Domestic 41000 MT for polyester film and 2210 MT for metallized film.
, 61%
Business Operations:
Garware Polyester is engaged in manufacture of Bi-axially
(Source: CMIE) oriented polyethylene terephthalate film ( BoPET) film lines
used in flexible packaging, rigid PVC pipes, HIP Sheets,
metalized films for sari yarn, electrical insulation films, tea
wrapping film and value- added products like sun control films.
As on March 31, 2010, around 61% of sales for GPL were
contributed by domestic market while overseas market
contributed 39% of sales.
TRDR Films
b) Sun control films: Company manufactures Polyester dyed films
which is used in the solar control applications and is among the only
Metallised
Polyster two players who manufacture this product. GPL has patented its
Films
unique technology of manufacturing these films with the Department of
Patents, United States. It is marketed under the brand “Garware
Suncontrol Film”. This film is patented in 16 countries and exported to
more than 40 destinations across the globe.
India is one of the largest and fastest growing markets in the world
for flexible packaging and other polyester products. Polyester
“Polyester output is expected to production accounting for 80% of the total manmade fiber output is
grow by around 6-8 % in the next expected to grow by around 6-8 % for the next two years.
two years”
The total PET film capacity in India is about 360,000 tons, with the
surplus production generally being exported to overseas market.
Industry Competitiveness:
The five forces model helps to determine the competitive intensity and
therefore the industry attractiveness. The existence of many players and
“Technology advancement number of brands makes the industry highly competitive. The Polyester
and in house R&D ensure industry framework has been analyzed on the basis of buyer and seller
company stays abreast bargaining power, threat of new entrants, threat of substitutes that
with latest innovations” determines the degree of rivalry among existing players.
Peer Comparison:
GPL was trading at a P/E multiple of 3.13 which was lower than
its peers and having ROCE of 6.8% and ROE of 9.4%, comparable
to its peers like Uflex Ltd.
Capacity utilization:
“Wealth Creation” Considering increased in demand and pressure from its peers
which are aggressively increasing their capacities, it is expected that
Value today for every `100 invested
Garwarpoly Sensex going forward company may increase its production capacity.
3 Months 62.49 100.35
6 Months 125.90 114.21
Key Risk Factors:
1 Year 355.15 115.08
3 Year 176.72 99.10
5 Year 353.63 216.32 Fluctuating raw material prices:
Increase in price for key raw materials like PTA and MEG could
impact the profitability margins if company is not able to pass on
the cost to customers or undertake initiatives to reduce the costs.
As per Mar’10 (6 months) figures, PTA had a significant share on
Raw Material Consumption total raw material cost (59.27%) followed by MEG (22.43%).
Breakup (%)
Procurement of raw materials at a cost effective price as well as
efficient management of the inventory will be key to control
18% 0.06 %
DMT production costs.
PTA
59%
MEG Fluctuation of foreign currency:
Others Polyester films market has a huge export potential. GPL exports its
22.43% product to nearly 40 destinations across the globe. So exposure to
foreign currency fluctuation against domestic currency would be a
considerable risk for it.
The risk factors for the company remain the input cost
exposure to crude derivative prices, product obsolescence risk
resulting from regulatory changes and forex exposures
resulting from globally diversified operations.
“Geographic diversification
Given the highly competitive nature of the industry along
supported by efficient forex
with presence of big players, strategic initiatives taken by the
risk management is key to
company towards geographical and product diversification
remain competitive in the
while controlling costs would be key to maintain
industry”
competitiveness in the market.
Annexure I:
Annexure II:
Assets
NET FIXED ASSETS 400.08 375.80 364.67
INTANGIBLE ASSETS 15.88 15.88 15.88
INVESTMENTS 36.76 36.76 36.76
CURRENT ASSETS, LOANS & ADVANCES (A):
Cash & bank balance 11.65 15.82 15.22
Other Current Assets 245.47 185.45 201.96
CURRENT LIABLITIES & PROVISIONS (B): 55.74 40.47 44.22
NET WORKING CAPITAL (A-B) 201.38 160.80 172.96
TOTAL ASSETS 654.10 589.24 590.27
Contact Details:
Jatin Vyas
Brickwork Ratings, Phone: +91-22-28389144
Email: jatin.v@brickworkratings.com
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