Key Highlights

The main reason for name change from Garware Wall Ropes to Garware Technical fibres is to highlight the change in the nature and product mix of the business of the company, as it moves away from age old ropes and wires business to more of technically well qualified value added products.

Technical textiles and value added products account for around 67% of total sales as on FY 18 as compared to around 40% in FY 15.

During last AGM, management was cautiously optimistic given the uncertainty in India and implementation of GST etc. In FY 18, exports which account for around 51% of total sales grew by around 10% YoY to Rs 451 crore while domestic sales which account for 49% was down by about 1% to Rs 433 crore.

Domestic sales were affected in H1 FY 18 but company was able to recoup the loss of sales with better sales in agriculture and geotextile division in H2 FY 18.

The fall in FY 18 domestic sales growth was over a 1% increase in sales growth in FY 17 on YoY basis. So basically the domestic market has been more or less steady for past 2 years and its the export market which grew by 22% in FY 17 and 10% in FY 18 on YoY basis that's driving the growth which is aided by increase in sale of value added and niche technical products.

Exports were at 25% of total sales 5 years back and today crossed 50% mark. Expects exports to stabilize around 50-55%.

Outlook for domestic market is cautiously optimistic as while demand is better than last year and good monsoon will lead to higher demand from agriculture side of the business, there is still no momentum being visible. So though the direction is positive, more acceleration is required. High polymer prices will restrict the margins in domestic market.

Internationally, the performance was aided by higher value added product sales, new markets and favourable rupee. Further increase in market share in aquaculture business particularly new markets such as South America also aided the growth.

International market should continue to do well in FY 19 as well, as more and more demand is visible for company's products and solutions. It has increased its reach to 77 countries worldwide.

The company has further diversified its products and its markets to reduce the overall risk and dependency. The company manufacturers multiple types of technical textiles for applications as diverse as deep-sea fishing, global shipping, aquaculture, sports, protected agriculture, environmental protection, infrastructure development, safe transportation, building construction, and highly specialized defence requirements.

The company has reduced risk and has grown well. So overall despite challenging situations, management expects the company to continue to do well in the years to come.

The company has sufficient capacities and latest technology to meet the growing demand going forward. It generally spends around Rs 5-8 crore on R&D front every year.

No major capex aimed however R&D spend will increase and new products will be launched every year.

Normalised OPM of the company on an average is around 18-19%. June18 quarter margins were high aided by rupee depreciation and higher exports. Margins are difficult to predict as some value added products have margins around 20% and which quarter sales jump of some products happens is difficult to predict.

Other income was lower in June 18 quarter as last year the company had shifted its funds from bank deposits to liquid funds and there were sizeable MTM gains.