Ladies and gentlemen, good day and welcome to the Garware Hi-Tech Films Limited earnings conference call. As a reminder, all participant lines will be in 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 zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Vikas Verma from Ernst & Young. Thank you, and over to you, sir.
Thank you, Muskan. Good evening, everyone. Welcome to the Q1 FY 2026 earnings call for Garware Hi-Tech Films Limited. On behalf of the company, I would like to express our gratitude to each of you joining the call today. To discuss the performance of the company and to answer the questions, we have with us from the company, Mr M.S. Adsul, Director Technical; Mr Deepak Joshi, Director of Sales and Marketing; and Mr Abhishek Agarwal, the Chief Financial Officer. Before we begin, I would like to draw your attention to the fact that today's discussion may contain forward-looking statements that are subject to various risks, uncertainties, and other factors which will be beyond management's control. We kindly request that you bear in mind there may be uncertainties when interpreting such statements. Please note that this conference is being recorded.
We will now start the session with opening remarks from the management team. Afterwards, we will open the floor for an interactive Q&A session. I would now like to invite Mr Deepak Joshi to make his opening remarks. Over to you, sir.
Thank you, Vikas. Good evening, everyone, and thank you for joining us today to discuss the Q1 FY 2026 performance of Garware Hi-Tech Films Limited. The first quarter of FY 2026 unfolded against the backdrop of a challenging external environment, both globally and domestically. Traditionally, a strong quarter for us, this year's performance was modest due to unusual monsoon patterns and emerging global trade uncertainties. On the domestic front, Q1 is usually a strong volume driver, but the monsoon season started 30-40 days earlier than expected in the entire country. We have seen demand disruption in end-use sectors such as automotive for Sun Control Films and beverage for Shrink Films. This seasonal shift affected our order flows in our consumer and industrial divisions, particularly for segments that are sensitive to short-term demand cycles.
In our Sun Control Film business, revenues saw a year-on-year decline of approximately 7%, primarily due to early rains and temporarily slowdown in demand from developed markets and sluggish growth in automotive sales. Our Paint Protection Film segment recorded a year-on-year growth of approximately 28%, driven by higher adoption in global markets such as North America and the Middle East, supported by improved brand awareness and the expansion of Garware Application Studio. Revenues in our Industrial Product Division saw a decline of around 3% on year-on-year basis. Our Shrink Film sub-segment declined by nearly 29%, influenced by the unusual monsoon patterns, leading to slowdown in beverage industry and uncertainty of tariff situation in U.S. market. While the overall top line was impacted due to these evolving geopolitical and tariff-related concerns, we believe the fundamentals of our business remain strong.
Our strong global presence, diverse product mix, and a long-standing customer relationship continue to act as a strong lever. We have grown steadily over the last 10 years. FY 2026 is likely to be a challenging year due to tariff uncertainties and geopolitical tensions. Until April 2025, we were paying a 6.25% tariff in U.S. market. Post that, a 10% base tariff was added, taking the total impact to 16.25%, which was absorbed in the entire value chain. An additional 15% tariff has been imposed with effect from 7th August. We are in discussion with our channel partners for an amicable solution for this. Currently, with the announcement of a further 25% tariff, we are evaluating our next steps. We hope that this will end in a better way. I would like to mention here that the first 10% impact could have been INR 100 crore in the bottom line.
That means INR 33 crore for the quarter one. However, it was absorbed by all our efforts during the entire supply chain. Our focus remains on capturing new opportunities in all business segments like automotive, architectural, and shrink labels, while manufacturing products in a cost-efficient manner and improving operational efficiencies. We are also on track with our strategic investments, including the second PPF line and the upcoming TPU plant, both of which are expected to drive our next phase of growth. We remain committed to navigating the current environment with agility while laying foundation for a stronger and more resilient future. With that, I will hand over to Abhishek Agarwal to walk you through the financials. Thank you.
Thank you, Deepak. Good evening, everyone. Let me take you through the financials for the Q1 of FY 2026. Our consolidated revenue for the quarter stood at INR 495 crore, compared to INR 475 crore in the Q1 of FY 2025, which translates to a 4.3% growth year-on-year. This is achieved even in a very tough operating environment. EBITDA stood at INR 123 crore versus INR 130 crore in the last year, while the EBITDA margin was 24.8% versus 27.4% in Q1 FY 2025. The reduction was primarily on account of increased employee and marketing costs, which is a strategic investment towards the long-term growth of the company. The PBT declined by percent to INR 110.3 crore versus INR 117.5 crore in the same quarter last year. This is consistent with the revenue mix and investment-led expansion. PAT for the quarter stood at INR 83 crore, compared to INR 88.4 crore in Q1 FY 2025.
On the balance sheet front, we remain in a strong position, debt-free, along with INR 700+ crores of cash and cash equivalents. This provides us ample headroom for our ongoing CapEx initiatives and potential strategic investments. We continue to invest in innovation, global expansion, and long-term brand building, which will position us to capitalize on growth opportunities in the coming quarters. With that, we now open the floor for questions. Thank you.
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 the touchtone telephone. If you wish to remove yourself from question queue, you may press star and two. Participants are requested to use handsets for 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. Please go ahead.
Hello, I am audible, sir?
Yes.
Sir, in terms of just trying to understand your strategy, given what has happened with the tariff. We have very strong presence in Europe and we are also penetrating into Middle East. New product, new geographies. What is the alternative strategy or geography you are looking for the growth?
On alternative geographies, we have added new manpower in Europe and Middle East. With Middle East, we are in fact growing pretty fast, and we expect around 30%-40% growth in Middle East this year. Mainly, this is happening into architectural segment because we were already pretty strong in automotive segment in Middle East. The growth, which was limited to earlier UAE and around the areas, now we are doing really penetrating well in most advanced market like Kingdom of Saudi Arabia. We have added manpower. We are putting lot of some digital media and other marketing efforts in Middle East to grow the business to around 30%-40% this year. In Europe, we already added manpower six months back, and there also we are seeing quite strong growth in that region.
Of course, like you asked about the other region, but even in U.S., we are trying to, because we have added good new resources there as well. To compete with the current scenario, we are working on very strong measures which leads to cost-saving efforts. That means we are trying to make the product with some innovative ways. Same the product, we are trying to make it with the different ways, with improving our efficiencies, which gives us lot of benefit, lot of headrooms to mitigate the impact of tariffs from U.S.
And sir, I think what I learned is that whatever the U.S. exposure we have, I think half of the exposure is basically into our brands. I think we have three brands under which we sell the product. In that case, the tariff will not impact that part of business, right?
See, tariff will impact the overall business, but this, what you are saying, half of the business, which is through our channel partners, we will have a strong advantage there as compared to the other business. Having said that, the entire customer base, we had a discussion and they all are aligned. They understand the situation. We will find out a solution, but to an extent, what you are saying is correct.
Sure. Thank you so much, sir.
Thank you.
Thank you. The next question is from the line of Aashish Upganlawar from InvesQ PMS. Please go ahead.
Yes, sir. Just continuing on this very important subject of where we stand after this tariff. Couldn't understand your thinking in detail. You said Middle East, you would be sending the goods from there. Very difficult to understand. Can you please clarify how are we strategizing in case this situation with tariff maybe ends up maybe 30%, 40%, if not 50% of tariff? How do we maneuver the business accordingly?
What I said is not related to where we manufacture. The first question was related to our growth in Middle East and Europe, that means alternative geographies. I explained that we have added manpower, we have stepped up our efforts in marketing to grow those markets, because that Saudi and Middle East, entire Middle East is a very big market for cars as well as buildings. That area is still growing very fast in terms of real estate growth. Sun Control Films for architectural segment is one of the key part of that growth. We are putting a lot of efforts to directly enter into contracts with those builders and companies who are doing architectural business there. That was the first question.
Now if you are talking of how do we maneuver if that continues, first of all, we hope some solutions will come. We hope for that. We are preparing for whatever can go here. In that way, we are reducing our cost. Means the manufacturing of these products, there are various ways we can improve a very good amount of efficiency there. Second thing is, in terms of power and other initiatives, we are taking these initiatives to reduce the cost on that. There are many initiatives which company is working internally. Lastly, if that remains a long-term game, we are also evaluating what can be done for a longer term, like after the cost savings and better efficiencies and all.
That also evaluation is going on, at this event, unless it is formalized in full, I won't be able to give much light on that.
Two things I wanted to understand. One is that we would be selling there directly, or we are selling through some channel partners, the tariff would be on your bill value which goes out, on the ultimate price to the customer, that percentage will be lower. If you could explain if things have to be passed on to the customer and to the value chain, overall, how would it work? Because I think even if it is 50%, the markup would be much lower given your cost to the distributor, and beyond that, there would be multiple in terms of pricing. That is one thing I wanted to understand. Secondly, is there an option of alternative manufacturing in the U.S. because your competitors would also be feeling the same heat, because probably U.S.-made manufacturing won't happen. It would be sourced from somewhere else.
How is the entire scenario panning out now?
The thing is, to answer the first question, you have summarized it well that there are the cost of selling from here to USA, to your own company, and from there to the customers. You are right. There are some benefits which company can take, but again, because of the confidentiality in nature, your direction is right, but I won't be able to tell you the exact numbers or exact thing what we are doing because that is proprietary to the company. Definitely your thought process is correct. That is the possibility. This kind of cost pressure can be reduced by doing such kind of things. There is a leverage there, so that is done. Second thing is in terms of the current situation in the market.
Let me tell you, the Korean products, first of all, Garware or global competes with the products which are manufactured in America. They hardly compete with the products which are manufactured from China and Korea and any other country. When we talk of U.S. manufacturers, I won't name them, but they also have backward integration of their products. Some of them are coming from China and Korea or from any other part. The duty impact has also hit them pretty hard and that's why we have seen some price increase into the market to the end customers. All those being documented, properly studied, and because this is only a situation unfortunately changed in day to day, this is in last week or so. We are still evaluating, but we are now feeling confident and something will come out.
As I said, this is challenging without a doubt, but we have options where we can pull everything together and make the best solution for us.
Last thing, if I can ask, how does this work? In certain industries, a 20% tariff was supposed to be not as affecting the bottom line as much, maybe couple of percentage points on the EBITDA till it gets absorbed into the market. With cost efficiencies, people could have managed. In your industry or in your case, how much of a tariff is manageable? Is it maybe 20% and beyond that it becomes a very big hit on the profitability overall. Any metrics on that, if you can share, it will be helpful for us to understand the gravity of the situation overall.
In any case, like I explained in detail that 6% and it went to 16%, which was a comfortable situation. Another 15%, we are working, like I said. This last 20% is still, I can say that is very difficult and it makes it more, I would say challenging.
The initial ones, like I gave you an example, 10% could have hit us with INR 100 crore on the bottom line, right? That's a big number, which is INR 33 crore on the bottom line. You saw the results, and that started from April itself. We were hardly impacted by this because there were some other things like monsoon and others, we navigated. We are confident for some other percentage can be similarly traded off. Beyond that, it's very difficult to say what will hit, what will not. Definitely it's something which is at the macro level that government has to do. Beyond a certain number, it's very difficult to absorb that. We have to work towards that, and we are hopeful something better will come out. I can't give you a number, like beyond this, we can't do.
There is something which is for the confidentiality reason. We have lots of things where we can do, like whatever I can share in terms of operational efficiencies, power costs, and alternative geographies. Beyond that, it's a little bit of confidentiality nature where we would not like to share what margins to our subsidiaries and selling into the market. That's all I can say.
Thank you so much, sir. Thank you.
Thank you.
Thank you. The next question is from the line of [Gunit] from TCI. Please go ahead.
Hi, sir. I would like to understand in the U.S., in the segments that we are present in, who are our main competitors and what is our pricing as compared to them? Do we directly compete with 3M, or in the segments that we are present, are the competitors imports from Korea? What is our pricing as compared to them? Before the tariffs, what kind of pricing differential was there, and how will the tariffs impact our competitiveness?
Yeah. There are four big players in U.S. market, including us. You named one of them. They are pretty strong in architectural segment. Others, there are two more players who are strong in automotive segment. We have also been pretty strong in automotive, and we are now opened our good, strong ways for the architectural segment. That's how the competitors stand out, because I won't name anyone because of, we can only talk to them as our peers. If you talk about the prices, we were, I can say 10%-15% lower in U.S. market for the obvious reason that we were exporting to that market and they were manufacturing the product there itself.
Now, after the tariff situation, everyone has got impacted because all of them are doing either their direct imports from other countries, or they are importing their raw materials. Like they're manufacturing in U.S., but they are importing their raw material from other country, or raw material of raw material being imported. We have seen some price increase also from them, which we are also evaluating, which we will do, because these things are very dynamic currently, so we don't even know the full impact, like how much peer A, B, C, D has increased. We are studying that, and definitely there is a scope of price increase, which we will take.
All right, got it. If we have to track, what is the main country from which raw materials are imported and what kind of tariffs do they face with respect to if you compare it with our tariffs? Earlier you had given a guidance of INR 2,500 crore in FY 2026. Would you like to revise that to a lower level, or do you think it is still possible to achieve those numbers? What should be the direct impact? Now that the tariffs have been further increased, so do you see any further impact? If so, can you quantify it?
Yeah.
In terms of your—
The first question is, we have a comprehensive tracking mechanism. Our team does, like which country is facing how much tariffs, and what are the impact to each individuals, and how are they doing the prices, increase, stable, and all those things. Obviously, that's very difficult to share here because, again, for the confidentiality reason. We have that full access and it's still dynamic because many people do it in a week or 15 days time, or there is a time lag before the shipment comes there in the country. That was the first. Second thing on the guidelines, yes, of course, we have given the guidelines of INR 2,500. That was given three years back, and we continuously move towards that. Even the last year, we did INR 2,100 crore.
In the current situation, we will definitely like not to say anything or confirm that, because this is something which is a very, I would say, again, something dynamic has happened, which is beyond our control. It was, I can understand even from the government bodies, that everybody is kind of shocked, to all business and everyone. We will need some time before we assess where we can reach. I would like to stay away from giving any guidance right now, because this is something, even if I say something, but we don't know how much will be reversed or will happen. In that situation, it doesn't make sense to say what would be the guideline. We would like to stay away for this at this moment.
We have always been very vocal and said whatever we could achieve, but right now, we would not like to say anything on that.
All right, sir, got it. My last question would be, you said that prices were 15% lower as compared to peers. After the initial tariff implementation of first 25%, you said that the competitors also increased their prices. Was that delta of 15% still maintained till the first 25% tariffs were announced?
Sir, the first 25 was announced three days back. That's what I said. I gave you with the timeline that it was only 10% additional from April till August 1st. The announcement was last week only. We are evaluating that. Of course, there, the delta which we had, where we were little lower, we can take advantage of that situation. We can take corrective actions, in terms of whatever we can gain from the market. We are working towards, like I said, on the cost-saving measures, and at the same time, we would like to retain our customer base. That's the first priority for us going forward. I hope I answered your question, because it's so dynamic that it will take for us to take some time.
In fact, I would say we don't know that something changes in next 15- 20 days, because we understand the delegations are still happening towards the end of the month, and the negotiations are still going on. We cannot comment at this moment on that particular situation.
All right, sir. When it comes to the customer base or the distributors—
I'm sorry to interrupt, sir. I just request you to rejoin the queue for the follow-up question.
Sure. Thank you.
Yeah. Thank you so much. The next question is from the line of Sunil Jain from Nirmal Bang Securities. Please go ahead.
Yeah, thanks for taking my question. Sir, my question relates to considering, let's say, worst-case scenario and we get a 50% duty. In that case, if suppose we are not able to sell much in the U.S., whether the plant will be fully utilized, and if yes, then how the product can be diverted to other geography, and what could be the impact on the margin in that case?
See, again, I would say it's a hypothetical question, but of course, what you say is in the current light of the situation, you are right. If we assume that situation remains. In that case, I think we would like to maintain, of course, our top line in the market, because we never work in other markets, for example, Middle East and Europe, in light of that, what we are doing in U.S. We have grown in all geographies. Of course, these geographies are little smaller than what U.S. is, but our effort is to grow on all alternatives geographies, which we are already doing. Our target would be to retain the customer base, whatever we are having.
We have some ways where we can, as I said, there will be operational efficiencies and power cost and some of the alternative methods, where we will be able to reduce the impact of that. We should be able to maintain the customer line. Of course, there will be definitely some impact on the bottom line if the situation prevails.
That's great. Second thing is about India. You said that Shrink Films got impacted, and also this other Sun Control Films is also got impacted. What about PPF? How is PPF in India?
PPF has grown. Like I said, overall, PPF has grown by around 28% as compared to last year because it does not have seasonality impact. It was unaffected. In fact, we have grown good, around 28%. That is overall numbers. That is export plus domestic consumption. At the same time, in the domestic market also, it has grown around 25%-30%. Same. I mean, around 28% overall, but it has grown to all geographies. That business is still growing because it does not have any impact of seasonality.
How much it contribute to India revenue or overall revenue, India PPF?
India business is roughly around 20%-23% of PPF revenues.
Okay. The last thing about your studio and all, now how many more studio you have added and what's the current numbers?
Current number, we have 250 +, and we are now targeting towards 300.
Great, sir. Thank you very much.
Thank you.
Thank you. The next question is from the line of Shikhar Mundra from Vivog Commercial Limited . Please go ahead.
Can you give a geographical split between the exports, how much we are doing from Middle East and how much from U.S., sir?
Yeah. We are doing roughly 45% in America, in U.S. It's around, I can say, in domestic market, we are doing 23.5%, 12%-13% in Europe, and between 3%-5% in Middle East. The numbers, as I said, it's growing very fast in Middle East and Europe, right? Of course, in India.
What was the growth rate for Middle East? You said 30%, 40%, and how about Europe and India?
Europe could be around 20%, because it's a established market. There, we have to get shares from other competitors. That's why Europe we are targeting around 20%. Whereas Middle East, we have added a good manpower, and we have done a lot of initiatives, and we are seeing the traction towards 30%- 40% growth in Middle East.
Right. For this 10% tariffs in Q1, how much of a hit we had to take, or how much of absorption we had to do, and how much did our supply chain do, or it was entirely our supply chain which did?
No. When I say supply chain, it means everyone, including us, because entire from us till the customer, right? The impact could have been, like I said, last year, almost INR 1,000 crore in export to U.S. market was 10% means INR 100 crore to that, which was like INR 33 crore could have been in this quarter, or I would say INR 25 crore because of second half of April thing. We got hardly, I think, around INR 3 crore-INR 4 crore. Rest we were able to do in between our supply chain.
Okay. Based on your interaction with the supply chain, how much of absorption is more possible for them? At what level we'll have to stop supplying to the U.S.?
As of now, we don't see that we will stop supplying. Of course, like I answered the question already, that if this situation prevails, there will be definitely impact on the bottom line, right? We don't see the situation like that we will stop supplying there.
All right. Thank you.
That's okay.
Thank you. The next question is from the line of Parikshit Kabra from Pkeday Advisors. Please go ahead.
Hi. Thank you for the opportunity. Just one quick question. How much of this quarter's impact on revenue was because of the tariff versus because of the early monsoons? Is it possible to quantify at least directionally?
I think around total, if you talk of revenue, around INR 25 crore-INR 30 crore because of this season and rainy season, and around INR 20 crore because of, in IPD mainly, because I can tell you that in Sun Control and PPF, we did not see much of the impact. In industrial product, because that's a long supply chain and low margin products in our value chain. That's why we saw that into our shrink business.
Got it.
INR 30 crore and INR 20 crore, roughly.
Got it. I was just wondering that why One would think that with the threat of the upcoming tariff, there would be some fill up in the channels rather than a slowdown in the ordering, right? Because the tariff hadn't been implemented yet as of the last quarter. Why was there this slowdown in anticipation?
Yeah. What happens is, because the situation has happened towards China, that when there was announcement of 150% and all those things, these guys are noting down. What happened is there were some product, and they had to pay that kind of duties. It was lowered. People want to wait till they are in extreme urgency to get the product, maybe by air or so. Especially, as I said, we didn't see the much, it may be 5%-10% in PPF and sun control business. But on industrial product business, people try to stay away because if the industrial product means they have the stocks and then they manufacture, then it goes to label printing and all. It's a cycle of around three to five months.
That cycle, people really feel afraid of that because especially the margin there are lower, pretty low as compared to other value chain. That particular thing delays or of course they try to buy more and more. Though they will not be pretty happy with the domestic suppliers, but they will continue. They will buy from there. They will avoid imports from India.
Got it. Sir, I got a little bit confused how you answered this question. I'm not sure I've understood the answer properly, is that the people you're competing with, they are the ones that are manufacturing in the U.S., but they have some supply chain coming from China and Korea. I think that's what you tried to say.
Yes.
Because China and Korea are also facing tariffs, their costs have also gone up, but their costs have not gone up commensurate to our costs. Is that the fair way?
Yes.
Of looking at it?
Yes. See, what happened is we were in a good position prior to the implementation of the 25%, which was announced last 7-10 days back. Korea was 25, that was lowered to 15. In one I would say 7- 10 days, the situation flipped.
They were 25. They went down to 15. We are at 10 and hoping for a better solution. We went to 25.
Mm-hmm. Got it.
That's there. China, I don't want to comment because it's lots up and down happening. We don't know how much is exactly because there are so much exemptions, so much inclusion, exclusion. That's volatile, I can say.
Got it. For the Americans, the only alternative is going to be, of course, we can either go to China or Korea in case the delta is significantly lower. Is it realistic for them to manufacturing it in America itself? Would there ever be a possibility?
This will be little. I can answer that, yes, it's difficult in the U.S. I won't go much beyond why and all, but we feel it's not feasible. Also, I would like to tell everyone that the product, it's not very easy replacement. You can just not replace our product with someone else because it comes with lot of technicalities. That means the visual light, that means the color, that means the IR rejection, which works for a particular segment of cars, because of the laws in different states, like what VLT you can put, what VLT you cannot put, and the liking of the customers, it's very important, when they see the aesthetics and also see how much of heat rejection he's looking for. Normally, in advanced market like the U.S., they look for more than 90% of near-infrared blockage.
Our product being deep dyed with nano dispersion facility. People like the product, and they have been using for the dealer distributor for last 20, 25 years. Even the applicators, they know the quality of the product in terms of application and the ultimate performance of the product. It's not that easy to replace the chain very quickly. That's why I said we'll try to maintain our customer base. There will be little up and down or up and down in the bottom line, depending on what ultimate tariff is done for us.
All right. Thank you so much.
Thank you very much.
Thank you. The next question is from the line of Vinay Nadkarni from Hathway Investments. Please go ahead.
Yeah. Thank you for the call. Fortunately. I wanted just two questions. One is, we had around 12%-13% of our business coming from Asia other than India. Is that number still valid or is it changed?
Sorry, sir.
How much of it is from Japan?
You are not audible a little bit. Can you repeat the question, please?
Yeah. I'm saying, out of your total business, around 12%-13% used to come from Asia other than India, correct?
Right.
Is that still there? How much of it is from Japan?
Japan is very low in the number because that's not very big market, and there are some producers already have very strong presence there. The numbers are more or less same, between 12%-13%.
Okay. Secondly, on this, the revenues that you gave just now, the loss of revenues because of drop in seasonal and this INR 25 crore-INR 30 crore drop in seasonal is only the Indian market, right?
Yes. I'm talking only India.
This INR 20 crore IPD drop could be because of only the U.S. market?
Yes, the drop in the delay in the decisions and all.
Yeah. Total around INR 45 crores. You're comparing with your budgeted numbers for this quarter?
Yeah. That's what if had we achieved that, we could have touched around INR 550 crore. That would have been reasonable because the fact is, if you really see the performance of our company FY 2024 versus FY 2025 and now FY 2026. 2024 - 2025, the bottom line has almost done the double. If 88%-90% growth has happened last year and very good growth on the top line. This year with all those factors, we expected those numbers like INR 550 or so. We are on track and we expected the similar numbers from us.
Okay. Thank you. Last question was on exports. How much is in quarter one 2026, what is the export percentage?
Export again, we tried since little better going into the market. Domestic revenue increased slightly. It was to be very precise, it went to 27.5% in India and total export happened around 72.5%.
Okay. Thank you very much. That's all from—
Thank you.
Thank you.
Thank you. Ladies and gentlemen, in order to ensure that management is able to address questions from all the participants in the conference, please limit your question to two questions per participant. Do you have a follow-up question, we request you to rejoin the queue. The next question is from the line of Souresh Pal from KRSP Capital Limited. Please go ahead.
Yeah, thanks for the opportunity. Sir, you mentioned that beyond the point of tariff percentage, you cannot manage. What is the percentage of tariff that you can manage by improving operational efficiency and cost cutting and all those things?
See, honestly, we are doing a lot of efforts to improve those efficiencies and other methods. Please understand that I can't give the exact number because we are hopeful to have something better. We assure you that in this current scenario we will definitely do good in terms of our numbers, top line and bottom line. That exact number is very difficult to give now because still, as I said, this dynamism, though we were working on the efficiencies from war levels in April because we expected anything might happen, but this last numbers became like a shock. These kind of things really need a careful consideration. As a company, we do lots of due diligence before we can say anything into that. I request that allow me to maintain what I said. I can't say beyond this.
Okay, fine. No issues. Thank you.
Thank you.
Thank you. The next question is from the line of Kishan Tosniwal from Polar Ventures LLP. Please go ahead.
Good evening. I have two questions basically. The business of studio that we started in India, how is that progressing and the revenue, can you state the revenue from that as well?
Yeah. See, the thing is, this particular business is a franchisee model. We track the growth of them in terms of how much total we are doing. I can tell you, like I said, we are growing between 25%-30% into PPF business and around 15%-20% in sun control business in India. The primary growth now because entire channel has been kind of we are the major supplier and having the market penetration of more than 60%. Now the growth is mostly coming from that channel only. We can attribute, I think, the new growth whatever we are having 15%-20% in Sun Control Films and 25%-30% in PPF is linked to the Garware Application Studio.
How's the margin profile in that?
Margin profile is because to protect them what we are doing, we are giving them some unique products like Titanium PPF is dedicated to them. Then we have also launched one more category of PPF and one or two different categories of kits. The margin from that particular product because we support the gas, but still we give them the best of the best products and their average is higher than what we do through the normal distribution channel. Right? Just to mention that since that has been a flagship studios which are under franchisee model. We give more facilities to them, like said, unique products to them which we do not sell into the market. Then we give them the benefit of Bajaj Finance, then insurance, and then couple of coatings which we provide and cleaning equipment.
Overall, that's a model which is franchisee-based and gives us on an average 10%-15% better margins than what we achieve from the market through our normal channels.
If I can squeeze in one more question.
Yes.
I just wanted to know that the PPF business that we are doing, what is the split between India and outside India, and how is the Indian market growing? What is the acceptance ratio in India or how the customers are accepting it?
As I indicated in my earlier question, that India is around 25% of overall PPF business, right? That segment is continuously growing. Our overall growth has been last year to this year has been 28%. Both markets, India and export, has grown almost equal numbers, 25%-30% on an average. Both. That is also around 25% of our total export market. In fact, in PPF, the revenue mix is going high towards Middle East and European side. I mean, that's slowly increasing. Again, we don't want to go much detail because now current situation is because of this geopolitical tariff situation, right? We are evaluating if we can further penetrate, especially the PPF business, into these geographies.
Thank you.
Thank you.
Thank you. The next question is from the line of [Aditi] from Abakkus. Please go ahead.
Hello, sir. You just mentioned that there are currently 250 studios, and you would like to reach the target of 300. Could you please clarify on the timeline for the same?
See, since the initial growth has been very, I would say phenomenal, so by end of this year, that is 31st March 2026, we can complete those 300.
Thank you, sir.
Thank you.
Thank you. The next question is from the line of Punit Mittal from EBISU Investment Advisors. Please go ahead. Yes, Mr. Punit, go ahead with your question.
Hi, thank you. Just two questions.
Yes.
Is it fair to assume? Yeah. Can you hear me?
Yes.
Yeah. I have two questions. One is related to the revenues that you deferred during Q1 because of the early monsoon onset. Do you see that revenue being pushed back to Q2 and Q3 rather than lost revenue?
No. I think if the monsoon started early and if it goes early, that means if we see good October heat, surely it can come back. Let me tell you one straight away, it is our revenue of that particular business, label business, is directly linked to the beverage industry, right? If it happens, like we also see that if IPL comes or something comes in the summer season, though the demand increases, that's a very direct linkage to that particular business of label, right? Two things, one is the label business, another is Sun Control. If we see better summer, more sun, definitely these two businesses in the domestic market help us. If it happens, like if it goes in September or something, and we see good sunlight in September, October, definitely it will come back. Hello?
Okay. The second question regarding the U.S. where you said you lost about INR 20 crore due to tariff. Naturally, given uncertainty around things, I think a lot of clients are probably waiting.
Yeah.
Is it fair to assume that what will happen is if this uncertainty continues for some more time, people would essentially defer their purchases, essentially, you would not lose market share because I think pretty much all players are in the same boat. Is it fair to assume that?
See, I was very certain on the first question, this particular question, the situation is like if there are players which are producing the product in the nearby countries, for example, South America. The major competition comes from U.S. market, U.S. producers as well. Right? If this situation prevails, we might have to talk on the lower margins or lower prices compete with them. Right now, because this was real uncertain, like happened in case of China where people ordered the goods when it landed in the market, and they faced a tariff which was dropped later on. Right? That is the uncertainty where people don't know what will happen. Right? They all knew from 1st of August or initially from 9th of July, when three months were over, the tariff to India was about to go to 26%.
They were expecting that this might happen in between somewhere, like the trade war, instead of 26, it goes to 15%. That kind of uncertainty prevailed into the market, which last 10 days has gone to a different level. We really don't want to give that situation. This situation where whatever way this changes, we will take action accordingly. Because right now we can't tell them to buy and we will see that because the margins on that particular segment is lower than in the consumer product division. That's the worry.
Hello. A related question to that, and I don't know whether you'll be able to answer this. A related question to that because the new tariffs were announced, but it will be implemented 21 days later.
Yeah.
If the goods are in transit during that period, the new tariff is not applicable to the goods in transit. Does that mean that because you have a subsidiary in the U.S., would you be able to stock the inventory there?
Yeah. For that particular thing, actually, honestly, whatever we have, we are trying to ship the goods before it goes on board, before 27th of August, right? That works on the bill of lading. We are working hard to supply more products before the deadline of 27th. We are working on that. We are doing that, rather, I can say.
Yes, Mr. Punit. Does that answer your question?
Okay. Got it. Thank you so much, and all the very best. Thank you.
Thank you. Ladies and gentlemen, due to the time constraint, we will take this as the last question. I would now hand the conference over to Mr. Deepak Joshi for closing comments. Over to you, sir.
Yeah. On behalf of Garware Hi-Tech Films management, I would like to thank all the participants for their time to listen to us, and we would like to assure you that we will do our best to protect the interest of our investor family. Thank you very much.
Thank you. On behalf of Garware Hi-Tech Films Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.