About the Company
Incorporated in August 1984 by Mr. S. P. Mittal, Greenply is India 's largest Interior Infrastructure Company. A leader in the plywood, laminate, decorative veneers and particle board industry, Greenply accounts for 25% of the organized plywood and 15% of the organized laminate market in India. Greenply is the only integrated manufacturer of plywoods, laminates, decorative veneers, particle boards and prelam particle boards/MDF. Popular brands include Greenply Plywood, Green Club Premium Ply, Greenlam Laminates, Green Decowood, Green Lamiboard and Ecotec.
Greenply has 28 branches across India with a strong dealer/distributor/sub-dealer/retailer network of over 9600 and a presence in over 300 cities. It has five modern manufacturing facilities are located in Nagaland, West Bengal, Uttaranchal, Rajasthan, Himachal Pradesh and Gujarat. Greenlam, the flagship decorative laminate brand from Greenply is exported to more than 50 countries including Thailand, Indonesia, Taiwan, Canada, Bahrain, Hong Kong, Malaysia, Singapore, Kenya, Dubai, Russia, Syria, USA, Australia, Mexico, Saudi Arabia, China and Israel.
Industry Scenario
The plyboard and laminates is a highly fragmented industry. Share of unorganised sector is approx. 80% in plywood and around 50% in laminates. Particle Board & MDF (Medium Densified Fiber) segment is growing at a rate of 25% with imports having a share of around 70%. Growth of organised sector is 15-20% in comparison to overall industry growth of 5%, indicating the shift of customer preferences from Unbranded to Branded goods.
Investment Argument
In a sweet spot - well positioned to profit from growth Looking at current market dynamics Greenply has an opportunity to increase its market share in the organised plywood and laminate industry. The organised wood panel industry is poised to grow 15-20% in FY10. Greenply is the market leader in both plywood and laminates segment, having the highest share of the organized market. The unorganized sector constitutes nearly 70% of the plywood and laminates
market is steadily losing its market share to organised sector as customers seek superior quality and value. Creating and sustaining successful brands is also going to be important going forward. Greenply is well positioned to profit from this trend. Huge potential in MDF Greenply is venturing into MDF, a very popular and successful panel product worldwide. MDF is a very versatile product with applications primarily in Paneling. It is also used in a wide range of furniture, windows,doors, frames, handicraft items, display or exhibition stands and signs, ceiling, toys, carving, partitions, maritime applications and educational equipment. 70% of the country’s MDF requirements are currently met by imports. Imports of MDF is costly since the freight component in MDF is around 30-35%.
Greenply is setting up India’s largest MDF Plant with a capacity of 180,000 cbm at the existing unit in Uttaranchal. Project is being setup at a cost of Rs.250 crores. Project implementation is progressing as per schedule and plant is expected to start commercial production by March 2010. The Unit will enjoy Fiscal benefits in the form of excise duty exemption for 10 years and corporate tax exemption on 100% of profits for first 5 years and 30% for the next five. MDF is expected to contribute around Rs.375 crores to the gross revenue at full capacity.
Capacity Expansion in Laminates Greenply has installed a new laminate unit with a capacity of 33 lakh sheets (126.4 lakh Sqm) which commenced commercial production in one press out of a total of three presses proposed to be installed. The plant will get Fiscal benefits in form of - (a) excise duty exemption for 10 years and (b) corporate tax exemption on 100% of profits for first 5 years and 30% for next five years. The total capital outlay for the plant will be Rs.105 crores. Unitwill manufacture compact laminates in three different formats apart from the present (4’x 8’). This will open up markets internationally such as US, Europe, parts of Asia, South Africa, Australia as well as new markets in India. This plant is expected to generate gross revenues of Rs.250 crores at full capacity.
Environmental benefits
Rajasthan unit is registered under the UNFCCC for carbon credits shifting from conventional fuel consumption to mustard husk in its boilers. Uttaranchal unit is in the process of registration. During Q3 FY09 Greenply received Rs.1.2 crore towards carbon credit in respect of the laminates facility at Rajasthan. Carbon credit worth Rs.50 lakh is still under the final clearance process.
Key Risks
Economic slowdown in the domestic and global markets may lead to a fall in growth prospects of Greenply. As a major risk factor, downturn in the realty sector may affect interior infrastructure industry prospects. Globally, allthe countries are adopting environmental compliance measures, which may affect business, as raw materials like timber comprise major input for the company. Rising competition within the organised segment may lead to reduced margins.
