Garware Hi-Tech Films Ltd: A Hidden Consumer Story in the Polyester Film Industry

At the outset, we (Amit and I) want to make one thing clear that Garware Hi-tech is a “messy business” with questionable management practices. Two things that interested us in looking at the business were 1) new line of businesses; solar window film and PPF (added recently) crossing over legacy commodity business and 2) management’s sudden change in stance to openly share the business changes with the investor community through con-calls. So before rejecting this business primarily only due to promoter issues, we thought that this business was worthy enough to dive deeper to better understand the changing landscape and check what the risk:reward proposition was being offered by the market. With that being said, our main goal is to share our understanding of the business that we have had so far, and the scuttle-butt findings. And it is upto the reader to determine whether the risk:reward proposition is favorable or not after getting the complete view.

Disc: both are invested.

Garware Hi-Tech Films Ltd (GHFL) is engaged in manufacturing polyester films. The company belongs to the Garware family. The Garware group was founded by Dr. Bhalchandra Digamber Garware. Dr. BD Garware has four sons; Ramesh Garware (Garware Technical Fiber), Shashikant Garware (Garware Hi-Tech Film), Chandrakant Garware (Garware Synthetics), and Ashok Garware (Garware Marine Ind). All the four companies are listed but only Garware Technical and Garware Hi-Tech seem to be fully operational.

A brief history of the GHFL’s evolution-

There are two broad divisions; Industrial and Consumer.

The company is shifting its focus on the value-added specialty business and has reduced the pie of the commodity business over the years-

Within the value-added business, one particular segment; Sun Control Films, is growing at a much faster rate-

So, even though the overall topline did not grow by much during this period as the commodity business was de-growing, the margins expanded. The company claims that sun-control films is a very high margin business and hence the margin expansion.

This growth in margins and sun-control business has coincided with an industry-wide upcycle and hence, it remains to be seen if GHFL trend is secular and not just a short-term phenomenon

Sun Control Business- These are the window films that we once used (now banned in India) on our car windows to protect from excessive heat and direct sun rays.

  • Sun Control is a 450cr business for them (46% of FY21 revenues).

  • The company does private labeling and also has 3 brands; Global Window Films (Global), SunControl Films, and Garware.

  • The pie of branded business is not specified and the company does not disclose that but gives a broad range of over 60-70%.

  • Their main brand is Global which is present in the US and European markets. Global has grown from a 30cr business in FY12 to 200cr in FY20 in the US. Source- Past annual reports

  • USA contributed 20% to FY20 revenues and became 30% of overall business in FY21. This is a growth of 60% YoY.

Qualitative insights on the Sun Control Business-

  • Garware calls itself a “high chemistry” company and claims to be the only company in the world with backward integration for manufacturing Solar control films. Extract from their website

  • Extract from a User Manual-

  • Third Largest Brand in the US- Garware claims that Global is the third largest brand in the US after 3M and Eastman. This was confirmed by a neutral industry expert who mentioned that Global is in the Tier-1 category along with 3M, Eastman, and Saint Gobain based on size, quality, and brand visibility.

    • We don’t know how the branded sales have shaped up over the years. The company does not disclose that data.
  • Garware claims itself to be the only exporter manufacturer of Sun Control films in India.

  • There are not many “quality” sun-control manufacturers outside of the US which is Garware’s key market for this business. Even though the sun-control film is a $300-$400M business in the US, only $75M was imported in CY20. The rest is manufactured in the US.

Key Growth Drivers-

  • The company did 115cr capex in FY20 & FY21. 50-60cr out of this was for a new product called Paint Protection Film (PPF). The rest was for modernisation of existing facilities and to make them fungible.
  • Paint Protection Film (PPF)- The company has invested 50-60cr and has installed a 300 lac sq ft capacity of PPF. The plant was commissioned in Dec’20.
    • They expect a turnover of 300cr by FY23 end with more than 30% margins.
    • Unlike Sun Control, they don’t plan to do any private label here.
  • Expansion in sun control/Consumer Division- The current sun control capacity is running at 100% utilisation. Garware recently announced a 135cr capex to increase the existing capacity of the Sun Control business by 75%. This will take the manufacturing capacity from 2400 lac sq. ft to 4200 lac sq. ft.
    • They expect this capacity to be ready by end of FY22 and should contribute 300cr in 2 years time
    • This capacity is fungible and can also be used to manufacture PPF.
  • PPF + Sun Control, they want this business to be more than 1000cr in 3-4 years time which is right now at 450cr.


PPF is an ultra-thin transparent film that protects the car from minor scratches and protects the surface of the car. It has self healing properties; it can instantly heal if the top layer of the body’s paint is scratched. This is a premium product and is installed only by luxury car owners. More on PPF here.

PPF is not a new product, the film was developed by 3M for military use during the Vietnam War. Until 2011, PPF or Clear Bra as it was known, wasn’t widely popular among car owners. XPEL introduced a self-healing PPF in 2011 for luxury car owners.

XPEL is a $2B company and is the largest player in PPF in the US and globally. Window Film and PPF come in rolls. Installers of Window Film and PPF use software and a cutting machine to cut the roll according to the size of the car. 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. DAP has the largest database of window and car surface patterns in the world. Until 2010, XPEL was a software company. Their revenues ballooned from $10M in FY12 to $180M in FY21. ~70% 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-

  1. 4
  2. 3
  3. 1
  4. Xpel Technologies Part 1: Company Overview – Travis Wiedower

Few extracts from XPEL’s presentations-

PPFs are installed by the same tinters who install window films. The supply chain is exactly the same and this increases the dealers/tinters’ offerings and profitability. Garware is confident of achieving 300cr sales from PPF in 2 years time and wants to capture 8-10% market share.

The industry insider confirmed that PPF is growing at double-digits and they think that it will continue to grow at the same rate for the next 5 years because of new car sales and low penetration.

Presence of China- There are three ways to manufacture PPF using- Thermoplastic Polyurethane (TPU), PVC, or a blend of PVC and TPU. Products that are only TPU based are of the highest quality and PVC is the lowest. China is mostly present in PVC and blended based PPF manufacturing, the market of which in the developed markets is very small.


Understanding Supply Chain-

  • There are two parties in the supply chain; distributor and dealer/installer.

  • Garware used to have its own depot in the US prior to 2010 and used to sell to the various distributors and dealers of sun control film. They did not have much success as they had no front-end presence and sales & marketing team.

  • After 2010, the company changed its business model, appointed 5 exclusive distributors covering all of the 50 states in the USA.

  • Garware works on a cash and carry model. This makes them a highly working capital efficient business.

  • Garware’s distributors in the US sell to dealers/tinters. These dealers are like the local car accessories shop. Tinters are trained professionals who install window film and PPF on cars.

    • These dealers can have a few tinters working in their workshop or sell these window films to the Mom & Pop tinters.

    • Garware claims that these 5 distributors supply to 800-900 dealers who in turn have a touchpoint with 4000 tinters across the USA.

      • They mentioned in the concall that there are about 8000 tinters in the USA. This gives them a 50% penetration.
  • Distributor Responsibilities- The 5 distributors are responsible for stocking inventory, marketing, generating sales, increasing dealer/tinter penetration, conducting training programs for the tinters, and after-sales services.

  • Tinter Stickiness- Most tinters use only one or two brands and are generally “wedded” to the brands they have been using over the years. This was confirmed by Amit’s scuttlebutt and the industry insider.

  • Setting up an entirely new supply chain is a costly affair and hence Garware seems to have partnered with Distributors that had a regional presence and an established network. Three of the distributors, Express Window Film, Dragon Distributing, and Solar Control Films have their own brands as well. These could just be Global products which are repackage under their own name.

Understanding Unit Economics-

  • Garware mentioned that the sun control was running at 100% utilisation. They have a capacity of 2400 lac sq ft. They did a revenue of 450cr in FY21. This means that they have a realisation of around Rs. 19/- per sq ft.

  • Global Express Window Film, their largest distributor has a good website on which a dealer/tinter can order window films and PPF.

  • Looking at the selling price on the website, it looks like the distributors have a VERY HIGH gross margin of more than 60-70%.

    • Price varies with product category, size, and Visual Light Transmission (VLT). Category is the most important aspect.
  • Global’s highest category Sun Control Film (there are 4 in total), QDP Ceramic, sells for Rs.90-140 per sq. ft. based on size and VLT, on Express’s website. This is an example from the website. The per sq. ft. realisation for Global’s distributors comes out to be Rs. 99 in this case. (The conversion has been made assuming $1 = Rs. 74).

  • Whereas the lowest category product, Global Quick Dry, sells for Rs. 45-52 per sq ft. This is what it looks like. The realisation works out to be Rs. 48 in this example.

  • So, even if Global is selling just the lowest quality Sun Control then also the Gross Margins made by distributors is more than 60%.

    • This has an important implication, if the higher quality products start selling more, then growth can come from the existing capacity as well.
  • We don’t know what EBIT margins the distributors operate at to understand their true profitability as they have a lot of operational overheads.

  • However, we do know from the scuttlebutt that Tinters also have a very high gross margin of 70-80% as tinting or installation is a labour intensive job. This means that the price of the product is not the most important factor for tinters, quality is. This has been confirmed by the industry insider and Amit’s scuttlebutt.

  • What all of this means is that 450cr worth of products sold by Garware under sun control is ending up creating a value of more than 4000-5000cr in the entire supply chain.

  • The same is true for PPF. Global Express is selling the PPF at more than Rs. 300 per sq ft while Global plans to make 300cr on a 300 lac sq ft capacity. This gives Global a realisation of Rs. 100 per sq ft.

  • The management mentioned that they make similar returns on private label and branded business, this makes sense because Garware’s distributors are selling at 2.5-3x the cost and perhaps Garware is getting the same realisation from other brands in the USA who they do private label for.

Competitive Landscape:

Sun Control Film- The Sun Control Film industry (without the installation) is of $300-400M in the USA. The industry is divided into Tier-1, Tier-2, and Tier-3 players.

  • 3M, Eastman (Llumar & SunTek), Saint Gobain, and Global fall in the Tier-1 category. According to the industry insider, Tier-1 brands contribute 50-60% of the overall market.
  • Then there are Tier-2 players like XPEL, Madico, Johnson Window, American Standard, and Avery Dennison, etc that form 20-30%. These companies are also manufacturers (except XPEL).
  • And then there are regional players who get the products white labelled.

PPF- Currently there are fewer players in the PPF market with the majority of the market consolidated between XPEL (very high market share), 3M, and Eastman.

  • Although, there are many new entrants like Global. Most of the window film companies are now entering the PPF market as well.

Apart from XPEL, it is difficult to find numbers of other players in the industry as most of them are either private or under large conglomerates like 3M, Eastman, or Saint Gobain. XPEL’s numbers are not comparable to understand Garware’s efficiency.

Industry Landscape- The dealer/tinter is the ultimate customer of Global and other brands. Generally, the car owners would compare between 2-3 nearest shops that do tinting and install what the tinters are selling. However, companies like XPEL are challenging that and are creating an awareness among the car owners who now look for an XPEL shop and walk into that. The industry is quite fragmented that way with XPEL as the only large organised player with a few regional players like Tint World. For the other established brands like 3M, Eastman, Saint Gobain, etc, the tinter is still the end-customer. The industry insider we spoke to believes that the industry will remain fragmented for a long time.

Technical Aspects:

  • Dyeing Patent- According to the management, dyeing or coloring of polyester film is a critical process and only two companies in the world have that technology, GHFL is one of them

  • Could find their patent which seems to have expired in 2020.

  • Shrinking of Film- Shrinking of Window Film is an important aspect in the installation process. Easy shrinking helps with better installation for the tinters. This is also one of the key reasons why installers/tinters don’t switch easily because they get used to working on a particular brand and the way it shrinks.

  • Cutting software & machine- Window Films and PPF can either be cut manually or using a software & machine. The software comes with the car’s design and specifications and saves a lot of time and effort for the tinters.

    • Using these software has its own cost but most of the tinters working with XPEL and other brands seem to be using it. We don’t know on an aggregate level what percentage of tinters would be using a software and cutting machine.

    • We don’t know whether, let’s say, the machine provided by 3M to its tinters can be used to cut Global or any other brand’s products.

      • We do know that a company like XPEL does not allow tinters to use the software without becoming an authorised XPEL dealer which would mean that XPEL’s dealers would have to buy a certain amount of products every month from XPEL.
    • Global has also partnered with a software & machine company.

    • A short video on how tinting is done manually.

    • This is a good video on how the software looks like.

Corporate Governance issues will be covered in a separate post which should come out in a day or two


Notes from chat with someone who has been associated in various ways with the company for more than 15 years in the US:

  • This person informed me of Garware’s change in the business model after 2010. This is clearly visible in the change in debtor days. He thinks that the change was pivotal for their growth.
  • He has been in the industry for more than 20 years and he mentioned that Garware’s quality was as good as 3M and Eastman.
    • His words- “I feel satisfied after promoting the brand Garware to tinters.”
  • According to him Garware’s greatest asset is that it has "a rock solid colour stable product quality.”
  • He mentioned that one area where Garware is superior to any other player in the industry was in their manufacturing capabilities.
  • According to him the company operated in a traditional way but they have become proactive in the last 5-7 years.
    • They took little interest in front-end marketing but that has changed.
    • Garware has hired independent consultants in the US to help the distributors with better reach and visibility.
  • Global is a well recognised brand among the tinters now and it is much easier to convince them to start using Global products than it was earlier.
    • Global is known for its quality among the tinters.
  • All of the Global’s distributors have been in the business for a very long time.
  • On growth he mentioned that the industry is booming and he has never seen such kind of growth. Car sales and higher savings/spending ability are the two key reasons according to him.
  • According to him, the bigger players in the industry did not give Global enough attention and did not consider them as a threat.

Notes from meeting with a leading Automotive Styling Center’s National Franchise Sales Manager

  • About 45% of topline for franchisees comes from Auto window films tinting + Vinyl (wrap on top of existing paint - small business advertisement wrap OR affordable replacement of paint option without the expensive repaint cost) + PPF + Architectural Tints
  • Best performing franchisee makes about 75% gross margins and 34% EBITDA
  • About 75% of all auto vehicles would have Sun Control Film applied. They didn’t have such numbers for PPF penetration.
  • PPF market would be about $400mn.
  • Wraps, PPF, Solar Films - all have good demand tailwinds and better prospects ahead for them.
  • Recently self-healing (from a small dent) PPFs and vinyl wraps have been the latest innovations in the industry.
  • 100% of their tinter franchisee locations would be using software and cutting machines. There is a one-time fixed cost of ~$10k and then $100 a month for a film cutting software license. (there are film cutting machines available in the market for about $3k to $5k)
  • Around 10% of new cars are sold with pre-installed window films and these films are just for privacy purposes and not UV protection. However, on high-end cars the quality of pre-installed films is better than starting range cars.
  • All films are ordered through franchisor’s platform. Franchisor aggregates all orders from multiple franchisees and then sends orders out to the vendor.
  • They get Solar Window Films and PPFs from Suntek, 3M, and XPEL.

Notes from meeting with a Neutral Industry Insider who has covered Film Industry for last 10+ years

  • According to him, it is a level playing field between Global and US manufacturers. Lower production cost for Global gets negated by direct sales reach for US manufacturers.
  • Top 5-6 brands control about 50%-60% of the market; 3M, Eastman, XPEL, Garware (Global), Madico, Johnson. And the rest of the market is with many smaller players and most of them are catching-up. It’s a highly competitive market.
  • Global is definitely part of the top tier brands/manufacturers in the US. And Global provides good quality products. Global has been more of a silent player 4-5 years back but lately they have upped their game in terms of marketing and growing the business.
  • Solar window film market is growing at a slower rate than PPF. Solar would be growing about 5%-8%.
  • Price is not the main factor. It’s the quality of the product, relationship with the tinter, TRUST built over several years, standing with the tinter when there is something wrong with the product (warranty service), providing more offerings to the tinters to serve their customers better, providing training - these things are of utmost importance in this game and makes Tinters stick to the brand.
  • There would be about 6000 tinters (auto + architectural) in the US. Market is very fragmented. About 20% of tinters would be exclusively offering only one brand. Remaining tinters would be offering multiple brands. XPEL and Tintworld people are trying to have a professional structure in this line of business by offering franchises. But it’s going to be a long affair for them to be able to grab a bulk of tinters because it’s so fragmented. It is expected that this industry will remain fragmented.
  • Eastman’s architectural window business would be almost similar in size to its Auto window film business.
  • Penetration of PPF in new sold cars would be below 20%.
  • There is opportunity for brands to work directly with new car dealers to have films applied at the showroom level when the car is sold.
  • PPF market shall grow at a faster rate than Auto Window Film market in the future.

Scuttle-butt observations after meeting 20+ tinters in and around Charlotte, NC

  • Most tinter shops were owner run, mainly a one-man army or at the max 2-3 helpers, serving people in their local community for the last many years. So these are mainly blue collar workers, very passionate about cars, who are mainly selling many services like car detailing, wrapping of vehicles, paint correction, window films, PPF, audio enhancement, other interior accessories, etc. But for most of them the bulk of their revenue comes from sun control window films and PPF.
  • They deal with the customers of their local area often and take pride in delivering quality products with exceptional craftsmanship service. They stand by the quality of the product and ensure that they keep delighting their customers. They know that customers living in their area are going to come back to them if anything goes wrong with the product and customers can leave bad reviews for others which would harm their business. So they ensure that the job is done right all the time.
  • Most of them in my area had an exclusive relationship with the film brand and some of them were selling/offering only a single brand for 10+ years. Selling only one brand for 10+ years was telling me loudly about the tinter’s loyalty with the brand.
  • More training is needed for getting better at PPF application than Window Film application. However, moving/switching between brands for final application is not a problem for an experienced tinter.
  • Most of them used software and film cutting/plotting machines. It makes them efficient and the job gets done faster with minimal wastage of the film. At the same time, for PPF, certain areas of the car like fenders, they prefer to apply the PPF themselves rather than a pre-cut PPF because the edges of the fender get better covered. Most of the PPF customers opt for doing just the front portion of the car (hood, fender, and side mirror) and hence covering the edges of the fender well becomes critical.
  • Most customers walking in the shop don’t ask for a particular brand of film. Their main concern is to get a film whose Visible Light Transmission (VLT) number is allowed in their state according to the state law. So it’s all about the service, warranty, and cost of service that the tinter offers.
  • I was also lucky enough to visit SunStoppers (the biggest franchisee of XPEL) located in my city. They have about 5 locations in Charlotte metropolitan city. Very professional and customer centric approach as compared to mom&pop tinters. More products/services offerings, big on social media marketing. Since I googled XPEL, their advertisements started showing up on my Chrome browser and FB news feed. XPEL has clearly been a big winner in gaining market share and has disrupted this industry by having direct tie-ups with the tinters in the form of franchisees and having them sell exclusive XPEL branded products to their customers.
  • I wasn’t able to find a single tinter selling Global brand in my area. It seems like Global has zero presence in Carolina states. However, I checked a few tinters in Texas, Arizona, California, and Maryland states and found tinters who were offering Global brand along with other brands as well.
  • I also noticed that a few tinters in my area were running July 4th, independence day PPF specials - where Full Front package was offered for $699 which usually goes for $1400+ regular price. I called-up that tinter and asked how long the special would last. He said just the week of 4th of July but he shall have a similar special for Labor Day long weekend in September. With such promotions the affordability level will increase drastically and the market will not be limited to just Teslas and high-end cars.

Disc: Invested


I have been going through the past annual reports of Garware Hi Tech from the year 2000. Sharing the notes and highlights. I have tried to cover the key matters and events in their own chronological order.

Garware’s difficult past-
The polyester film industry was going through a recessionary period at the turn of this century. Garware Polyester suffered huge losses in FY1999, FY2000, and FY01. This led to a significant net worth erosion and the company was declared Sick. Source- FY2000 Annual report.

This continued in FY01 and the company considered financial restructuring with the bankers. While IDBI agreed, ICICI, UTI, and EXIM Bank filed complaints in the Debt Recovery Tribunal.

From FY02 Annual Report-

The company undertook financial restructuring; revalued its Land and Buildings and took write-offs in investments in and loan to a 82% subsidiary, Garware Chemicals Ltd (more on this later). The net losses on revaluation and adjustments were passed through the share premium account.

This is finally how the restructuring happened with the bankers. Looks like ICICI and EXIM continued with their loan. One Time Settlement was made with IDBI & UTI. From AR08-

Garware Chemicals Ltd
Garware Polyester had a 82% subsidiary, Garware Chemicals Ltd. They had set up a Di-Methyl Terephthalate (DMT) plant in 1999 which started commercial production in May’2000. DMT was a key RM back then for the company.

Total CWIP as of April’2000 was around 250cr, this is what the break-up looked like. The company had huge pre-operative expense and most of it was from Interest expense-

Apart from the downturn Garware was facing in their core business due to the industry conditions, Garware Chemicals had its own issues. The company had done a huge capex in GCL for backward integration and wasn’t able to meet its debt repayments

GCL was referred to BIFR. From AR02-

In FY02, Garware Polyester took a write-off in the investment made in GCL and Loans given to GCL. This was a part of the financial restructuring plan (mentioned above) where the company revalued its Land and Buildings, and took write-offs in the Investment and Loan provided to GCL. Source- FY02 Annual Report

GCL became an associate company after the write-off and it looks like GCL continued its manufacturing. Garware Polyester continued to source DMT from GCL.

Garware Polyester continued to extend the corporate guarantee to GCL. Source FY02 Annual Report

In FY04, IDBI offered a restructuring plan for GCL and Garware brought back some amount on its balance sheet in the form of Loan and Advances. About 90cr was in total provided to GCL in the form of equity and loan by Garware Polyester. Only 36cr was brought back. GCL continued to remain an associate-

In FY05, Garware Polyester exercised its right and converted the loan amount into equity shares. Source- FY05 Annual Report

In FY06, Garware Polyester reached an agreement with Mizuho Corporate Bank (formerly Fuji Bank).

Nothing much happened in GCL for the next three years. Suddenly in FY11, Garware Polyester made an arrangement to purchase GCL’s assets by doing VERY weird adjustments. Garware Polyester first purchased around 15.5cr of shares of GCL from various stakeholders. This was added to their own equity investment and then the entire amount was disposed of. Source Annual report FY11-


The assets of GCL exceeded liabilities by 7.4cr. Given Garware Polyesters’s 51cr investment (after buying stake from others), the company created a 44cr Goodwill and converted the equity investment into Goodwill.


That year, they also purchased some “Capital Asset” from a Director for 15.3cr. This probably belonged to GCL as well.

Something interesting happened in FY08, DMT became obsolete that year and wasn’t used anymore by the polyester film manufacturers globally.

The management confirmed this in the Q1FY22 concall and were well aware of this, yet they went ahead and acquired the assets of GCL. They tried making use of the plants for other purposes but that never fructified and they had to dispose of the assets over the years.

It did not end there, the company went ahead and took a huge impairment of their assets a year later in FY13 and wrote-off the entire Goodwill amount. And because they did not want to book a notational loss, they went ahead and revalued their land again.

I think this is a serious red flag. The company knew back in 2008 that DMT was phased out from manufacturing polyester film and yet they did this scheme of arrangement.

Disc: Invested at lower levels.


Related Party Transactions with Garware Industries Ltd. Garware IndustrieEs Ltd, and Garware Chemicals Ltd (GCL).

The promoters had a private company, Garware Industries which was later amalgamated (we don’t know in which company). They then started dealing with Garware IndustrieEs, This change happened in FY14. Further, GCL was merged with Garware IndustrieEs.


According to the management, Garware IndustrieEs holds some tech which is crucial for the manufacturing of sun control films. I have collected data since FY11 to understand the transactions between Garware Polyester and these entities. They have mentioned that processing charge is a variable cost.

According to the management, the company had a sale purchase agreement along with processing charges till FY16 which later became just processing charges.

This is what it looks like if we add the Salary and rent paid to promoters and their entities along with Donation to Family Trust.

The company has been paying very high salary to the promoters.

Changes in CFO

Garware Polyester hasn’t had a stable CFO in the company in the last 13-14 years.

Sources- All of this has been taken from the past Annual Reports. Reports till 2010 are available on the exchange. I am attaching the pdfs from 2000-2010 if someone wants to probe further.


Here is a Google sheet that has the details on Related Party Transactions, Changes in Fixed Assets, Auditor Details, Changes in Directorship, Factories, Subsidiaries, R&D, and Promoter’s Salary over the last 20 years- Garware Polyester VP - Google Sheets

Disc: Invested at lower levels.


I am not an expert at forensic accounting or accounting in general. I’ve been tracking the business of this company and it looks pretty good. However, as fellow VPs have pointed out there are question marks on the management transparency. The management is trying to clear some of them through concalls. In the last concall, I remember there were 2 questions regarding this which the mgt answered.

Why so much legal fees? Ans: The mgt is not aware of such fees or any legal proceedings. Might need clarification.

Why processing charges to promoter entity? Ans: To maintain technology arbitrage, a KSM is supplied to the company by promoter entity which owns (and hides) technology.

I have one more question. I’ll request people expert in accounting to please clarify the doubt.

The audit fees of this company seems pretty high. I can only assume it is high because some companies of similar turnover pay considerable less audit fees.

Audit fees of Garware Films

Audit fees of Cosmo Films with >2x turnover


Management spoke about opportunity and their approach of doing PPF business in India during Q2 concal:

I did scuttlebutt to understand more about domestic opportunity for Garware. Below is notes from same based on interaction with 4 tinters/owners doing PPF business and Xpel distributor.( Thanks @aga.ayush11 for helping with insightful questions)

Cost of PPF per car varies from 1.5 to 3 Lacs including installation charges. Spending such an amount for a high end car is worth considering the resale value for a well maintained car.

Cost of PPF per sq feet is Rs.650 to 900. (3M seems the costliest). An average material required is 220 to 250 sq feet. Cost varies depending on car model, design, size…etc.

PPF available as two materials TPU and TPH. TPU is of high quality with a warranty of 10 years. TPH quality is low compared to TPU and warranty period is for 5 years.

Overall market has transitioned from using wax (which gives glassy appearance) to ceramic coating and to PPF. Few years back the tinter who was doing 25 cars ceramic coating and 5 cars PPF is doing the reverse now. ceramic coating offers resistance but does not have self healing property and does not offer protection against stone chips which is a common problem on highways. If significant scratches happen on PPF without damaging the underlying paint we can replace the PPF and still give the new look to the car.(narrated a story about such an incident with a car owner who got impressed and get PPF done for his other cars also.)

PPF business is increasing with an increase in the number of high end cars. Out of 10 high end cars at least 6-7 ‘will get PPF done.

Xpel, ceramic pro( kavac),stec,3M are preferred brands. There are other players like Llumar, saint gobain, Lg cool pro, hexis and few more Chinese brands. Xpel and Ceramic pro(kavac) seem to be leaders are preferred by tinters. 70% of customers do not ask for any particular brand and most of the time they will go by tinter advice. Few cars get PPF done at the showroom itself while purchasing. Each vehicle needs 3-4 days of time for PPF and generally 3-4 technicians work on it.

All are aware about Garware’s global brand and they have been approached by the garware team to buy PPF. Feedback I could get is, global brand is not preferred and concerns about overall quality, peeling of film at the edges and wrinkling are common compared to other top brands. Slight Yellow tinge which appears after applying seems to happen early( three months) with global brand.(same is one year for Kavac and 6 months for 3M).

XPEL has its own software and even ceramic pro(kavac). If we enter the car model and detail, it gives pre defined cuts for that particular model from PPF roll which exactly fits the edges and angles of the particular car. Using software wastage of roller is more and installation charges also high. Manually we can do the same job without wasting film roll. Software has a role in exotic cars like Lamborghani due to more angles.

Xpel distributor has 4 authorized dealers. These dealers have their own tinkering business and sell to others also. Xpel provides training to authorized dealers/installers. Xpel gets paid for using their software by dealers.
Material is imported from the USA and distributed here.
Overall xpel is growing at 10-15% per year. retail price is 650-750 per sq feet but can’t share the details about margins.
Xpel has a 10 year warranty and carries a unique id linked to the vehicle identification number. Using xpel software we can go back and check details of installation, thickness of material…etc which customers are interested in while reselling the vehicle.
Xpel film material, thickness and adhesive used is of top quality. Other companies’ material will develop a slight yellow tinge over the period(feedback from others is also the same). This is one of the reasons for why xpel is preferred by customers/installers particularly on white colored cars.

Discl: invested


Garware Hitech – Q4FY22 concall KTA - CMP: Rs 668.00 | MCap: Rs 1553 crs

In FY22, Revenue: Rs 1303 crs (+32% YoY), EBITDA: Rs 238 crs (18%), PAT: Rs 167 crs (13%) | Net Cash: Rs 125 crs

ROE: 22.49% | RoCE: 17.65%

Guides for 1800 crs Revenue by FY24/25, maintaining similar margins of ~15-18% (DD margin range as benchmark now)

Demand Review:

  • Capacity Utilization was 100% and has strong demand and long order book, company had option to pick and choose customers due to lower capacity
  • Loss of sales due to Russia and Chinese demand affected due to war / lockdown has been partially offset by higher sales in USA, Europe and Middle East
  • Car window film business has shown continuous growth despite of dropped car sales in key markets of US and RoW due to Chip shortage and covid lock down
  • PPF was expected to be 95% exports but looking at the domestic demand, expect 80% Exports and 20% Domestic

Marketing Activities:

  • Have largest PPF (Paint Protection Films) capacity and has aggressively initiated marketing campaign (domestic and international).
  • Started GAS (Garware Application Studio) – target 200 stores by end of FY24 across major cities in India – Working with OEMs (PPF to be installed in showroom itself), Dealers and Distributors (get products at special incentivized rate) to open 10 stores immediately
  • Started strong Social Media campaigning and awareness is growing
  • Hired President Operations and dedicated team for Marketing in US
  • Strong marketing campaign in US with social media, participation in various shows
  • Also, started 3 products of PPF – Economical, Premium and Normal which is leading to better sales vol…


  • 135 crs PPF + Upgradation of existing lines and was up in FY22 and another 135 crs for new lamination line… Full CU by end of FY24 ( total capex – 270 crs which can yield revenue of 600 crs )
  • New lamination line will be fully operational by Q2FY23 (expect 300 crs revenue from this Line) – plans to run step wise to reach full operation
  • PPF line is more than 50% utilised and has achieved breakeven with 80-100 crs revenue


  • Expansion of distributorship can be done either through Organic or Inorganic route in the region of US
  • Distributorship in majority of countries are Exclusive in Nature

Raw Materials:

  • Major RM is PTA & MEG for which company is having Long term contract with supplier (RIL) and supplies are guaranteed and any kind of cost increase is passed on to the customer and another is TPU used in PPF

Exports – accounts for 73% of total sales

  • Launched special architectural segment for sun control films with large corporate customers and is putting dedicated efforts to grow on architectural segment

  • Freight rates was expected to go down in Q4FY22 but has stabilized on higher side but now there is indication of drop in freight prices

  • Working on new Organic and Inorganic expansion for which cash will be utilized

  • Mr. CJ Pathak, WTD has retired, Promoters are involved in day to day management and COO has been hired based in Aurangabad to manage the operations and work on efficiencies and debottlenecking

  • Land Bank monetization will be done at appropriate time and Directors will take the call, management is more focused on improving performance


Note from visit to Garware application studio:

Owner was dealing with 3M films for paint protection films. Now with Garware films as exclusive partner. Obvious reason for shifting was better monetary gain offered by company. He is able to get same quality material at half price compared to 3M and can service more cars by offering lesser cost to customers in comaprision to 3M films…

Garware PPF costs ₹ 750/sq feet vs 3M at ₹1200/sq ft…thickness is same(20 micron).

Garware offers 5yr warranty against manufacturing defects compared to 1 year warranty of 3M.

( Insurance also available against PPF if its gets significantly damaged due to accident and need replacement…cost of insurance is ₹4000.00)

We are doing PPF for 10-15 vehicles per month…what we get here is SUVs like XUV, Harrier,Nexon Hector…etc. premier cars like BMW/Benz may be 1-2 per month.

Overall cost of PPF for a full body will depend on the surface area of the car. Typically for XUV its 1.6lac(offered me at 1.25lac)

For BMW/Benz it will cost near to 2 lac.

Disclosure: reentered during last few weeks(5% of PF)