Ladies and gentlemen, good day and welcome to the Garware Hi-Tech Films Limited Q2 FY 2025 conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vikas Verma from EY. Thank you, and over to you, sir.
Thank you. Good afternoon, everyone. Welcome to the quarter two FY 2025 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. MS Adsul , Director Technical, Mr. Deepak Joshi, Director of Sales and Marketing, Mr. A. Venkataraman, Senior President, Corporate Affairs and Finance, 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 that there may be uncertainties when interpreting such statements. Please note that this conference is being recorded.
We will now start the session with the opening remarks from the management team. Afterwards, we'll 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.
Good afternoon, ladies and gentlemen. Thank you, Vikas, and thank you all for joining us today to review Garware Hi-Tech Films' financial performance for the second quarter and half year ended FY 2025, ending on September 30, 2024. We appreciate your continued interest and support. Following a record-setting first quarter, I'm delighted to report that GHFL has sustained its upward trajectory in Q2 FY 2025, further building on the strong foundation laid earlier this year. Despite a challenging global economic environment, we have managed to achieve new heights, not only meeting but exceeding several of our ambitious targets across key performance metrics. We continue to carry forward the momentum from Q1 into Q2, making a steady and promising start to the financial year 2025. This quarter, we achieved a new record with consolidated revenue of INR 620.6 crores, surpassing the previous quarter's results.
This was supported by the ongoing operational improvements and sale of value-added products. Additionally, for the first time, our quarterly PAT has crossed the INR 100 crore threshold, reaching INR 104.3 crore. This milestone highlights our ongoing commitment to growth and operational excellence. Although marketing costs may continue in the short run to medium term, these investments are important for our growth strategy and are expected to fortify our market presence in the long run. Now, let me give you more insights into our product divisions. Our Solar Control Films continued to show excellent performance, achieving increased revenues compared to Q1. The growth is also attributed to our recent product innovations such as Spectra Pro and DecoVista series, which have gained even wider acceptance and popularity in Q2.
With our growing presence in the new markets and ongoing focus on digital engagement, we are broadening our reach and establishing GHFL as a leading force in the automotive and architectural film segments. Moving to Paint Protection Films, we witnessed a strong demand momentum from our PPF products, including our Titanium, matte, white, and black series. This segment continues to operate at a high capacity to meet both domestic and international demand. I'm happy to announce that we have launched whole new series of Colored PPF in SEMA Show in Vegas, which got a great traction for auto enthusiasts. As previously announced, our new PPF production line with an annual capacity of 300 lakh sq ft is progressing as planned, and we are on track to commence commercial production by Q2 FY 2026. This added capacity is anticipated to strengthen our market position and revenue potential in the global PPF sector.
In our Industrial Products Division, Q2 brought a steady recovery supported by a strong demand for specialty films such as lidding films, PCR, and floatable shrink films. These high-margin products have contributed to our profitability, allowing us to serve premium customers while maintaining operational efficiency. Our focus on high-quality, sustainable solutions has positioned us well within the specialty film industry. We at Garware Hi-Tech Films Limited place a strong emphasis on innovation, quality, and sustainability, which serve as the foundation of our strategy. We have continued to invest in R&D and process improvements to ensure that our product offerings remain aligned with the highest industry standards and emerging trends. Our expanding distribution network enables us to cater to an even broader range of customer needs worldwide. Looking forward, we remain confident in our ability to sustain and expand our growth achieved thus so far.
Our diverse product portfolio, targeted capital investments, strategic market expansion initiatives, equip us to drive continued revenue and profitability gains in the quarters ahead. With steady market demand and our strategic initiatives in place, we are optimistic about the delivering continuous performance improvements in the quarters to come. Thank you once again for your time today, and for the continuous trust in Garware Hi-Tech Films Limited. With this, I now request Mr. Abhishek Agarwal, our CFO, to take us through the highlights of the financial performance. Over to you, Abhishek.
Thank you, Deepak, and good afternoon to everyone on the call. I'm pleased to report that quarter two and H1 FY 2025 has built further on a solid start to the year, with improved financial performance across all metrics. In Q2, we achieved a consolidated revenue of INR 620.6 crores, reflecting a year-on-year growth of 56.3% and a quarter-on-quarter growth of 30.8%, driven by continued demand in our HCS and PPF segments. The steady demand for our value-added products remains a core contributor, while IPD has also shown positive developments, carrying forward the momentum from Q1 and benefiting from our focus on high-margin specialty products. The focus on premium and innovative offerings has helped us to maintain a competitive edge and capture more market share. EBITDA for quarter two reached INR 150.5 crores, representing significant year-on-year growth of 103.3% and quarter-on-quarter growth of 15.8%.
This increase reflects the impact of a high-end product mix, expansion to new geographies, and ongoing process improvement that have enhanced operational efficiencies. Profit before tax for the quarter stood at INR 138.1 crores, showing an impressive growth of 127.7% year-on-year and 17.5% quarter-on-quarter. Our PPF and HCS business maintained its growth trajectory by growing 67% and 64% year-on-year respectively. This quarter, our IPD business also showed a sharp growth and grew 30% year-on-year. Our PAT also experienced strong growth, reaching INR 104.3 crores with 127.1% year-on-year and 18% quarter-on-quarter increase, benefiting from an enhanced mix of high-margin products in our portfolio. Exports continue to perform well, comprising approximately 81.3% of quarter two revenue, with value-added products making up around 88% of this segment, highlighting our expanding global presence. Our export mix has been instrumental in sustaining this growth trajectory.
We are pleased to report that our cash reserves now stand at INR 544 crores as of September 30th, 2024, with zero net debt, positioning us well to advance our strategic projects. We are progressing as planned with the new PPF production line, and this investment will significantly expand our capacity to meet the projected demand. Looking forward, we remain confident that our initiatives will continue to bring measurable improvements in our financial performance. With this, I turn the call over to the moderator for the Q&A session. Thank you.
Thank you, sir. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. In order to ensure that the management is able to address questions from all the participants in the conference, please limit your questions to two per participant. The first question is from the line of Priyam Khimawat from ASK IM. Please go ahead.
Congratulations, teams, once again for a great performance. I just wanted to understand our strategy going forward on Garware Application Studios. Right now, we are at around 160 odd. What would be the strategy for the next two, three years on this part of the business?
Yeah. Thank you. As you said, we are close to 160 as of now, and our initial target was to reach to 200. Looking into the demand from our channel partners that they would like to participate in this growth strategy. We will continue or we will not stop at 200 level because right now the PPF growth is coming from tier two and tier three cities also. The next line of growth we are seeing from these cities, which are tier two and tier three. I can say that we will continue to grow in this segment of Garware Application Studios.
Got it. With a new line coming in from next year, I believe there's immense potential for us to grow this faster. Apart from that new line which is coming next year, any other expansion are we planning or any other new products which we are looking to enter into?
See, as our focus has always been a player which is more focused on new products and qualitative output. As I spoke in our opening address, that we have launched Colored PPF series. The company's target is to take the market share from companies like Tesla, who has started supplying their Cybertrucks in stainless steel bodies. Means there is no color in those trucks. We could see lot of attraction toward our colors, and that can be going forward, a very different business where cars may come because this is started by Tesla. More companies can come without paying to the market, and this can be a big business for Colored PPF. That's one of the strategies. Similarly, we have many more things which are in pipeline, which we are going to declare as and when things progress.
Got it. Sir, lastly, we were expecting to achieve INR 2,000 odd crore revenue this year. I believe we will surpass that significantly this year itself. Next year we were envisaging around INR 2,500 crore of revenue with the new line coming up. Are we sticking to that guidance or do you believe that there's significant upside downside risk considering the kind of demand which we are seeing in our products?
See, we would like to maintain that. We are confident that we can beat that. There are certain geopolitical things which we are always aware in our consideration. That is moderate, but we would like to stick to that.
Okay. Should we assume a 25% EBITDA margin going forward for this business? Or do you believe that there's upside downside risk to this number?
No. We have actually the guideline like we gave last time. We try to maintain 25% ±3% because this is a seasonal product and the product mix makes a lot of difference. The number which comes is usually you will see Q2, Q3 being a little low season for us, and Q4 being the preparation for a high season. We'll see that product mix a little down and then go up. Overall, we plan or we target to be 25% ±3%, within that range.
Got it, sir. That's all from my side. I'll come back further for any other questions. Thanks.
Thank you very much.
Thank you.
Thank you very much. The next question is from the line of Ankit Gupta from Bamboo Capital. Please go ahead.
Yeah. Congratulations to the entire team for the great set of numbers. My first question is on the QoQ growth in revenue that we have seen from almost INR 475 crore- INR 621 crore in this quarter. I was looking at the breakup that you have given in the presentation, and I think most of the growth has come from our CPD segment, which has grown from around INR 318 crore- INR 441 crore. Is it the Sun Control Films which have driven this growth on a quarter-over-quarter basis or is it the PPF which has driven this data of around INR 120 crore that we've seen in this quarter?
See, first of all, this is a good question in view that first time we have crossed 70% threshold for CPD business, Sun Control and PPF. That is 71% of CPD and 29% of IPD. In that particular segment, more growth I think has come from PPF because Q2 goes towards a lower season for Sun Control. Still, the growth in Sun Control has also been there, but more growth has come from PPF segment.
Sure. I was also looking at the geographical breakup of our revenues and the growth is also driven more by the North American sales.
Yeah.
Is it more of our branded sales which has driven this data or is it the third-party manufacturing that we do for the other players?
On North America, from 48%, we have gone up to 54.5%, close to 55%, and that is very well directed. It is as per our wish. We are moving higher and higher in U.S. market because we try to maintain our EBITDA margins to higher levels, and this market is our premium market. This is a directed growth. The growth has come in both the segments. Primarily, we are putting more efforts towards Global branded sales. Like recent in SEMA Show also, we could see the attraction towards Global brands. Garware and Global brand both we are putting lot of efforts and growth is coming from that particular segment. Of course, when we are growing with this pace, white box customers are also growing fast. It is coming from both the segments.
Sure, sir. Sir, given Q3 and Q4 are relatively leaner quarter for Sun Control Films, do you think the PPF sales which we have done in this quarter it is possible that we can maintain this base or even grow from here on the PPF segment? Normally we see a significant decline in revenues and like we used to see decline in revenues in Q3 but in this financial year, Q3 and Q4 might also see significant jump in revenues given how PPF is doing for us.
When we say lean season, actually in Q4, which is when we talk of February and March, they are pretty good season for us because then it's a preparation for the coming season. Q4 is definitely we always expect to be stronger, not weaker. Q3 definitely is a low season because Sun Control, there is hardly any sun in our primary market. Then we see a little drop in our sales in Q3, which is very standard phenomena. PPF is not directly affected by that. I can say it will be more or less stable in Q3, but Q4 with the CPD division coming back, we expect a strong Q4 for us.
Sure.
For us, it's a seasonality, mainly hits Q3, not Q4.
Sure. Last year, if I look at it, maybe we were just coming out of the issues that were there in the Sun Control Films.
Yeah
On the inventory side, because Q3 we saw QoQ growth last year.
Maybe this year the base is very high, we might see some drop there.
No, you are pretty right here. Pretty correct. Since the growth has been in H1, we have shown outstanding growth, base is quite high. The company is still targeting further growth from here. If not in Q3, Q4 definitely, we are trying big sequential numbers as well.
Sure. That's great to hear, sir. Sir, my question was also on the architectural center
Mr. Ankit, may we request that you return to the question queue for follow-up questions? Thank you very much. The next question is from the line of Vivek Gautam from GS Investment. Please go ahead.
Sir, congratulations on your bumper quarter and keep up the good work, sir. My question is regarding the opportunity size and the expected growth rate our company can have in Indian and export market, especially in view of the slowdown sort of we are seeing of the auto slowdown, especially in the West, sir. Any impact it's having on us and growing number of Ola, Uber cars also is having any impact on our prospects, sir. Thank you.
Thank you, Mr. Vivek, for your kind words on our performance. That is really unfortunate that in India we are seeing only 0.5% or kind of no growth in auto segment. U.S. is exactly same, no growth, 0.5% growth, which is almost nothing. In Europe, kind of de-growth in auto sector till Q2. Another thing, there is a geopolitical tension, which is quite strong or prevalent in the market for first half. Despite all the challenges, we have come over that and we did this kind of performance. Going forward, the only challenge we are seeing right now is the seasonality in Q3.
The rest of the things, we have been telling to our team, if the global scenario has been that tough, but we have performed so well, so when they are conducive to us, I think we can do much better than that. I would like to say this much only to this.
Sir, what about the architectural films in India? How is this the opportunity size for that? What are the R&D initiatives you are having? I believe R&D is our major hidden strength.
Yes.
More sort of a thing which is helping us out a lot after investment of 10 years. Congratulations to Mr. Adsul and the whole team, sir.
Yeah. Architectural, actually, in the past, as I have always been saying, automotive, we are very strong, but since last one and a half years, we have putting lot of efforts in architectural. The example of that is Spectrally Selective Films, which has been the key leader in our portfolio, which is like the parameter of that which I discussed in recent American visit, and where it is something which is a game changer for us. That product is really doing well in Europe, and it has started doing well in America. In India also we have launched this product, and at the same time, we have another series, which is DecoVista series. Spectra Pro and DecoVista, these were launched last year, especially for the architectural segment. Other than that, we have Security Films which are taking interest from all around the world.
When we talk of architectural, the complete range is there since last one year. With sustained efforts in terms of marketing hiring, marketing initiatives in digital media and complete product portfolio, we are doing good. I can say the internal assessment for the compared to year-on-year basis, we are running at a 100% growth rate in architectural segment.
Lastly, sir, on the industrial product range, I think our sector has also started doing well. All the companies like Polyplex, Jindal, etc., also coming up with that numbers. What changed over there? That growth rate is also expected to help us out and expected to remain strong for how long? Because that's a cyclical sort of a thing, sir. Thank you.
IPD, like we explained that it did better than last year. Another factor is that IPD used to be more than 50% for us three, four years back, and we have been continuously reducing our dependence on that. Right now our CPD has gone to 71% and IPD is only 29%. In that 29%, definitely we are doing better. Margins have improved. If you really see, we have always wanted to go away from commodity market. We only wanted to stick to our base strong fundamental R&D products, which are like Shrink Films, floatable shrink films, APR films and PCR films in Shrink Films. And then the various different kind of lidding films and Low Oligomer Films, which are for electrical grade films.
Not on the real commodity where market may go up and down, if you really see last two, three years, the peers when we are talking, they were really low. Some people went negative also. We continued to grow on that because we have always been believing that we will only be serving to specialty where we can give some special kind of product to the market, which are delivered by our new product and R&D team. Our focus will continue to grow. We will not be disturbed by sudden good market on commodity and we rush to that. We'll continue our efforts toward specialty and we'll produce something which as a leader, which people will follow, we will not follow the commodity segment.
Thank you.
Thank you.
Thank you very much. The next question is from the line of Akshay Shah from CRISIL PMS. Please go ahead.
Congratulations team for good set of numbers. Thank you for always upgrading your guidance. Now I want to understand your thoughts on President Trump coming in America. How did it impact our business?
I mean, I'm just coming. Today morning I came from America, so I can understand the feeling there is more people asking the question, What would be the impact of the regime change in the U.S.? We are more optimistic than any other country. Our biggest competitor is China, though we do not directly compete when we talk of the triangle, we serve at the top of the top range, whereas Chinese are at the bottom. When the regime changes, there might be more duties towards China market. That's our expectation. If there is any change of, we can't comment as of now what will happen, but the chances of getting better impact than negative.
He may impose 10% duty on every product from Garware. Will it impact our demand supply situation?
There may be some couple of percentage here and there, won't make much of a difference. I said, this is a very different series where margins to distributors and dealers are in a good shape, right? The real impact will be to guys who are selling at a very low prices. As I gave example of Chinese players who sell almost 1/10 or 1/5 of our prices, right? Because their strategy to gain the market is the price sensitive, means they only want to sell the low product. If their duty, which is currently 25%, goes to 50%, will affect them badly. Whereas for us, if it's a 2%, 3%, 5% here and there, might not affect. We don't know. This is a geopolitical thing, that's the government to decide how they are going ahead. We will frame our strategy based on what is the outcome.
As of now, we don't see that negative to us.
Okay. Exports grew very much for us in Q2, almost 40%. How do we see it panning out going ahead?
See, as I said, Q3 will definitely be lower in terms of seasonality, right? Again, in preparation of coming season, it will again pick up in Q4.
Okay. Thank you, sir.
Thank you.
Thank you very much. The next question is from the line of Mahesh Bendre from LIC Mutual Fund. Please go ahead.
Hi. Good morning, sir. Thank you for the opportunity. The Paint Protection Film has become in last four quarters, the Paint Protection Film has become over 1/3 of our sales, and it has come from nowhere. Going forward, Sun Control Film and PPF, this will remain the core for us. Any other new product do you think, which has a potential that we plan to launch maybe over the next two, three years can become as dominant as Paint Protection Film?
See, there are products which we are working, but that will come out once we are confident of quality and all those things because our product life cycle, the testing of weathering and all takes long. They will definitely come. We select some out of many. In Paint Protection Film, we have come from nowhere. Four years back, nobody knew about PPF in India. Now the growth has been pretty strong. With the launch of Titanium that is really doing good for us and recent launch of Colored PPF, that will take the market from current 2% to maybe 10% level. We still see the upside of 5x in PPF in India. That may take its own time, but with the growth of Garware Application Studios and the sales strategy which we have now, we see a big upside in Paint Protection Films.
Sure. Sir, what is the current utilization in both Sun Control Film and Paint Protection Film?
Sun Control worked almost 100% in Q2, Paint Protection went, I think, 135% range. It goes up and down. It cannot remain stable each month. Depending on the load on the other lines, on Sun Control lines and PPF line, we switch the fungible lines. They were pretty much occupied and PPF was running beyond capacity.
Sir, last question from my end. Sir, any white labeling available because, can we
Mr. Mahesh, your voice is fluctuating. Please
Yeah
repeat your question.
I'm audible?
You are audible. Please go ahead.
Sir, last question from my end. Any white labeling opportunities available, major opportunity in terms of can we supply some of the products that we are manufacturing to our major global competitors, maybe 3M kind of players?
This is a strategic question. Of course, we do white labeling and we do many big players, different products, right? Of course. We can't name any of the manufacturer here because of the strategic confidentiality agreement with our suppliers. With our customers, sorry. Yeah.
Sure. Thank you so much.
Thank you.
Thank you very much. The next question is from the line of Ankush Agrawal from Surge Capital. Please go ahead.
Hi, sir. Thank you for taking my questions and congrats on the great set of numbers. Firstly, sir, on the architectural films business, I want to understand the distribution part of it. Is it mostly like a direct sales business which is bulky in nature? If so, would it have a much higher margin than, say, SCF and PPF?
Architectural business, there are two models. One is the standard distribution model, but that model only works for a smaller scale trades, like some housing and all those things. The typical nature of these products are the qualification to big architects, big brand owners. I'll just give you example of if you want to do some airports, you need your qualification in Airports Authority of India. Similarly, if you want to do Today only we got a very good news that one of the leading Indian hotel manufacturer qualified the product. When we talk of qualification, that means it should have the certification required by the each and every brand owner or architect or PMC. That certification normally done by European, U.K. or American standards. After the qualification, these project teams, they directly get quotes from the company, right? For the project.
That is how it is supplied, right? One model is simple like automotive, where you give your distribution and they put some security films or other films into any building. Another one, the bigger one where we talk like we showed last time, the Central Bank of Brazil, we won the project against our world leader, world's best chemical company, and the another 3M which somebody just thought. We won that project against those guys. Similar big projects which do the entire building or the chain of buildings. Their qualification is important. That's why we have a dedicated team which works only on the architectural segment, and this team was formed almost a year ago, which is performing well. The same model we are applying to European market and the U.S. market.
Okay. Generally speaking, would architectural be a higher margin business? Obviously there's a host of products within, say, PPF, SCF, and within architectural also there would be a different lines of product. Generally speaking, is it higher?
Yeah. Margins are more or less similar. These products are actually expensive. If we really see because their technology is a bit different. The nature of the product, because they are the stable buildings, they see the sunshine all the time, we need a different kind of properties which help the building to run longer. Of course margins are different. Margins are better, slightly better, the products are expensive also. That's why the higher margin means a big price to the customer. Definitely these are one of top of the top range products for us.
Okay, got it. Sir, second question that I want to ask is to understand a bit on the quarterly gross margin variation.
Mr. Ankush, may we request that you return to the question queue for follow-up questions?
This is my second question only, ma'am.
I think you go ahead, please.
Okay. Thank you.
Normally, we request two questions because we see a lot of queue, but please go ahead quickly.
Yeah. What I wanted to understand was the quarterly variation in our gross margin. Last quarter, the gross margin was at a 53%, this quarter it's 44%. You did allude last quarter that it is because of change in product mix between PPF and SCF. If I look at the overall contribution of CP business, it is higher this quarter versus, say, YoY also, but still the gross margins are similar at around 44%. Wanted to understand, is the product mix itself is such a big differentiator that leads to such high variation in gross margins or there is something more to it? How should one look at, say, steady-state, how much we'll be able to do?
Yeah. Actually, it depends on the product mix. As you rightly said, what happens is, when it was a peak summer in Q1, then at that time IR products, which are our highest margin products, so their sale rises in the Q1. Q2, we saw a big jump in the sale of PPF, and there was a growth in window films as well, window film which comprises of auto and architectural. When you see the growth was definitely there in both the product lines, but there was a higher growth in PPF. So PPF price being very high and IR product as a base being low, so we see that product mix making that change, which is 27% went down to 24.5%. We exactly can't control month on month or product basis, but this is basically a direct reflection of product mix.
Okay. In that sense, Q3 would have the lowest gross margin because, seasonally lower quarter with lower share of SCF. Would that be a right understanding?
Yeah. For the year, we have given the guideline 25% ±3%, in quarters. Overall numbers, I think, slightly better closer to that number. Very fine management becomes difficult because the market keep on changing. Like our biggest market in U.S., they keep changing every quarter the requirement, and based on the seasonality, they require different products into different seasons. Right? Overall guidelines will remain the same between 25% ±3%. It will range from 22%-28%, anywhere. Q3 might be little low, but again, as I said, Q4, we will get it back.
Important. That was very helpful. Thank you.
Thank you.
Thank you very much. The next question is from the line of Shrinjana Mittal from RatnaTraya. Please go ahead.
Hi. Thank you for the opportunity and congratulations on the good results. Just had couple of questions. On this, can you help us give some number on the Sun Control Films and the PPF films? What is the growth percentage year-on-year? You did mention that PPF has seen a higher growth, but can you share some number on that, year-on-year or QoQ, what is the growth been like?
YoY Sun Control growth has been 64% and PPF growth has been 67%.
Understood. That's very helpful. On the architectural films, what is the current share in terms of sales as a percentage of sales?
Yeah. When we started the campaign, it was around 15%, that then went to 20%. Right now we are estimating that around 25%. I'm using the word estimation because there are some products which go into both segments. It's very difficult to bifurcate them. Based on the nature of spectrally selective films and those kind of films, we are estimating it around 25% as of now. From 15% it has gone to 25%.
That is as a percentage of overall sales or just the-
It's a percentage of our Sun Control sales.
As a percentage of Sun Control.
Yeah.
Understood.
Yeah.
Understood. Architectural films right now currently it's largely exports, right?
Yeah. I can tell you it's a European market, then India market, and then developing into U.S. market. It's bifurcated. In India also, it is doing quite well.
Understood. Thank you. Thank you for taking my questions and all the best.
Thank you very much.
Thank you very much. The next question is from the line of Vinay Nadkarni from Hathway Investments. Please go ahead.
Yeah. Just two questions. One is on the sales growth that you have achieved in this quarter. How much of it is volume driven and how much is value?
Yeah. Do we have those numbers? Just a second. Because when we are seeing them, it's Again, depends on the product mix. Definitely it will be more of a volume-driven because prices, only when the product mix changes. Otherwise, we are seeing lot of volatility into the market. The absolute number pricing per unit may not change.
Okay. Secondly, in the Sun Control Films, since it's such a high margin business for us, is it possible to tap into the Southern Hemisphere for Q2 and Q3 in order to gain business there or Q3 and Q4?
See, that's perfect. You can also see the size of the market in the U.S.A. and there is hardly any Southern Hemisphere in the U.S.A. It's more on a Latin America business. Latin America, Australia, New Zealand. We are aware of the fact, and we actually do lot of sales in those Southern Hemisphere during Q3. If you see the size of market, you can't compare. That's how the low season means our extreme, the number one market is in low season. Definitely, we do lot of sales during this period in ANZ and South America or to some extent in Africa.
Okay. Thanks a lot. Lastly, just one here on the market share. Since your growth has come in automotive sector in PPF, when the automotive sector itself has not grown so much.
Yeah.
Is it because it's a new product and new acceptance, or is it that you have gained because there's nobody else in this business?
No, there is no one else is not a thing because you see there are maybe more than 50 players in China and Korea. We have grown because of our quality, our consistency, and our consistent marketing efforts. In India, actually, we have created the market by training the people. We have trained more than 800 applicators. Providing the place for the market, which is Garware Application Studios. Lastly, giving market the product as per the requirement, which is lifetime warranty, 10-year warranty, five-year warranty, and three-year warranty. We have captured the entire market by giving all range of products to all kind of customers. Of course, like I said, the facilitator being the applicators and the application studios. It's not easy to get a new product just by selling.
We need to have a proper strategy, like how it will work into the market.
This is also in used car business?
Sorry.
This can also be used in the used car business.
Yeah, there are some products which are doing for the used car market now that we will maybe launch pretty soon, which will be a very maybe different product. We are working on many options. We take feedbacks. We have our brand ambassador everywhere in the market, like these 800+ applicator whom we have trained. We keep getting feedbacks from them. We have our sales team, then we have marketing agencies, which do all those things like what should be done, how to grow into the market, and what should be the pricing strategy for entire spectrum of the customer range. These are all things we do before we take any action on that.
Thanks a lot.
Thank you.
Congrats for a very good set of numbers.
Thank you very much.
Thank you very much. The next question is from the line of Preet Nagarsheth from Wealth Finvisor. Please go ahead.
Yes. Hi. I think one thing I wanted to understand was that how was the situation during the last time Trump was the President and tariffs were put in? Did you see a shift in your product, improvement for you based on the theory you mentioned that the lower-end Chinese products would find it hard to survive? Was there an increase in business for you guys at that point in time?
Last time, actually, it was much talk, but nothing actually happened on the ground. As we are continuously growing into that market, and our partners are quite strong there. As I said, if you compare to last year, then nothing changes. We don't know, because this time it is more of a serious rhetoric, or I would not use the word rhetoric, serious discussions going on. If you really see this time, nobody knows. I spoke to many people, including the leaders in that industry. In fact, some of them have kind of representation. We are members of the top bodies there, and they have a representation over there as well because they all want a stable duty for them.
Because there are a lot of talks, if their duties are increased arbitrarily, then a lot of inflation will go up, which is against the idea of, they have announced that the primary thing would be increased tariff, reduce taxes, income tax and all, but at the same time, control the inflation right away from the taking oath on January 6th. If there are more tariffs are there, then definitely the inflation is going to go really high for them. All those discussions are going on, so we don't know what will happen, but it looks like, as I said, we hope for more positive than negative because we have industrial product is also doing good there. Market participants believe that it will be more good than bad to us.
Just continuing on this question. When we sell in the Northern American market at a quality level, you're saying that there are people who are on par with us because we are the highest quality there, right? There will be some North American manufacturer who is on par or maybe better than us in quality. Could that be a case here?
There is a wide range of products. When we talk of automotive segment, the top of our products are considered to be on the top line. There is no better than that, because the base of what we make is very solid and our nano dispersion is also quite strong. Our film base films are stable. This IR, which really affects the heat rejection, that is also strong. Our quality is the best quality and people are at par. Of course, when you talk to the company, which is a chemical company, a big company, we are at par with them.
At the price level, are we, say, below them or do we sell on similar pricing as them?
See, because we are little lower because they are the local player there and they have a strategy which is sometimes direct to the customers. For us, with our sales force and everything, our route is through distributor and sometimes because of the volume and the white boxes, people tend to sell little lower. That lower means only 10%-15%. I would say around 10%.
Correct. The reason I was asking all of this is because if, say, duties come in and they are, say, 10%, 15%, 20% or more, would it make the local players competitive, versus what we provide? That's the line I was trying to better understand.
As I said, see, the decision will happen on the larger scale where, if you talk of window film market, which is very minuscule as compared to the broader imports from China and Asia, right? Based on that, consideration on window film is not going to be there, if there is a structural change of 4% or 5%, as I said, that doesn't do much impact to us because we might gain more volumes if the duties are put to our counterparts in other countries.
Got you. Wonderful numbers and fantastic execution. Wishing you guys all the best.
Thank you. Thank you very much.
Thank you very much. The next question is from the line of Gunit from Counter Cyclical PMS. Please go ahead.
Hi, sir. I would like to understand, can we consider the INR 600 crore+ quarterly revenues to be the run rate going forward? I understand that in Q3, you might see a very downside variation over 10%-15% because of seasonality. For the rest of the quarters, can we consider this as the run rate going forward?
Like I said, Q3 seasonality, Q4 should be back. We hope that Q4 will be the similar one.
All right. Sir, you mentioned that the growth in Q2 is mostly driven by increase in volumes. In Q1, you mentioned that most of our lines were running at 100% capacity.
I just like to understand how were we able to increase our volumes when we were already running at full capacity. Also, sir, what is our maximum revenue potential at current capacity? With the new line coming in in Q2 FY 2026, what would be the additional peak revenues from that line? Also, sir, are there any SCF or PPF lines coming in Mexico? Do you have any idea about that?
Okay. I think a lot of questions there. If I miss anything, please ask again. Number one is how we were able to do more volumes in Q2 as compared to Q1. More volumes means, I said it also depends on the product mix. If you see PPF prices are like, in absolute terms, they are 3x, 4x higher than the sun control lines, right? The growth has been slightly higher on PPF, means your revenues will go up. When you are doing less of IR products, then the margins will definitely go down. Your questions are both answered with that way, like revenue went high because of a strong growth on PPF. EBITDA margin slightly lower because of less of IR sales in window films. That's the reason of Q1 versus Q2.
We have lot of flexible capacities which we use based on seasonality or whichever product is selling more. That's how we use it. Now, third question is how much is PPF is going to increase? How much we say revenue? INR 500 crores?
Yes.
INR 500 crores.
INR 450 crores-500 crores.
Oh, yeah. It's like a revenue increase will be around INR 450 crores- INR 500 crores when the new line runs at full capacity.
INR 450 crores?
It is like, normally we have a ramp-up plan. We normally do better than that, but there will be stepwise utilization of that line. INR 450 crores- INR 500 crores crore top line.
All right, sir. Are there any PPF or SCF plants coming up in Mexico?
Yeah. Actually, I have not heard of that. We have all the data and all. Again, even if it is coming, that does not make much of difference for us because there is no dearth of capacities in the world. If you see China, I can easily see more than 70 players in Chinese market, right? The real difference comes from the quality of the product, because this product is really very difficult to make. We don't normally see it as a challenge unless it is put by one of the top five players in the world.
All right. Sir, my last question would be.
Mr. Gunit, may we request that you return to the question queue for follow-up questions, as there are several other participants waiting for that as well.
All right, sir. Thank you very much. I think you're doing great with your organic growth, and I would just request you to stick to that and not do any inorganic acquisition, because I think you're doing a great job in this. Thank you.
Thank you very much. Thanks.
Thank you very much. The next question is from the line of Puneet Mittal from Fort Capital Advisory Limited. Please go ahead.
Hi. Thank you for the opportunity. I have just two questions. First question is on the side, kind of a dot on what you said. One is that Q3, you said Sun Control Films is lower season, but there's no seasonality in PPF. Second, you said that you are using the capacity of PPF to 125%. That's how you said that it's all fungible. Are you planning to move the Sun Control Films lines to PPF for Q3, if not for selling in Q3, but to cope up with the demand and create an inventory for Q4? That was my first question.
Yeah. We do that. You are 100% right that we have fungible thing. Plus we plan more in Q3 for Q4, but that will not come into numbers, no. That is definitely being done because we plan for six months ahead. In the forecast from customers, distributors and all. We see a good forecast in the short, near- term as well. Only thing is, because of the seasonality, we can't dump the material in Q3. I'll just ask simple question, like when you go to November and December, the top of America, northern part of America is full of snow, so hardly anybody comes out and puts the Sun Control Films. There are certain things where the shops are also closed.
PPF is not a seasonal sale, still there are common people who are out of work for at least in whole of December. Having said that, we are quite confident in our guidelines like we have done, outstanding in H1, and in H2, mostly Q4, we are expected to go back to very strong numbers. Q3 will be stable as compared to our YoY and all those things.
Great, thank you. Second question is, we are putting up a new capacity of PPF which naturally takes time, you have explained historically why it takes time to set up new PPF capacity. At the same time, you are doing a great job of developing the market in India. Just like XPEL in the U.S., you may have a first-mover advantage here of developing this market. The more studios, the more applicators train, you do get that advantage. Would it not be strategic to develop this more aggressively, both setting up the PPF line for future development as well as setting up the GAS, the studios?
Your question is putting more lines than one? Hello?
Yes. You are right now planned for one line of INR 300 lakh PPF.
Yeah.
You are right now planned for putting up one more capacity in FY 2026. Would it not be strategic to put up some more line because we do see this demand growing and the Indian market popping up, which you're doing a great job.
We are prepared. As I said, if you see the growth world over, the penetration of PPF, if we see the China and U.S.A. We have a headroom available for five times of the growth, which takes time, but we are growing that. The current line, which I said we are already running 35%-40% more than the capacity, 135%-140% operating rate. With that, we are able to meet the requirements now till the new line comes. Once that is operational, it's a big headroom again, available for sale in terms of productivity. At the same time, we are tapping all the necessary, like with the GAS and others. We are aware of the fact that this is important, and we assure you that nothing will be left, like customer or without having the product from our side.
We are working on that. We do not want to put something which may seem to be unnecessary in future, because we have lot of other capacities, which are like, if I may tell you that we have five lamination lines other than PPF line. There will be five lamination +2 PPF lines. That means seven lines which act as a fungible. We have enough capacity available. In fact, we can think of some other expansion in the meantime, which we will update in due course. We are working on lot of options in that. We are aware, we will not leave any customer as a strategy having less capacity and all.
Thank you so much for answering the questions and all the queries. Thank you.
Thank you.
Thank you very much. The next question is from the line of Rohan Patel from Turtle Capital. Please go ahead. Mr. Rohan, your line has been unmuted. Please proceed with your questions.
Yes. Thanks for the opportunity. My question is regarding current quarter, like Q2 PPF, we have seen that we have done top line of around marginally more than INR 200 crores. This seems like a one-off because this is more than what we have done in H1 FY 2024. It is twice of H1 FY 2024. Can we take this as a base or we consider that there is some seasonality of front-loading of some of the sales in it?
See, exact numbers can never be told because there are a lot of things which happen in the background. There will be some material in the pipeline which goes to our subsidiaries and then sold from there. Of course there are some seasonality. Sometimes one of our major customer has OEs with them, so they need more material all of a sudden. Overall, as I said, it definitely will be true because the natural growth is coming. We are penetrating to the markets. We are creating more markets for us, and we are going to the places where we have not been in the past. Exact numbers cannot be set as a base like that. Definitely when you say, like four years in making, then we started first year with 5% of the capacity only.
Second year it jumped to 25%. The third year it went to 70%, 80%. Now it is running 135%, 140%. The growth is very natural. That base I cannot guarantee like this has been set. It might be more than that, but it's very dynamic in terms of the customer base in our key markets and the material which is on the waters to U.S.A. and European markets.
Okay. Considering looking at the growth which we have experienced in CPD division, most of that which has come from is, as you mentioned, from volume growth. Have we penetrated any new geographies apart from America and Europe that is giving us a new market which we can also penetrate further?
Yes. What we have done, our sales division which we call like, we have different sales divisions, which is domestic sales, then U.S. sales, then Rest of the World. In the Rest of the World, we have penetrated to geographies which I don't want to name here as a confidentiality sake, but we have added key sales force in five new regions. Five new countries. That is historically a place where you would hardly find our Sun Control sold, but PPF is being sold in these areas. Once we have started selling PPF, of course now the Sun Control is also going. There are territories where definitely we have penetrated afresh.
Are these international geographies or you are talking about domestic?
I'm talking only international. Domestic growth definitely is quite strong. We started with 0.1%, then 0.5%. Currently we are around 2% of penetration of Indian market. As I said, we have five times to go and since the product is not, I think you will appreciate the fact the car price in India, sale price versus the price of PPF, it's a significant cost. With lots of efforts and persuasion, we have been able to reach here in PPF. You can assume INR 1 lakh is the average cost for putting a PPF. We are continuously growing. We are seeing the growth on month-on-month basis on PPF. International market penetration to new geographies, India market penetration everywhere. Initially we did in metros, then we did in tier one cities, now in tier two cities even going below them as well in India market.
Okay. Yeah. This first from my side.
Yeah.
Thank you.
Thank you.
Thank you very much. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to one per participant. The next question is from the line of Akash Bachhawat from Narnolia Financial Services. Please go ahead.
Hi, there. Am I audible?
Yes.
Yeah. Congratulations on the great set of numbers. Very good numbers.
Thank you.
I just have a few questions regarding capacity utilization opportunity data center. I was reading an article that in UAE, they are using films to insulate data centers from thermal heat. Are we into those kind of films? That's the first question. Capacity utilization, I just have one more question that we are exceeding beyond 130% in PPF. How much more sales can we extract from the same capacity until our new capacity is coming? If you can answer these things. Thank you, sir. Congratulations once again.
Okay. First question, Mr. Adsul can answer.
Can we just repeat, the thermal insulation on a building.
Yeah. I was reading an article, in UAE, Dubai, they're using thermal insulation films on data centers to protect them from external heat. Are we in those kind of films? I just wanted to know on that thing. Yeah.
That can be a normal Sun Control Film also. Like, in architectural segment, there are films which the solar heat control is quite strong on that. If that is a glass, then we are definitely supplying those films to UAE as well, to all the markets. If it is like a building, then.
Yea. If that is on a terrace or a roof of the building, those are different films or paints are used.
Yeah. There are paints as well. Normally when you are talking of data centers, then they are usually glass buildings because of aesthetics, and they are definitely these new films, like Spectrally Selective Films and.
Reflective Film.
Reflective Film are very popular, we are selling them in good quantities.
Okay, sir. Thank you.
Yeah.
What's capacity utilization?
On utilization, see, the thing is, it's simply a fact that maximum we can go double the capacity by using 100% of sun control, because the maximum of a plant is like which we are doing 135%-140% can go to 200%. Right? That's the limit. To have that limit, we need to have sun control lines free for that much of capacity. That many orders should also have, right? It's not the magic stick that wherever we go, and we get orders. There are a lot of efforts, market development, and all those activities are concerned. If the question was, how much can we go before the new line can come? It can go to 200%, provided we have that much orders, provided sun control fungibility is available to that.
These are notional questions, but with the rider, I answered your question.
Just a follow-up, sir. If there is the realization in PPF is 3x-2x of SCF, and we are seeing much more traction in PPF in quarter two, and even in quarter one, your analysis was except quarter one, quarter two , PPF, we are seeing a lot of traction in it. If you extrapolate it in Q3, will the realization help compensate the loss of sales from SCF in Q3?
I think the facts are not correct here. Sun control PPF absolute margins are higher. If you talk of percentage terms, sun control high-end IR products are at the top level, right? We do not disclose them like exact number. The top quality products of sun control in terms of percentage, they are number 1 to us. PPF capacity is lower. When you make PPF, it is not at the same rate we can make sun control, right? We do all the bits. Please, I can assure you that we do every bit to enhance our sales and profitability. When there is the issue of seasonality, we can't do anything, right? Definitely this is going to be, overall the year is going to be really, really good.
The strong sales we expect right now from Q4 and Q3 is also, it will be decent.
Yes, sir. You are doing excellent job. Thank you, sir.
Thank you very much.
Thank you very much. Thank you very much. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your questions to one per participant. The next question is from the line of Prashant Parmar, who is an individual investor. Please go ahead.
Good afternoon. Mr. Prashant, please go ahead.
Mr. Prashant, your line has been unmuted. Since there is no response, we will move on to the next participant. The next question is from the line of Karthi from Suyash Advisors. Please go ahead.
Good afternoon, gentlemen. Many congratulations on a very impressive performance. I had one question and two clarifications to seek. Can you elaborate on the business development process for Colored PPFs? I am not very sure whether you would go through the OEM route or will there be a different model for this? The clarifications I will just plug in immediately. One is on the India branded business. What is the current revenue and what is the target that you have, say, over a two, three-year time frame?
On Colored PPF, it is a need of the hour for some OEs where, of course, we are not direct there because one of our big distributors is supplying to them. The route, the number 1 is to distributor who is supplying to them. That is one.
The second, we will directly penetrate to the market by way of, like we supply now, the complete range of PPF from titanium, which is lifetime warranty to eight years warranty to five years and to three years. This will go with the similar route when we supply the matte PPF and black PPF and all those things. Right? We already are into colors, which were limited to black and white. Now there are many colors which we have added into that portfolio. It will go to one route, through our distributor to OE. Another route will be like to the market, where it will go to different stages.
In India also, would you follow the same route, sir, as in the distributor route or for an Indian OE, would you be directly approaching the OE?
In India, we have already a partnership with Mahindra, where we supply direct to Mahindra, and another two have been approved, which we will inform in the due course. Of course, we will directly also supply to these guys and to the market as well.
Right.
We may have certain colors which are reserved for certain OEs. That consideration will be done in due course.
Those would be bespoke colors, right?
Sorry?
Those would be bespoke colors, right? Customized color schemes, basically.
Yes. Like some has a special yellow or some has a cherry red specific to a OE. These things we'll do. We are doing actually.
How big could this be, sir?
that I can't disclose, we are doing that.
How big could this product alone become, sir, for you?
You mean Colored PPF?
Yes, sir.
As of now, we had been in the show, there is lot of attraction because of colors. If you really see, it will take some time because something new, nobody is doing that, people are trying to do that, it will take some time, we safely assume that it might be like 10% addition or 15% addition to our sales.
Right. On the branded products in India, sir, this is on Garware brand itself. How big can this become, say, in a two, three-year time frame?
Mr. Karthi, may we request that you return to the question queue for follow-up questions, as there are several other participants waiting for their turn?
No, this was not answered, madam, I'm just adding layer to that. It's all.
Yeah. Okay. Absolute numbers. Just a second. We do not give the specific number. As you may be aware that, looking into the outstanding performance of Garware, there are many operators. I don't want to give the readymade information, which people should get by way of marketing agency or something. We are growing at the rate of 70%, 80% into the India market.
Okay. Thanks, and very best, sir.
Thank you.
Thank you very much. The next question is from the line of Pritesh from Lucky Securities. Please go ahead.
I have two questions. One, in your past calls, you have said that the PPF 300,000 capacity that we had, we had invested about INR 150 crores with full-time asset turn. Now when I'm first trying to connect the dot, I'm still clueless, what is the PPF revenue number? Because in one answer, you said one-third, someone told you INR 200 crores. Then you gave a utilization number. I am clueless on the PPF side, if you could be little bit more clearer. My second question is, if you look at the margin swing in the last three quarters, the BOPP industry itself has gone through a 25%-30% change in the gross margin number. Is it fair to assume that the 35% of your portfolio, which is ex-IPD, where there would be lower margins, which are now on a higher side.
This 300 basis points, 400 basis point swing that we see in a last three, four quarters basis is to do with the industry profitability swing, because even you have 35% of your business right there. It will be very helpful, be very clear on these two parts, because then the margin assumptions, et cetera, everything is based on these two observations.
Okay. Thank you. About this total revenue from PPF.
Even if you take 135% of the earlier number which you have shared in the conference call of INR 160 crore at two time asset turn, it goes to about INR 400 crore. There is a INR 100 crore of quarter in this, then that 30% number doesn't come from anywhere.
The number is at 26% on revenues from PPF.
For this quarter?
No, for H1.
For H1. Okay. this makes something
I hope you are clear because you asked us like you are clueless, I hope you are not clueless.
the capacity utilization is 100%+ in the first part, right?
Yeah.
Okay. this answers the first part. My second question was on the profitability side. which means in your revenue numbers, there has to be an element of higher realization.
Yeah, that's what I said. The growth has been volume-driven, and that volume has come from new territories and growth on the-
There has to be an element of higher realization. Your growth is almost 56%. My guess is there has to be at least 15% or 20%, 25% minimum realization there.
Mr. Pritesh, if you would have gone through the earlier questions every part has a different price point. As you were mentioning earlier, PPF is at a higher price point as compared to IPD or SCF films. What you are looking at of 15%, 20% growth in prices is not the growth in prices, that is a change in the mix of a products.
Okay. On the margin question, is the observation correct that you would have gone through a 400 basis point because of the profitability improving is now 35% of the P?
See, first, we are not in the BOPP film segment per se. When you're trying to relate BOPP with polyester films, I don't think that it is the right linkage which you are doing there.
We do not produce BOPP. We produce polyester films, BOPET.
Even BOPET has gone through those three.
If you would look at, and that's part of the investor presentation also, we are into specialty. We do not deal into commodity.
Currently, our CPD business has been 71% of total sales, and BOPET has gone only 29% because despite the fact that it is going up now and definitely with a lot of capacity which have come in or will come, and on the BOPP side also there will be a margin erosion once again on the commodity. To safeguard ourselves, we are always trying to give value products to the market, which has some kind of uniqueness in the products, and we will continue to deliver new products into that. That's why our share of BOPET is continuously going down. It is now only 29%. And that too, we are only catering to the segments like shrink films, floatable films, low oligomer films, lidding films, and all those, which are high-end products.
Okay, sir. Okay. Thank you.
Okay? Thank you very much.
Thank you very much. The next question is from the line of Kiran D. from Table Tree Capital. Please go ahead.
Hi there. Congratulations on a good set of numbers. I have a slightly different question zooming out of these quarter numbers. FY 2023- FY 2024, and all those data points are available on your FY 2024 annual report. FY 2023- FY 2024, there was a significant drop in the global brand sales in the U.S. Right? One of our customers, I think, whom we are white labeling to is 30% of our revenues. Two-part question is, A, how do you think about global brand sales significantly degrowing? Was it a conscious decision or it just so happened that global brand degrew in 2024 and will be back in 2025? Two, 30% of revenues is from a single customer, is that a point of concern? That is one question.
The second part of the question is more operational, which is, there's been a six-quarter, eight-quarter, or 12-quarter discussion around Nashik plant monetization, more dividend payout. If you could just tell us, are there any board discussions around that? The third part is, smaller question is Middle East part of Europe? Do you consider Middle East part of the Europe because you seem to be growing well in Middle East as well. Those are the three-part questions, sir. Global brand and. Yeah. Go on.
I'm not sure, how did you get the number that our global is degrowing. In fact, we are seeing a good growth in global brand. In fact, some of the places in U.S., we saw Garware is also growing. We are really happy to see that there is a continuous growth momentum there. That's one part of thing. Second part of, we have many customers in white label also because I'll just tell you one thing. Even in India, we have challenge. Everybody wants to sell Garware now. You go to a place and the guy is selling Garware. Next door, there is a big branded shop has come. He wants to sell Garware product because of the quality.
The challenge is he has spent so much on his showrooms and everything, and the next door is selling Garware on the open market. How to sell to both the guys? We are not letting these places to our competitors. That's why the white box is sometime a necessity because that gives a big brand value. Because they are world leaders. You're not talking of only one, but we have many such players into the market who are buying from us. Right? There is no degrowth of global. In fact, global and Garware both are growing. Talking about white labeling, we do decent numbers because we have to continuously grow. These guys may have 100 salesperson, and we have very limited one because our focus markets are different. Right? We can't compete with everyone into each market.
As a strategy, that works well for us. There is no price difference between white labeling and Global.
Right. I got the details from your annual report where Global U.S.A. gets reported as a subsidiary-
Mr. Kiran
I considered sales.
Mr. Kiran, sorry to interrupt.
The other part of the question Sorry. The other part of the question that I asked, if you could just answer, sir. If Middle East considered as part of Europe and-
No. Middle East is Can you just show? One second. Middle East is a separate territory for us. The thing is, many of our customers from America, we have shown a separate part, 3.1% sale in Middle East.
Got it, sir.
Yeah, it is very clear into this thing. When you talked about one single customer, that was Global?
No. There are two bits in your Annual Report, sir. One is your subsidiary information, which is clearly stated as Global Films U.S.A. There, if you look at AOC-4 form, the sales between FY 2023 to 2024, there's a de-growth. Two, you also have to report a single largest customer, more than 10%.
That's not a de-growth. Let me clarify to you. See, between these two years, what happened, there was a lot of inventory which was lying there, which we cleared because after COVID, the shipping timeline was very high. Right? It dropped significantly after that. There was a lot of 30- 40 days inventory suddenly went into our subsidiary. These are operational things. There is no de-growth. It is like your inventory adjustments were there.
Got it.
Okay?
Got it.
Thank you.
Thank you.
Thank you very much. The next question is from the line of Sunil Jain from Nirmal Bang Securities Private Limited. Please go ahead.
Yeah. Thank you very much for this opportunity, and congratulations for great set of numbers. Sir, my question relates to PPF. Are we thinking of any backward integration in this particular part of business?
Again, this is very strategic and confidential information. Unless some decision and all those things are made, it will be informed accordingly.
Okay. In India also, you sell it through white label, or is it only pure branded sales?
Mostly branded sales, but a couple of big branded people who sell at a very premium thing. We sell, but that percentage is hardly 10% of our sales. As I said, it is a necessity because otherwise we potentially lose the customers.
Yeah. Okay. Thank you very much.
Thank you.
Thank you very much. Due to time constraints, we will take that as the last question. I would now like to hand the conference over to the management for closing comments.
Yeah. Ladies and gentlemen, thank you for joining the call. Trust we clarified all your queries. In case if you have any queries further, you can write to us. We will clarify the same. Despite the holiday, you have joined. Thank you very much.
Thank you, everyone. Thank you.
Thank you.
Thank you.
Thank you very much. On behalf of Garware Hi-Tech Films Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.