Garware Hi-tech films (Earlier Garware polyester)

aga.ayush11 · May 24, 2021, 11:50am

Recent Margin Expansion- On the surface, it seems that the EBIT margins have expanded from 6-7% in the past to 15% at the end of FY20 due to expansion in gross margins, which could either mean value-addition or low RM cost, or both. Here are charts of their 3 major RMs that form two-thirds of the total RM cost. Their margins continued to expand in FY18 and FY19 even when RM prices were either stable or rising. Most of it can be answered from the fact that Sun Control was a 28% business in FY18 which in 9MFY21 was ~50%

Key RM prices peaked at the end of CY18 and started getting cheap at the end of
CY19 and reached a record low when crude prices collapsed. Q2FY21 and Q3FY21 EBIT margins of 23-24% may be unsustainable, but I feel that 18-20%+ EBIT margins are here to stay because of increased contribution from value-added products and their agreement for RM

Although, the rise in gross margins and operating margins could be because of the rise in the share of Value Added Products, one can’t help but look at the industry wide changes that have coincided with this. It indeed is the case that almost all the players have seen a rise in margins in the last 5-7 years. I won’t trust the GPM chart much as some parts of COGS like manufacturing expenses are classified under “other expenses”. However, a clear industry-wide uptrend is visible.

sharemarketgen_ · May 24, 2021, 11:53am

Garware had stopped selling BOPP films from FY18.From FY19 they ramped down sale of thermal films.All this directly shows in GMs as you have noted.However,since all ‘film’ companies have reported better EBITDA margins from FY18 there still seems to be some doubt about the true nature of GPL’s business.Look at another metric: GPL generated 117 cr. OCF in H1 on a PBT of ~80 cr. Company’s working capital is fantastic(and has been) and combined,these numbers don’t seem to characterize a ‘commodity’ business by any means.

On the sales guidance: Company did 283 cr. revenue in Q3,most likely Q4 should be better.Even then in a normal year GPL should be doing atleast 1120-50 cr. kind of revenue.A simple 5-6% growth yoy takes this number to 1200 cr. in FY23,with PPF scaling up to 300 crore we get 1500 cr.Being a largely export oriented company this rate of growth shouldn’t be an issue at all.So if anything the existing business numbers seem to have been conservatively guided for.PPF is an already existing market and GPL plans to gain market share.Quality of competition is very high but since GPL will be using the same dealer/distribution network this scale up shouldn’t be an issue.A cost advantage will help them as well.Also note that currently their tax rate is north of 30%.Iirc this will normalize some time in FY23,giving an optical kick to bottomline.

Disc.: Invested.Views are biased.

aga.ayush11 · May 24, 2021, 11:58am

XPEL, PPF, and Competition-

XPEL is a $2B company and is the largest competitor in PPF. XPEL was traditionally a software company. Their software, Design Access Program (DAP), is considered the best and is used by a lot of installers in the US. Window film comes in rolls like aluminum foil. DAP is a cutting software and machine which basically provides patterns that will fit a particular model of a particular car. Honda CRV will require a different pattern/cut v/s a Toyota Fortuner.
DAP has the largest database of window and car surface patterns in the world. Till 2010, XPEL was a software company. After having so much data on cars and consumers, they decided to foray into surface coating (PPF). They launched the world’s first self-healing PPF around 2011-212. Self-healing means that a minor scratch or a dent will be automatically healed by the PPF.
Take a look at XPEL’s past financials after they launched the PPF in 2011-2012. Their revenues ballooned from $10M to $180M TTM. ~75% of this is from PPF which was Zero 10 years ago.

XPEL is a classic branding and marketing company which has innovated and mastered the supply chain in this industry and has given the likes of 3M and Eastman a tough time in the PPF market. There are tons of resources on XPEL on the internet since this is one of the best performing US microcap companies in the last 10 years. Sharing a few if someone wants to go deeper-

Interesting Tweet by a USA investor, Sean Iddings, on XPEL- https://twitter.com/iddings_sean/status/1338645392217534466?s=20
Article by Sean Iddings in 2014 on XPEL- https://seekingalpha.com/article/2676825-xpel-technologies-wrapping-up-a-sticky-model-and-hyper-growth-worth-multiples-of-todays-price
Seeking Alpha article on XPEL- https://seekingalpha.com/article/1994221-xpel-technologies-an-undervalued-growth-machine-with-multi-bagger-potential
An Interesting Blog- Xpel Technologies Part 1: Company Overview – Travis Wiedower
Tesla driving the sales of XPEL PPF- https://twitter.com/clueless_1337/status/1351306846762487808

Few extracts and important highlights from XPEL’s past concalls and FY19 Annual Report-

In 2018, XPEL forayed into architectural window film (both commercial and residential
- Window Film (in which Garware is supposedly a leader) "will continue to grow faster year-over-year than paint protection does up until the point it becomes probably even a larger percent of our overall sales. So we have big expectations for growth there next year to continue.
"Launch of ULTIMATE (their PPF Brand) product catapulted XPEL into several years of strong revenue growth"
XPEL gets its products contract manufactured from 5 different companies, however, 80% of their PPF supplies are met by a high-chemistry company called Entrotech.
- I have a very strong feeling that Garware is XPEL’s supplier for their XPEL’s Window Film business.
DAP is a clear differentiator and gives them a huge competitive advantage because of their large database.
- When I had asked about the threat from DAP to Garware’s management, they claimed that Garware has also tied-up with a company for the cutting software. They also mentioned that not more than 30-40% of the installers use this software and prefer doing it by hand.
XPEL’s franchise based business model is what has helped them with this tremendous growth where they partner with the biggest installers in the neighbourhood and completely rebrand them as XPEL. They have more than 2,400 such franchises in the US.

Competition:
Some major players in the Window Film Market- 3M, Eastman (LLumar & FormulaOne), Huper Optik (German Company), Madico, and Motorshield Pro. There are other small companies like Avery Dennison, etc.
■ New entrants- XPEL & Ceramic Pro

Major Players in the PPF Market- 3M, Eastman (SunTek), XPEL, Stek USA
■ New entrant- Ceramic Pro and Garware

Growth of overall Surface Coating Products in the USA- Apart from Window Film and PPF, there is one more product that has seen phenomenal growth in the USA, Ceramic Coating. Ceramic Pro (private company) revolutionized this product in the USA for car owners. Ceramic Pro successfully created a market for this product and sold this to US car owners. Sales went from $0.3M in 2014 to $22M in 2018. Ceramic Pro also has now entered into the Window Film and PPF business for obvious reasons (the market is growing more than 30% and is underpenetrated). Ceramic Pro has a near monopoly in Ceramic Coating and XPEL has entered into Ceramic Coating with its brand Fusion very recently. Leaves room for Garware to innovate and launch more products. More info on Ceramic Coating and how it is different from PPF here.

I don’t know if 300cr is doable by FY23, seems aggressive, but given the secular growth in PPF industry for the last 10 years, Garware’s high quality product, deep supply chain penetration, and marketing activities should help them gain a good market share in the coming years.

aga.ayush11 · May 24, 2021, 12:04pm

Understanding Distribution and Supply Chain-

This is one of the trickiest pieces and where I could use a lot of help from VP members in the US @rupaniamit. There are two parties in the supply chain; distributor and installer. From the scuttlebutt that I was able to do and from what I could understand, distributors are relatively large after-market auto accessories shops that buy window films, PPF, and other accessories like Decals, etc and stock them.

It is somewhat like a classic distribution model where a large distributor generally does not work with more than one or two brands, similarly, a brand won’t work with more than a handful distributors in a particular region.
Installers are the trained professionals who install window film and PPF. It is a high-skill job.
Now, an installer can be an independent unit that has a small garage like shop or could use the distributor’s workshop to install the products.
If an installer is independent, they can keep multiple brands to cater to different categories of customers but they don’t keep more than 2 or 3, however, if they are working under a particular distributor then they can only install the distributors’ brand. Generally, most installers are “associated” with a distributor.
There is stickiness in using a particular brand- The main obstacle an installer has to face are shrinking the film, dust and sealing of the windows. Different brands shrink in a different way and installers get used to installing a particular film. Unless there are quality issues and warranty claims, installers hardly make a switch.

XPEL completely turned this model upside down in the US and has created a brand pull. They eliminated the distributors and went directly to the large installers and has re-branded them as XPEL. Every XPEL installer is a franchisee partner of XPEL. Even though few XPEL franchisees keep other brands, XPEL has very tactically eliminated that by enforcing the franchise partners to purchase a minimum amount every month. XPEL still follows the traditional model in geographies outside the US but is trying to adopt the same model in well-penetrated markets.

Garware- Before 2010, Garware used to stock inventory in the US and had appointed distributors that would procure from their central warehouse. However, they changed their distribution model and appointed 5 key (super) distributors in different regions who would buy the inventory, generate sales, and undertake marketing activities for Garware in the US. This is clearly visible in the fall in debtor days after 2010. Garware has long-standing relationships with its distributors.

List of Garware’s distributors- Contact Global Window Films - USA Sales Offices

Interesting story of one of their first distributors in the USA (page 4)- https://www.globalwindowfilms.com/pdf/GLOBAL%20Window%20Films%20[%20Part%201%20].pdf

One of their largest distributors, Express Window Film, seems to have their own brand Express, and from scuttlebutt, I have understood that this is just Garware’s products repackaged as Express. There seems to be a huge conflict of interest. Why would Express push Global products and not Express? This is one of the key questions for me for the next concall.

Garware now has around 6 super distributors in total catering to different regions in the US. These in turn have presence with 800-900 small regional distributors, who are in touch with 4000 installers directly. These large distributors place an order with Garware, undertake sales and marketing, after-sales services, and training activities for the installers. From what I understand, Garware is trying to have better brand presence and is now investing into marketing directly. This seems like a costly distribution model but even then are making good money.

All the major players like 3M, Eastman, Huper Optik, Madico, etc follow the traditional distribution model. It is only XPEL that has successfully created a front-end presence in the US. In my conversation with Sean Iddings, he mentioned that Just in-time Inventory (JIT) is a key aspect in this industry. Old distribution model is based on lean inventory management. Takes much longer to meet customer demands.

I also think the installer is the ultimate customer and not the car owner for the traditional companies, including Garware. However, XPEL has changed that and has created a massive brand pull and car owners now go looking for XPEL installers in their cities. We need to understand how Garware plans to counter this and the unit economics of their distribution model. What kind of selling and marketing initiatives are the distributors undertaking and how are they incentivised?

aga.ayush11 · May 24, 2021, 12:12pm

What is the presence of the brand Global like in the US?

This is the most interesting piece of the puzzle. I scraped through websites and online forums that discuss window films. Both installers and car owners participate on these forums. Look at their comments on Global’s products (most of it has been picked from tintdude.com)

From one of the distributors-

The Flip Side- Even though there are Global lovers on the internet, a basic google search on “top window film brands in the USA” does not yield Global’s name in the blog articles. Note- Garware claims itself to be the second largest window film manufacturer globally and the third largest brand in the Auto & Residential Window Film market in the USA. They claim that they don’t compete on price with the leaders. Could there be so many fake accounts and can all this just be fake? From scuttlebutt, I have understood that Garware’s quality is genuinely top-notch and they rarely face any quality issues. They even mentioned in the private call that they are so highly integrated that they make their own adhesives for the window film and PPF. The numbers are another testament to all these comments.

An industry expert who had previously worked with Garware insisted me to visit their factories. He is an American and mentioned that he could not believe he was in a plant that could match the best plants in the US. He also claimed that Garware products are as good as 3M.

Corporate Governance Issues-

The company pays some 30-32cr of processing charges and 3-5cr of Rent to the
promoter owned private entities, one of the major beneficiary is Garware Industries Ltd (GIL).
- GIL seems to hold the patents and technology that Garware boasts about. Can’t really claim that this is a diversion of money until we can ascertain that no actual benefit is received from these transactions.
- There were some sales and purchase in the past, too, as can be seen in the table below, but net-net, they transferred 25-30cr every year. I feel this has been intentionally brought down after certain allegations were raised against the company. This should come down further when more institutions/good investors show interest
High promoter salary, although has been coming down in percentage terms.

There are a couple of other articles by ET and Outlook India that highlight some other fines and allegations in the past as has already been mentioned by fellow members earlier.

sahil_vi · May 24, 2021, 2:00pm

this makes a lot of sense in light of XPEL concall notes shared by @harshitgoel since US is seeing a lot of growth due to the pent up demand.

Thanks for all the information added, Ayush. This is truly remarkable.
I am adding a little more Q3 Concall notes because they contain some very interesting revelations about the business model.

Q3Fy21 concall updates

Company became a carbon negative company. It consumes more carbon waste that it produces.
Company has put up a paint protection film plant (started in December). First time in India. Expecting incremental sales of 300cr in FY23.
The only manufacturer and exporter of car window solar protection films. Exporting to over 80 countries.
Received good response from distributors for PPF.
Most polyester manufacturers are into flexible packaging film manufacturing. Only 2 manufacturers in India are into thick polyester film manufacturing which is used for insulation.
Out of our total revenue, 50% comes from Solar control window film, building glass, architectural application, decorative application. 98% of the product are exported.
In Industrial applications, manufacture from 10 micron to 350 micron thick film.
26% EBITDA margin in Q4, 25% EBITDA margin in 9MFY21.
How sun controlled films are made: They manufacture this with 100% virgin polyester chips manufactured with an in house design recipe: requires particular shrinkage, particular age, and clarity. They have found this recipe through their R&D center. They make the plain polyester film. Then color/dye it. [Company claims to be one of only 2 companies in the world which has the technology to dye/color polyester films]. Then, solar metallized films are required. These are also manufactured in house. They make different adhesives for this. Nanotechnology is also involved for making some of these products.
They claim to be the only vertically integrated company for making these products. In many countries the use of Solar protection film is compulsory.
Largest brand in India. Third largest brand in the US. Third largest brand in Europe.
Sell solar control film under 3 brands: Sun Control, Global and Garware.
Manufacture ‘shrink’ films. Only major manufacturer in the country. Sell to beverage industry, it is used in bottles. Pepsi or coke label is written on top of a film that is made by us. In electrical industry the films are used in processors.
Sun control film market size is 4500-5000cr globally. Major competitors are in the US. One or two in Korea. Do not compete with Chinese manufacturers who manufacture very low value products. They have 70% market share in India.
Shrink business is a global one. We cater to large customers located in Europe, South America, India. Market share is around 80% in terms of products that we sell.
Electrical industry again we are a key supplier. We have a high market share in that product. We even export to china, which is a very competitive market.
Technology is a key barrier in terms of entering into the space. There are many ways of making the window film, but the technology we use, nobody has it. We have developed the technology in house through R&D. Have US patents for our products.
PPF business is a global one. India is not that large a market. Global Market size is 4500 cr. Largest player is XPEL.
Company will discuss a proposal to buy back shares. Many analysts suggested selling off their land holdings and buying back shares.
For the new plant which is producing PPF films, capital expenditure was 50-60 cr and co is targeting 300cr revenue at full utilization. Margins would be 30%.
Company started doing conference calls in order for investors to better understand the company.
FY23 profit target is already being met right now. Company is conservative in giving FY23 profitability targets.
Window film was banned by the Supreme court based on a PIL. Decision was taken on technical ground that central motor vehicle rules provide for visible light transmission. Until the ban in may 2012, regulation was 50% light from side windows and 70% from front and rear windows. But how should the transmission be achieved, there is no specific mention in the law. Court had directed regulators and legislators to make an amendment and the company has approached the ministry of road for carrying it out. In FY12 the company had done 75cr of revenue from this division.
Margin improvement reasons: Centralization of some activities: Reorganized activities to occur at Aurangabad (Waluj). Earlier these were taking place at multiple units. Stopped loss making units or loss making products. Reduced inventory. Tried to manage WC in an efficient way. Better product mix and market mix also aided. Focus is on Europe and US which are better paying markets than Korea and China. Significant improvement in gross and operating margins are due to these reasons, not due to raw material or crude price changes.
Company has full fledged offices in the US and UK. has helped grow the business.
In Solar window films business, Sales from both B2C and B2B (we already established this in Ayush’s posts)
In terms of strategy for market penetration of PPF, the company has a well established brand in US, so tinters have recognized GHTF’s brand. Now that company has started PPF, **tinters already recognize GHTF PPF as a high quality product ** and the company just needs to work with the same distribution chain. Company has 4000 tinters in US.
Company is continuously working on new products in R&D.
Capex: For achieving the 1500cr target, additional capex would need to be incurred over and above the currently planned 135 cr. Out of this 135cr, some has already. been invested in FY21 (I suspect this is the 50-60cr they have invested into PPF unit) and some will be in FY22. Capex announcement by other polyester film players is not of much importance to company since company does not operate in segments which competes with them (not for 74% of their revenue anyway). Capex will be partly funded by debt, partly with internal accruals. Cost of borrowing is < 9%.
Plans to monetize land bank in maharashtra will be discussed by the board.
All technology used by the company has been developed in House by the R&D team. No licensed tech.
Capacities: In IPD there is 42,000 T per annum capacity. In Sun control division capacity is measured in sqft basis. In Sun control it is 2400 lakh sqft per annum. In PPF it is 300 lakh sqft per annum. Capacity utilization was 100% in december. Going forward, the company might announce new capex. Until then, revenue growth would be through better product and market mix.
Business is on cash and carry model, no credit is given to distributors.
Company will give EBITDA guidance in Q4 concall.
Sun window film contribution to sales was 50% in 9MFY21. This was 38% in FY20. Management believes this is sustainable level (kind of reinforces the trend we already knew about through Ayush’s posts and XPEL concalls).
Company plans to gain market share through better pricing and product differentiation.
Company is paying tax at 33% due to MAT credit. Will shift to new regime in 1-2 years.
Highly flexible machinery and plants. Have the ability to turn any of their lines into any of their other lines. Completely fungible capacities.
Company has some pricing power in Sun films due to them being third largest brand in US.
Company does have plans to launch new products. Will come back to the market with this info soon.
In shrink and electrical markets, roughly 20% of revenue would be from domestic and rest from exports.
Packaging segment is the commodity product. There are 11 companies in India in this segment.
Company is not declaring their R&D spend consciously because many things are planned and in the pipeline. It is a significant number, meaning it is used for high chemistry. Most of R&D work is done in labs.
Any increase in RM price is directly passed on for commodity products and for value added it is passed on with a lag. They have contracts with RM suppliers. RM are sourced from reliance.

Disc: same as before

sahil_vi · May 27, 2021, 12:07pm

Q4FY21 Concall Notes

Additional 135 cr capex for manufacturing window films. Operational in 1QFY22. Will add 300cr to topline in FY23. Window film business has a capacity of 2400 LSF. Increasing capacity by 1800 LSF (67%).
QoQ margins have come down: There is some seasonality in product mix. Though RM cost has gone up, it is passed on to customers. For exports it takes some time, so Q1 margins should be back to Q3 level. Will be able to recover the GM reduction july onwards from exports customers.
Company has a Land bank. When board decides something it would be properly communicated.
On R&D: Can our competitors do the same R&D we did since the spending is small and compete with us in the global market? The way we are able to manipulate PET chips and the fact that we are vertically integrated means that our polyester is high quality and it is not possible for someone to buy PET and then be able to replicate our quality. Second, It is not not just about the R&D spends. Developing all this tech sequentially has taken many years. It is not possible for our competitors to replicate us quickly it would take them many years to replicate the tech.
PPF: Window film we sell for high end products. They cater to top segment. Mercs, BMWs, we make exclusive products for that category of customers. Window film prices are far higher than $200. PPF is also 1400-1500$ roughly. People dont use PPF for entire car generally. They generally use it for some parts of cars. Some spend 500$-700$. Some spend $1000. So our existing tinters can sell the higher value products.
Sun films: Branded and non branded have almost the same margins. US is the largest market. Then europe then middle east
Distributors do sell private brands but those are very small volumes and also lower cost and cheaper. But the ‘global’ brand is much larger volumes for our distributors. Customer comes and demands Global brand due to brand pull which is why distributor has to push this product.
Our tinters push global brand but if customer insists for XPEL then tinter installs that because
R&D goals: We only want to make niche products, hi-tech products. Difficult to copy. Want to get Better margins on the products.
Digital marketing: YT, instagram: It’s part of advertising. In the US, we have a person earmarked for these digital advertising activities and he is a global expert in digital marketing. The Amount of advertising on the net has increased. We have developed a digital showroom to understand our product.
Addition of volume in FY22 will come from PPF and new line will also contribute in FY23.
Covid: Some countries are coming back. US has come back majorly. Europe is having some issues. Brazil is having some issues, it is a big market for us.
We have already come to break even in the PPF manufacturing line.
We will recover the GM drop from exports. From July onwards we would be able to recover the GM drops.
FY20 Shut down: Operating system was very old and no service was available for that. This was a one-off and we do not expect a repeat.
Pricing wrt competitors for window films: We have been aggressively competing with xpel. We are higher than Xpel and 3M is higher and global is at par with most brands. The key drive for our brand is quality.
Process is already on to list the stock in NSE.
GHTF has a 10% market share in US market for Sun Films.
New products, price increase, product mix change can increase topline in FY22 despite us having 100% capacity utilization.
We have just in time inventory and so there is no inventory gain.
Sun control film volume increased by 20%.
We identify opportunities which are extensions of our product range: eg: front windshield glass. Some requests come from the tinter community. Some come from our own research.
Workman issues are there for some industries, but not for our factories in Maharashtra, 100% capacity utilization for our factories in Maharashtra. PPF line was done during covid times.
Marketing for customers: We are in touch with car retailers. We do a lot of online activity digital marketing in terms of reaching out to customers. Usually these days customers buy the product on the net. We are present as a part of that consideration.

My overall thoughts are that good to know that margin volatility is recovered back after a time lag. Hence, the GM reduction should result in equal and opposite expansion July onwards (just considering the RM impact). Also good to know that it is difficult to replicate the co’s R&D and tech easily (takes many years). Many analysts asked about landbank and also the processing charges. As an investor one can only hope that these get addressed by promoters.

Disc: Invested

sharemarketgen_ · May 27, 2021, 12:23pm

Very exhaustive notes(and some great questions ),you have covered pretty much everything.I feel most people are confused about the revenue potential in FY22.One participant asked about it quiet explicitly but management was evasive or probably didn’t understand the question.To my understanding,given the current quarterly run rate company should be able to do atleast 1150-60 cr. kind of revenue,with price hikes this should be close to 1200 cr which is a cool 20% revenue growth.PPF should add to this.It was a bit surprising for me to see management being very tight lipped on EBITDA guidance.Last call they said 25% will be the base and that PPF business segment will fetch 30% margins(maybe we can attribute it to first call excitement) However,there were no expansion plans back then so definitely revenue visibility seems to have improved with US markets recovering very well.Apart from GM uncertainty over the short term things remain well on track.It was also heartening to know that inspite of a severe 2nd wave company was running at 100% utilisation throughout.

Disc.: Invested.Views are biased.

tanishq · May 28, 2021, 9:57am

Found this review regarding global PPF. To be honest, i am still not very sure about the management’s capability in marketing the product but in terms of quality, they have got it right!

Kunjan · June 1, 2021, 7:44am

What is the company’s relationship with Garware Technical fibres ?
Are the promoters related ?
Just wanted to understand the promoter structure of the company

nikhil_chowdhary · June 1, 2021, 4:29pm

Shashikant Garware (of Gar poly) is Vayu’s uncle (Garware tech)

Kunjan · June 2, 2021, 4:42am

Great thanks.
Also found out this family tree of Garware.

Found it helpful

Source: Garware Group: Family & Group Structure - PA Wealth

Kunjan · June 5, 2021, 6:35am

The company has provided Adj ROCE and Adj ROE in their presentation (May 2021)

The amount adjusted for this computation is Rs 763.9 Cr (this is the total capital reserve according to their AR). The components of the Capital reserve being:

Demerger of Garware chemicals	44.39
PPE revaluation	618.42
Vile parle land revaluation	45.84
Aurangabad and nashik land revaluation	187.55
Impairment assets	-132.35

This is the PPE note in AR 18 where the fair value adjustment is Rs 583 Cr. The numbers don’t add up, so how have they calculated overall revaluation I am not able to understand
I wanted to understand can the total amount be adjusted from net worth to compute the return ratios ?

And how is the monetizable land value Rs 400 cr as discussed in the concalls? The value of freehold land as per the AR notes is Rs 770 cr

If anyone is able to understand this, kindly provide the rationale

sahil_vi · June 22, 2021, 12:20pm

Please read the link you have shared again, my own understanding (and I could be wrong) is that lubrizol is a supplier to ppf manufacturers, not a competitor. They talk about collaborating and enabling the value chain by manufacturing TPU: Thermoplastic polyurethane - Wikipedia not about manufacturing PPF. my guess is that TPU is a key ingredient for PPF.

tanishq · June 22, 2021, 1:50pm

Yes, you are right sir. My mistake! Will delete the post

nikhil_chowdhary · June 28, 2021, 9:47am

Encouraging, shows the quality and probably similar quality should be seen in PPF.

sharemarketgen_ · July 1, 2021, 11:13am

Company met some investor groups few days back on the 29th June. This time they have uploaded the whole transcript on the exchanges and quiet promptly,if I may add.

Some new questions but many repeated on margins,competitors,etc.

gurjota · July 6, 2021, 3:20pm

I was quite excited to read up on this business and the future prospects till last week, however looking at the corporate governance issues highlighted by @aga.ayush11, the spate of negative news has sobered me completely.

Remuneration and Fund Diversion Allegation - 2012

I dug a little deep into this and now sharing a summary of the promoter compensation (90%+ is fixed pay with very little commissions) over the past 7 years and this honestly raises a STINK in terms of corporate governance! I don’t think I’ve ever seen promoters get such a high % of PAT as compensation, it is very obvious what the promoters are trying to convey through their salaries, they don’t give a damn about business performance / PAT or minority shareholders.

Similar issues highlighted in 2019 - This was shared earlier on this thread as well, just sharing a couple of paras from the article

"As per the petition, ‘excessive’ remuneration is being paid to the promoter-directors. It showed that the CMD SB Garware was paid Rs 4.12 crore during the FY2017-18, while other members of his family, including Monika Garware, Sarita Garware and Sonia S Garware received Rs2.60 crore, Rs2.37 crore and Rs2.75 crore, respectively.

“The act of paying such exorbitant and excessive remuneration is harsh and burdensome, unfair and prejudicial to the minority shareholders and hence oppressive,” said the petition."

“It further said that the reason for high remuneration is not due to any extraordinary effort by them or the value derived by the business due to them but for the reason that they belong to the promoter family.”

This is also extremely serious. Quoting from the same article above

“GIL is an entity formed by the Garware family to divert profits from Garware Polyester, which is a listed company with about 20,000 shareholders, to GIL, whose 100 per cent shares are held in a private trust formed solely for the benefit of the member of the Garware family.”

And earlier this year, fine imposed for disclosure lapses few years back

Sebi imposes Rs 76 lakh fine on Garware Polyester, 5 officials for disclosure lapses