Garware Hi Tech Films Ltd: Annual Report 2023-24 Analysis

Overview #

Comprehensive Analysis #

This analysis delves into the Garware Hi-Tech Films Limited (GHFL) Annual Report for the financial year 2023-24, covering its financial performance, business segments, identified risks, and ESG (Environmental, Social, and Governance) initiatives.

I. Financial Performance:

GHFL demonstrated robust financial growth in FY2023-24 compared to FY2022-23. Key highlights include:

• Revenue from Operations: Increased by 21% to ₹1581.65 crore (standalone) and 17% to ₹1677.02 crore (consolidated). This growth is attributed to higher sales volumes of PPF (Paint Protection Film) and Sun Control Film.
• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): Improved by 19% to ₹288.19 crore (standalone) and ₹321.05 crore (consolidated), reflecting operational efficiency.
• Profit After Tax (PAT): Rose by 23% to ₹180.93 crore (standalone) and 22% to ₹203.29 crore (consolidated).
• Total Comprehensive Income: Increased by 27% (standalone) and 26% (consolidated), indicating strong overall financial health.
• Earnings Per Share (EPS): Increased by 23% (standalone) and 22% (consolidated), benefiting shareholders.
• Dividend: The board recommended a final dividend of ₹10 per equity share (100%), subject to shareholder approval. This represents a significant payout.
• Key Financial Ratios: Showed improvements in several areas:
  • Debtors Turnover: Reduced from 31 days to 24 days, indicating improved collection efficiency.
  • Interest Coverage Ratio: Significantly improved from 15.85 to 28.55, suggesting better debt management.
  • Current Ratio: Increased from 2.61 to 3.31, signifying enhanced liquidity.
  • Debt-Equity Ratio: Decreased substantially from 0.05 to 0.01, highlighting a reduction in debt levels.
  • Operating Profit Margin: Slightly decreased from 18.50% to 18.22%, but still remains strong.
  • Net Profit Margin: Slightly increased from 11.26% to 11.44%.

II. Business Segments:

GHFL operates primarily in the specialty films market, strategically de-emphasizing low-margin commodity segments. The report highlights the following key segments:

• BOPET (Biaxially Oriented Polyethylene Terephthalate) Films: A foundational product used in various applications, including packaging and industrial uses. GHFL maintains a leading export position in this area.
• Sun Control Window Films: A high-margin, specialized product line with established international brands (‘Global Window Films’ and ‘Garware Sun Control’). Strong presence in both domestic and international markets.
• Paint Protection Films (PPF): A rapidly growing segment, with plans for capacity expansion. Shows significant growth potential due to increased consumer awareness. The company has initiated “Garware Application Studios” to boost domestic sales.
• Shrink Films: Strong domestic market share with a focus on eco-friendly PET-based films, replacing PVC-based alternatives.
• Thermal Lamination Films: Expanded product portfolio with new offerings driving export growth.

III. Risks:

The annual report identifies several key risks facing GHFL:

• Raw Material Price Volatility: Fluctuations in crude oil prices directly impact the cost of key raw materials (PTA and MEG), impacting profitability. GHFL mitigates this through long-term contracts and cost-reduction initiatives.
• Intense Competition: Increased capacity additions by competitors are intensifying the market competition, particularly in the commodity segments. GHFL addresses this with a focus on value-added and differentiated products.
• Geopolitical Risks: Global uncertainties, particularly those stemming from the Middle East and Eastern Europe, impact supply chains and international trade. The company reports successful navigation of these issues.
• Currency Fluctuations: Significant export revenue exposes GHFL to currency risks, which are mitigated using forward contracts.
• Market Risks: Changes in demand and consumer preferences could negatively impact sales. The company counters this through product diversification, market analysis, and new product development.
• Logistics Risks: Supply chain disruptions and shipping challenges are acknowledged. The company claims to have successfully overcome logistical barriers.
• Talent Retention: Attracting and retaining skilled employees is highlighted as a key concern. Retention rate of 96.2% indicates success in this area.

IV. ESG Initiatives:

GHFL showcases a commitment to ESG principles across several areas:

• Environmental:
  • Energy Conservation: Significant energy-saving projects resulted in annual savings of ₹177 Lakhs. Focus on renewable energy sources.
  • Water Management: Implemented zero liquid discharge (ZLD) across all locations. Rainwater harvesting and water recycling initiatives.
  • Waste Management: Adherence to Extended Producer Responsibility (EPR) for plastic packaging. In-house recycling and partnerships for waste disposal. Reduction of hazardous and toxic chemical use.
  • Greenhouse Gas (GHG) Emission Reduction: Initiatives including tree plantation, rainwater harvesting, energy efficiency, and renewable energy use. Independent assessment of Scope 1 and 2 emissions by Tirkha Consultants.
• Social:
  • Employee Well-being: Initiatives focusing on physical, mental, and emotional health. High employee retention rate (96.2%).
  • Corporate Social Responsibility (CSR): Expenditure of ₹368 Lakhs on various initiatives, including healthcare, education, and elderly care.
  • Community Engagement: Programs aimed at addressing societal needs in the regions where GHFL operates.
• Governance:
  • Corporate Governance: Adherence to SEBI guidelines and best practices. Robust Board structure and committees. Independent Directors’ evaluations. Whistleblower policy in place.
  • Transparency and Disclosure: Clear communication with stakeholders through various channels. Comprehensive reporting on financial performance and ESG initiatives.

V. Conclusion:

Garware Hi-Tech Films Limited presents a positive picture of financial growth and ESG commitment in its FY2023-24 annual report. The company demonstrates resilience in the face of various market challenges, leveraging its focus on specialty films and proactive risk management. Its commitment to sustainability and stakeholder engagement is noteworthy. However, ongoing monitoring of raw material prices, competition, and geopolitical risks remains crucial for sustaining its growth trajectory. The detailed disclosure of key financial metrics and ESG initiatives enhances transparency and accountability.

Detailed Analysis #

Balance Sheet #

Asset Analysis #

Based on the provided Garware Hi-Tech Films Limited Annual Report 2023-24:

• Total Assets (Standalone): ₹2,25,719.81 Lakhs (₹2257.19 Crores)
• Current Assets (Standalone): ₹70,724.44 Lakhs (₹707.24 Crores)
• Cash and Cash Equivalents (Standalone): ₹1,498.44 Lakhs (₹14.98 Crores) (This includes cash on hand and balances with banks in current and deposit accounts.)
• Accounts Receivable (Standalone): ₹12,250.59 Lakhs (₹122.51 Crores)
• Inventory (Standalone): ₹24,123.67 Lakhs (₹241.24 Crores)

It’s important to note that these figures are from the standalone financial statements. The consolidated financial statements, which include the financial results of subsidiaries, would show different, likely higher, values for these items.

Liability Analysis #

Based on the Standalone Financial Statements in the Garware Hi-Tech Films Limited Annual Report 2023-24:

• Total Liabilities (Standalone): ₹27,859.68 Lakhs (₹278.60 Crores)
• Current Liabilities (Standalone): ₹21,396.49 Lakhs (₹213.96 Crores)
• Long-Term Debt (Standalone): The report shows this as zero for the reporting period, but notes that ₹7,535.70 Lakhs in long-term debt existed at the end of the previous fiscal year (March 31st, 2023). This indicates significant debt repayment during the year. The notes clarify that a portion of this debt was prepaid during the fiscal year.
• Accounts Payable (Standalone): ₹15,988.84 Lakhs (₹159.89 Crores) (This includes amounts due to Micro, Small, and Medium Enterprises (MSMEs) and other creditors.)

Again, remember these are standalone figures. The consolidated financial statements would provide different, likely higher values for these line items because they incorporate the liabilities of the subsidiaries.

Equity Analysis #

Using the Standalone Statement of Changes in Equity from the Garware Hi-Tech Films Limited Annual Report 2023-24:

• Shareholders’ Equity (Standalone): ₹1,97,860.13 Lakhs (₹1978.60 Crores)
• Retained Earnings (Standalone): ₹98,203.54 Lakhs (₹982.04 Crores) (This is the closing balance for the fiscal year.)
• Share Capital (Standalone): ₹2,323.24 Lakhs (₹23.23 Crores)

These figures represent the standalone equity. The consolidated financial statements would report different, and likely larger, numbers for these components, reflecting the equity of the subsidiaries.

Income Statement #

Operating Performance #

Using the Standalone Statement of Profit and Loss from the Garware Hi-Tech Films Limited Annual Report 2023-24:

• Revenue: ₹1,58,165.11 Lakhs (₹1581.65 Crores)
• Cost of Revenue: ₹79,286.72 Lakhs (₹792.87 Crores) (This includes cost of materials consumed, change in inventories, and other direct costs.)
• Gross Profit: ₹78,878.39 Lakhs (₹788.78 Crores) (Calculated as Revenue less Cost of Revenue)
• Operating Expenses: ₹1,38,044.05 Lakhs (₹1380.44 Crores) (This comprises employee benefits expense, finance costs, depreciation and amortization expense, and other expenses.)
• Operating Income: ₹18,092.65 Lakhs (₹180.93 Crores) (Calculated as Gross Profit less Operating Expenses)

These values are from the standalone financial statements. The consolidated results, including subsidiaries, would differ.

Bottom Line Metrics #

Based on the Standalone Statement of Profit and Loss from Garware Hi-Tech Films Limited’s Annual Report 2023-24:

• Net Income: ₹18,092.65 Lakhs (₹180.93 Crores)
• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): ₹28,818.79 Lakhs (₹288.19 Crores) (This is calculated by taking Profit Before Tax and adding back Interest, Depreciation, and Amortization.)
• Basic EPS (Earnings Per Share): ₹77.88
• Diluted EPS: ₹77.88 (The report indicates that basic and diluted EPS are the same.)

These are the standalone figures. The consolidated financial statements will present different values for these metrics due to the inclusion of subsidiary company results.

Cash Flow #

Cash Flow Components #

From the Standalone Cash Flow Statement in Garware Hi-Tech Films Limited’s Annual Report 2023-24:

• Cash Flow from Operating Activities: ₹17,211.05 Lakhs (₹172.11 Crores)
• Cash Flow from Investing Activities: ₹4,538.62 Lakhs (₹45.39 Crores)
• Cash Flow from Financing Activities: ₹(16,700.79) Lakhs (₹-167.01 Crores)

These are standalone cash flow figures. Consolidated cash flows, which include the cash flows of subsidiaries, would show different amounts. Note that the financing cash flow is negative, indicating a net outflow of cash related to financing activities during the fiscal year.

Cash Flow Metrics #

The Garware Hi-Tech Films Limited Annual Report 2023-24 doesn’t explicitly state free cash flow. Free cash flow is calculated, and it’s not a standard line item presented in the financial statements. To calculate it, we need information not directly provided. However, we can obtain the other requested figures:

• Capital Expenditure (CAPEX): This is not explicitly stated as a single line item but can be inferred from the cash flow statement. The cash flow from investing activities shows a net outflow of ₹4,538.62 Lakhs (₹45.39 Crores). A significant portion of this would represent CAPEX (purchase of property, plant, and equipment). However, other investing activities (like proceeds from asset sales) are also included in this figure. A precise CAPEX figure therefore requires further detail or breakdown from the company’s accounting records.

• Dividends Paid: The report states that ₹2,323.24 Lakhs (₹23.23 Crores) in dividends were paid during the year. This amount is explicitly shown in the cash flow statement.

To calculate free cash flow, you would typically subtract capital expenditures from operating cash flow. Since the exact CAPEX number isn’t readily available in the report, we cannot compute the free cash flow.

Profitability Ratios #

The Garware Hi-Tech Films Limited Annual Report 2023-24 provides some profitability ratios, but not all of those you requested. We can calculate some and the report provides others:

• Gross Profit Margin: This can be calculated from the standalone Statement of Profit and Loss:

  Gross Profit Margin = (Gross Profit / Revenue) * 100 = (₹78,878.39 Lakhs / ₹1,58,165.11 Lakhs) * 100 = 49.85%

• Operating Profit Margin: This can also be calculated from the standalone Statement of Profit and Loss:

  Operating Profit Margin = (Operating Income / Revenue) * 100 = (₹18,092.65 Lakhs / ₹1,58,165.11 Lakhs) * 100 = 11.44%

• Net Profit Margin: This is provided directly in the report’s analysis of key financial ratios as 11.44%.

• ROE (Return on Equity): This is also provided directly in the report’s analysis of key financial ratios as 9.14%.

• ROA (Return on Assets): This ratio is not provided in the report. To calculate ROA, we’d need the Net Income and Total Assets.

Important Note: These are standalone profitability ratios. Consolidated ratios, incorporating subsidiary performance, would likely be different. The report also presents some consolidated ratios but not a complete set for easy comparison.

Liquidity Ratios #

The Garware Hi-Tech Films Limited Annual Report 2023-24 provides the current ratio but not the quick ratio or cash ratio. We can calculate the current ratio from the standalone balance sheet:

• Current Ratio: This is given in the report’s analysis of key financial ratios as 3.31. (Current Assets / Current Liabilities)

The quick ratio and cash ratio are not provided and would need to be calculated using the following formulas:

• Quick Ratio: (Current Assets - Inventories) / Current Liabilities. This requires subtracting the inventory value from current assets, data that is available in the report.

• Cash Ratio: (Cash and Cash Equivalents) / Current Liabilities. This can be directly calculated using values from the report.

Therefore, only the current ratio is directly provided in the readily available data. The other two would require calculations using the standalone balance sheet values, and it’s important to note that these would only reflect the standalone liquidity, not the consolidated liquidity of the company and its subsidiaries.

Efficiency Ratios #

Garware Hi-Tech Films Limited’s Annual Report 2023-24 provides some efficiency ratios but not a complete set. We can calculate some, and others are given directly. All calculations are based on the standalone financial statements:

• Asset Turnover: This ratio is not explicitly provided. It’s calculated as Net Sales / Average Total Assets. We have Net Sales from the profit and loss statement, but to get the average total assets, we would need the total assets from the previous year’s balance sheet (which isn’t directly provided in this report).

• Inventory Turnover: The report provides this ratio in its analysis of key financial ratios as 7.82. This represents the number of times inventory was turned over during the year. The precise calculation (Cost of Goods Sold / Average Inventory) is not displayed.

• Receivables Turnover: The report shows this ratio in its analysis of key financial ratios as 15.19. This is the number of times accounts receivables were turned over during the year; the detailed calculation (Net Credit Sales / Average Accounts Receivable) is not displayed.

In summary, the report only directly provides the inventory turnover and receivables turnover ratios. To determine the asset turnover ratio, we would need additional data (previous year’s total assets). These figures reflect standalone performance; consolidated data would give a different result.

Leverage Ratios #

Garware Hi-Tech Films Limited’s Annual Report 2023-24 provides some leverage ratios directly, while others require calculation. All calculations below are based on the standalone financial statements:

• Debt-to-Equity Ratio: The report gives this ratio directly in its analysis of key financial ratios as 0.01. (Total Debt / Shareholders’ Equity). Note that the report highlights a significant decrease in this ratio compared to the previous year.

• Debt-to-Assets Ratio: This ratio is not explicitly provided. It’s calculated as Total Debt / Total Assets. The report does provide the Total Assets and, in the notes to the standalone financial statements, the total debt amount can be inferred (although some of this is long-term debt which has been mostly repaid during the year).

• Interest Coverage Ratio: The report provides this directly in its analysis of key financial ratios as 28.55. (Earnings Before Interest and Taxes (EBIT) / Interest Expense).

Therefore, only the debt-to-equity ratio and interest coverage ratio are explicitly stated in the readily available report data. The debt-to-assets ratio would require a calculation using data from the standalone balance sheet and income statement; again this would only represent standalone leverage and consolidated figures from the consolidated balance sheet would be different.

Market Analysis #

Market Metrics #

The Garware Hi-Tech Films Limited Annual Report 2023-24 provides some of these market-based ratios directly, while others require calculation using data from both the financial statements and market data (which is only partially provided within the report).

• Market Capitalization: The report provides this value as ₹4,05,718.91 Lakhs (₹4057.19 Crores) as of March 31st, 2024.

• P/E Ratio (Price-to-Earnings Ratio): This is not directly provided. To calculate it, we’d need the market price per share and the earnings per share (EPS). The report gives the EPS (₹77.88), but the market price used to calculate the P/E would need to be obtained from an external source.

• P/B Ratio (Price-to-Book Ratio): This is also not directly given. It requires the market price per share and the book value per share (Shareholders’ Equity / Number of Shares). While the report provides shareholders’ equity and the number of shares, the market price of the share at the time of reporting would have to be obtained from an external source.

• Dividend Yield: This is not directly provided in the report. To calculate the Dividend Yield, we need the annual dividend per share and the market price per share (Annual Dividend per share / Market Price per share) * 100. The annual dividend per share can be determined from the recommended final dividend, and an external market price for the share would be required.

• Dividend Payout Ratio: The report does not provide this ratio directly, but it can be calculated using the standalone figures. The recommended final dividend is ₹10 per share. To calculate the payout ratio we require the net income and the number of shares, which are available in the report:

  Dividend Payout Ratio = (Total Dividends Paid / Net Income) * 100 = (₹2,323.24 Lakhs / ₹18,092.65 Lakhs) * 100 = 12.84%

In summary, only the market capitalization and (calculated) dividend payout ratio are given directly within the report’s information. The other ratios (P/E, P/B, and Dividend Yield) require obtaining the current market price per share from an external source. Remember that all these ratios are based on the standalone financial statements. Consolidated figures would provide a different picture.

Business Analysis #

Segment Analysis #

The Garware Hi-Tech Films Limited Annual Report 2023-24 doesn’t explicitly break down its financial results by segment in the detail you requested. While it mentions several product lines, it does not give precise revenue figures, growth rates, operating margins, market shares, etc., for each individually. The report focuses more on the overall financial performance of the company as a whole. Therefore, a precise response to your question based solely on the report is not possible.

However, we can summarize the information the report does provide about the business segments:

Missing Information: The report lacks specific data points for revenue, growth rates, operating margins, and precise market shares for each segment. This information would likely be contained in more detailed internal reports, which are not publically released as part of the annual report.

To obtain the precise data you’ve requested, one would need access to Garware Hi-Tech Films’ more detailed internal financial and market analysis reports or would have to conduct independent market research in the specialty films industry.

Risk Management #

Risk Assessment #

Garware Hi-Tech Films Limited’s Annual Report 2023-24 doesn’t provide a formal risk matrix with detailed assessments of likelihood and impact severity for each risk factor. The report qualitatively describes several risks but doesn’t offer a quantitative analysis.

However, we can categorize and summarize the key risk factors mentioned, along with the mitigation strategies discussed:

Missing Information: The report lacks specific information on the likelihood and severity scoring for the risks. A more comprehensive risk assessment would include a structured methodology with quantified likelihood and impact ratings, allowing for prioritization and more detailed mitigation planning. The description of some mitigation strategies is qualitative and lacks specifics.

Trends: The report suggests that the industry is moving towards sustainability and value-added products. The increasing demand for PPF is highlighted as a key growth driver. The need for robust enterprise risk management (ERM) is also implied, given the challenges faced. However, the report does not present a formal analysis of evolving trends in risk factors.

Strategic Overview #

Management Assessment #

Garware Hi-Tech Films Limited’s management highlights several key strategies, competitive advantages, market conditions, challenges, and opportunities in its Annual Report 2023-24. Here’s a summary:

I. Key Strategies:

• Focus on Specialty Films: De-emphasizing low-margin commodity film segments and concentrating on high-margin specialty films like Sun Control films, PPF, and specialty BOPET films. This strategy aims to improve profitability and reduce reliance on price-sensitive markets.
• Product Diversification: Expanding the product portfolio to include new and innovative offerings, such as various PPF finishes and heat-sealable polyester films. This helps cater to a broader range of customer needs and reduces reliance on any single product category.
• Capacity Expansion: Significant investment in a second PPF manufacturing line reflects the strategic importance of this high-growth segment and aims to meet the increasing demand.
• Cost Reduction: Continuous efforts to streamline operations, improve efficiency, and lower production costs to enhance competitiveness and profitability.
• Global Market Expansion: Building and leveraging established international distribution networks and appointing sales personnel in key regions to capture broader market opportunities.
• Sustainability Initiatives: Adopting eco-friendly manufacturing processes, reducing waste, and developing recyclable products to align with the growing demand for sustainable solutions.
• Customer-Centric Approach: Maintaining close relationships with clients to understand their needs, provide customized solutions, and ensure high customer satisfaction.
• Innovation and R&D: Continuing to invest in research and development to create new products and applications for its films.

II. Competitive Advantages:

• Integrated Manufacturing: Backward integration for manufacturing raw materials and components, giving the company greater control over its supply chain and costs.
• Established Track Record and Brand Recognition: A long history in the industry, coupled with well-established brands (‘Global Window Films’ and ‘Garware Sun Control’), provides significant brand equity.
• Experienced Management Team: A skilled and knowledgeable leadership team drives strategic decision-making and operational efficiency.
• Global Distribution Network: A wide network of distributors across 90+ countries enables the company to reach a large and diverse customer base.
• Product Diversification: A broad range of products for different applications reduces dependence on individual markets and strengthens overall resilience.
• Dedicated R&D Center: Continuous innovation and development of new products ensure that the company remains at the cutting edge of technology.

III. Market Conditions:

• Growth in Specialty Films: The global and Indian markets for specialty films show positive growth projections, driven by demand from diverse sectors like automotive, construction, and packaging.
• Increasing Demand for Sustainable Products: Growing awareness of environmental concerns is driving demand for eco-friendly and recyclable films.
• Competitive Market: The industry is characterized by intense competition, particularly in commodity segments, putting pressure on margins. GHFL seeks to differentiate itself and mitigate margin pressure through its focus on specialty films.

IV. Challenges:

• Volatile Raw Material Prices: Fluctuations in crude oil prices significantly impact the cost of key raw materials.
• Intense Competition: The industry faces intense competition, both domestically and internationally.
• Global Economic Uncertainty: Geopolitical events and potential economic slowdowns create uncertainty and risk.
• Supply Chain Disruptions: Global supply chain issues and logistical challenges impact production and distribution.

V. Opportunities:

• Growth in Automotive Films (PPF): The automotive paint protection film (PPF) market presents a significant opportunity for growth due to increasing consumer awareness and technological advancements.
• Expanding into New Markets: Further penetration of existing and expansion into new geographical markets offer substantial growth potential.
• Sustainability: The rising demand for eco-friendly and sustainable products presents opportunities to develop and market environmentally conscious films.
• Technological Advancements: Continuous innovation and development of new applications for BOPET films and specialty films enable the company to capture market share.

In summary, GHFL’s strategy focuses on leveraging its strengths (integrated manufacturing, strong brands, global reach, and R&D capabilities) to navigate market challenges and capitalize on opportunities in the growing specialty films industry. The emphasis on high-margin products, diversification, and sustainability positions the company for continued growth. However, the company faces considerable challenges related to market volatility and global uncertainty.

ESG Ratings #

The provided Garware Hi-Tech Films Limited Annual Report 2023-24 does not include ESG ratings from any external rating agencies. While the report details various ESG initiatives undertaken by the company, it does not provide any scores or rankings from organizations that specialize in ESG assessments (like MSCI, Sustainalytics, Refinitiv, etc.). To find this information, one would need to consult independent ESG rating providers directly.

ESG Initiatives #

Garware Hi-Tech Films Limited’s Annual Report 2023-24 details various ESG initiatives. Here’s a breakdown by category:

I. Environmental Initiatives:

• Energy Conservation: Implemented numerous energy-saving projects, resulting in annual savings of ₹177 Lakhs. Focus on improving energy efficiency through equipment upgrades and process optimization. Exploration of renewable energy sources.
• Water Management: Achieved zero liquid discharge (ZLD) across all locations. Implemented rainwater harvesting and water recycling systems, significantly reducing reliance on traditional water sources. This includes a 5000 cubic meter farm pond for rainwater conservation.
• Waste Management: Adherence to Extended Producer Responsibility (EPR) regulations for plastic waste. In-house recycling of plastic waste; partnerships with certified agencies for waste disposal. Minimization of hazardous waste through efficient use of resources and responsible disposal practices. Implemented a new hazardous waste shed.
• Greenhouse Gas (GHG) Emissions Reduction: Various initiatives to reduce GHG emissions, including tree plantation, rainwater harvesting, energy efficiency improvements, and the use of renewable energy sources. While specific GHG emission figures are provided (total Scope 1 and 2 emissions), targets are not explicitly mentioned in the report. The report notes independent verification by Tirkha Consultants. Increased green belt from 30% to 36% of open land.

II. Carbon Footprint:

The report provides the following greenhouse gas emissions data:

• Scope 1 emissions: 25,216 metric tonnes of CO2 equivalent
• Scope 2 emissions: 53,052 metric tonnes of CO2 equivalent
• Scope 1 & 2 emissions per rupee of turnover: 0.000005 metric tonnes of CO2 equivalent/rupee
• Scope 1 & 2 emissions per rupee of turnover (adjusted for PPP): 0.00011 metric tonnes of CO2 equivalent/rupee
• Scope 1 & 2 emissions intensity (in terms of physical output): 1.30

Note that Scope 3 emissions data and specific reduction targets are not provided in the report.

III. Social Initiatives:

• Employee Well-being: Focus on improving employee health and well-being through programs addressing physical, mental, and emotional health. High employee retention rate (96.2%) is cited as evidence of success. Initiatives include flexible work arrangements, onsite wellness programs, and financial wellness resources.
• Corporate Social Responsibility (CSR): ₹368 Lakhs spent on CSR activities, including healthcare, education, and support for senior citizens. Projects are implemented either directly or through the Garware Charitable Trust.
• Community Engagement: While not explicitly detailed, the report emphasizes the company’s engagement with the local community and its efforts to support local development.

IV. Governance Practices:

• Board Structure and Committees: A diverse Board of Directors with several independent directors. Well-defined roles and responsibilities for various Board committees (Audit, Nomination & Remuneration, Stakeholders Relationship, Risk Management, CSR, and Vigil Mechanism).
• Independent Director Evaluation: Performance evaluations of Independent Directors conducted.
• Code of Conduct: Adoption of a code of conduct for Board members and senior management.
• Whistleblower Policy: A formal whistleblower policy and mechanism in place to address ethical concerns.
• Compliance: Adherence to SEBI (Securities and Exchange Board of India) guidelines and other applicable regulations.
• Secretarial Audit: Regular secretarial audits conducted to ensure compliance with regulatory requirements.

V. Sustainability Goals:

The report doesn’t explicitly list quantifiable long-term sustainability goals with specific targets and timelines. While the report highlights various sustainability initiatives, it lacks specific, measurable, achievable, relevant, and time-bound (SMART) goals for the future. The focus appears to be more on continuous improvement and responding to emerging environmental and social concerns.

In summary, Garware Hi-Tech Films Limited demonstrates a commitment to ESG principles through various initiatives. While the report provides data on its environmental impact and outlines social and governance practices, it would benefit from more clearly articulated, measurable sustainability goals with specific targets and timelines for the future.

Additional Information #

Operational Metrics #

Based on the Garware Hi-Tech Films Limited Annual Report 2023-24:

• R&D Expenditure: ₹686.71 Lakhs (₹6.87 Crores) (This includes both capital and recurring expenditure.)

• Employee Count: 885 permanent employees as of the end of the fiscal year. The report also mentions a total of 725 employees and 1050 workers. The exact breakdown of temporary vs. permanent and employees vs. workers isn’t explicitly clarified.

Key Events #

The Garware Hi-Tech Films Limited Annual Report 2023-24 highlights the following significant events during the fiscal year:

• Changes in Key Managerial Personnel (KMP): Mr. Uday V. Joshi ceased as a Whole-Time Director, and Mr. Mohan Sitaram Adsul was appointed as a Whole-Time Director. Mr. Pradeep Mehta ceased as CFO and Mr. Abhishek Agarwal was appointed.

• Changes in Independent Directors: Three Independent Directors completed their terms, and three new Independent Directors were appointed.

• Capacity Expansion: The board approved a significant investment (₹125 Crores) to set up a second state-of-the-art manufacturing line for Paint Protection Films (PPF), expected to commence commercial production in Q2 FY26.

• Successful Navigation of Geopolitical Challenges: The company successfully managed supply chain disruptions and other challenges arising from geopolitical tensions, particularly those in the Middle East and Eastern Europe.

• Award and Recognition: The company won the ‘CII Technology Conclave & Innovation Awards 2023’.

• Full Capacity Utilization of PPF Line: The first dedicated PPF line achieved full capacity utilization.

• Development of New Products: New formulations and products were developed, including recyclable shrink films, safety films, black and white PPF, matte finish opaque films, and heat-sealable polyester films.

These are the key events highlighted in the report. Other significant events may have occurred but are not explicitly mentioned.

Audit Information #

Auditor’s Opinion:

The independent auditors, Manubhai & Shah LLP and Kirtane & Pandit LLP, issued an unmodified (clean) opinion on both the standalone and consolidated financial statements of Garware Hi-Tech Films Limited for the fiscal year ended March 31, 2024. This means the auditors found the financial statements to be presented fairly in accordance with Indian Accounting Standards (Ind AS) and other generally accepted accounting principles in India. They stated that the financial statements provided a true and fair view of the company’s financial position and performance. No key audit matters were identified to be communicated.

Key Accounting Policies:

The annual report details numerous key accounting policies, consistent with Indian Accounting Standards (Ind AS). Some of the most significant are:

• Basis of Preparation: The financial statements are prepared using the historical cost convention, except for certain financial instruments measured at fair value and defined benefit plans. Ind AS is followed.

• Property, Plant, and Equipment: Valued at cost less accumulated depreciation and impairment. Depreciation is calculated using the straight-line method over estimated useful lives. Assets are tested for impairment.

• Intangible Assets: Valued at cost less accumulated amortization. Amortization is calculated using the straight-line method over estimated useful lives. Assets are tested for impairment.

• Revenue Recognition: Revenue from contracts with customers is recognized when control of goods or services is transferred to the customer, in accordance with Ind AS 115.

• Inventories: Valued at the lower of cost and net realizable value. Cost is determined using the moving weighted average method.

• Financial Instruments: Classified and measured according to Ind AS 109, categorizing financial assets as those measured at fair value (through profit or loss or other comprehensive income) or amortized cost, and financial liabilities at amortized cost. Impairment is assessed.

• Foreign Currency Translation: Transactions are translated using exchange rates at the transaction dates, and gains/losses are recognized in profit or loss.

• Leases: Right-of-use assets and lease liabilities are recognized in accordance with Ind AS 17.

• Employee Benefits: Accounting for short-term and long-term employee benefits, including defined contribution and defined benefit plans, in accordance with Ind AS 19. Actuarial valuations are used for defined benefit plans.

• Income Taxes: Deferred tax is accounted for using the balance sheet liability method.

• Segment Reporting: The company reports its segments in accordance with Ind AS 108.

• Consolidation: Subsidiaries are consolidated using the acquisition method.

These are only the most prominent policies. The annual report contains a far more detailed description of the accounting policies applied. It’s crucial to refer to the full “Summary of Material Accounting Policies” section within the notes to the financial statements for complete information.