF with as compared to our around 13% to 15% of the advanced market. We still see a big headroom in PPF going forward.

With anti-dumping investigations already reaching towards it's a it's a final thing, we expect that will help us to grow our, to grow our market and margins both in India, right? TPU will add a further thing to that, and these FTAs are going to add higher-end cars, which will definitely So we eye on a long term.

We we are a player which think like what is going to happen in 3 years into PPF industry with the help of, like backward integration, these FTAs, how do we play out, and how do we stop We are never averse of the competition, but we are always mindful of the people who are supplying quality products to the market. They should not be, I would say, misled by the product which is not in quality, but they just play on the prices.

All those thing will be taken care by this ADD. There are certain strategies which we are working to have that.

Main top-line top points I have shared with you in PPF. Now if we go to sun control, sun control that we our major focus area here is architectural.

Of course, automotive with the given guidance by the government, we are doing really good, but on architectural segment like all the top, I would say, this hospitality industry, then consumers, then jewelry and gems, and big malls, all are being protected by our sun control. We are now certified or approved in railways, in Airport Authority of India, in most of these names which I won't be able to take here, all the hospitality industry, because what we have done is we are certified.

We are the only company in India to be certified by GreenPro, which is government has given that guideline that if you have any building as per the government guidelines, it is recommended to have a company associated with a GreenPro certification. We are the only one in India.

Then we are GRIHA certified. We are certified by American Cancer Foundation to avoid cancer.

We have certified all our safety films by UK standards, TUV standards, and EN standards of America. You see the lot of work background work goes into architectural certification, product I I explained everything into my previous answer like how did we grow into architectural business by creating a full range of products, creating full team, making awareness into the market.

All those thing will take us this architectural business to next level in India and elsewhere, right? When we talk of 25%, like you said, it is mostly like major portion comes from IPD, but our growth engine IPD we strategically keep it as a stable level, but the real growth will come from architectural, PPF, and sun control business.

Also

we are working with some companies to supply as a industrial product. That will also add to this.

Thanks, Deepak.

Okay. Thank you, and all the best.

Thank you.

Thank you. Ladies and gentlemen, due to time constraints, we'll take the last question from Akhil Parekh from BNK Securities.

Please go ahead.

Yeah. Thanks for the opportunity, and most of my questions have been answered.

Congratulations for the resilient performance. Just wanted to understand the impact of depreciating rupee on our business.

What percentage of our sales is dollar-denominated, and what percentage of raw materials are dollar-denominated?

Yeah. I'll give you a ballpark number.

I think we can answer that offline, but definitely when the dollar depreciation helps us to some extent, because our a lot of raw material key raw materials are based on import parity prices. If the dollar if the rupee depreciates, we have that negative impact.

Our sale definitely into mostly into US dollar or even euro and pound, all those things are depreciating and rupee is depreciating. This leads to a positive impact for us, but there is like 40% of that is taken away with our raw materials.

That is the net impact on that.

So 40% is dollar-denominated raw material.

Raw material, yeah.

Okay. Okay.

That's all from my side. Thanks so much.

Thank you. Now, I would like to hand the conference over to the management for closing comments.

Yeah.

On behalf of Garware Hi-Tech Films management, I would like to thank all of you for joining us, taking your time to understand, hear out from us. We will do our best to meet your expectations.

Thank you very much.

Thank you very much. On behalf of Go India Advisors LLP, that concludes this conference.

Thank you all for joining us today, and you may now disconnect your lines.