• The company holds largest pan-India player with 32% share of organised plywood market and 30% share of domestic MDF market. The company have 4 state–of-the-art manufacturing facilities for Plywood and 1 facility for MDF –largest in the country.

• Plywood:

For Q4FY15- (A) Plywood production declined by 4.7% to 7.97 million square meters (million sqm). (B) Average capacity utilisations were at 98%. Sales volumes registered a growth of 4.9% to 12.55 million sqm. (C) Average net realisation of Plywood improved by 6.1% to Rs 242 per sqm. (D) EBITDA Margin decreased to 8.6% from 10.5% corresponding previous quarter.

For FY 2015- (A) Plywood production declined by 4.6% to 33.08 million sqm. (B) Average capacity utilisations were at 102%. Sales volumes grew by 3.6% to 46.11 million sqm. (C) Average net realisation of Plywood improved by 8.6% to Rs 241 per sqm. (D) EBITDA Margin decreased to 9.1% from 10.3% corresponding previous quarter.

• Medium Density Fibreboards (MDF):

For Q4FY15- (A) MDF production grew sharply 50.7% to 48563 Cubic Meters (CBM). Sales volumes rose by 41.2% to 49028 CBM. (B) Average Capacity Utilisation was 108% compared to 72%. (C) Average realisations of MDF reduced by 7.8% to Rs 24081 per CBM. (D) EBITDA Margin rose by 140 basis points at 22.7%.

For FY15- (A) MDF production grew 17.9% to 161229 CBM. Sales volumes rose 17% to 161424 CBM. (B) Average Capacity Utilisation was 90% compared to 76%. (C) Average realisations of MDF reduced by 1.2% to Rs 25238 per CBM. (D) EBITDA Margin rose by 170 basis points at 22.7%.

Financial performance

• The Company revenues were up 14% YoY to Rs. 428.42 crore in Q4FY15. Plywood division recorded a growth of 8.35% to Rs. 310.23 crore and accounted for 72% of total revenues. MDF division recorded a growth of 30% to Rs. 118.37 crore and accounted for 28% of total revenues. Gross margins expanded to 41.2% from 38.7% in Q4FY14, led by better product mix. EBITDA margin was down to 9.9% from 11% over a year due to rise in logistic cost to sales at 6.1% in Q4FY15 as compared to 5.5% in Q4FY14. EBITDA was up 8% to Rs. 53.52 crore. PAT was up 102% to Rs. 45.56 crore.

• For FY 2015- Revenues were up 12% YoY to Rs. 1560.58 crore. Plywood division recorded a growth of 11.04% to Rs. 1152.33 crore and accounted for 74% of total revenues. MDF division recorded a growth of 15.8% to Rs. 408.78 crore and accounted for 26% of total revenues. Gross margins expanded 140 bps YoY to 41.7%, led by better product mix. EBITDA margin was down 30 bps YoY to 12.9% due to rise in staff cost to sales at 9.3% in FY15 as compared to 8.69% in FY14 and Ad expenditure to sales at 2.8% in FY15 as compared to 1.9% in FY14. EBITDA was up 9% to Rs. 200.64 crore. PAT was up 58% to Rs. 121.82 crore.

• Working capital cycle improved by 4 days YoY to 52 days in FY15, led by better inventory and debtor management.

• Net debt to equity at 0.7x as on March 2015 as compared to 1.0x as on March 2014.

Demerger of Decorative Business

• The Company has demerged the decorative business (comprising of laminates and allied products and accounting for 37.2% of FY14 consolidated sales) of the company with all its assets and liabilities into Greenlam Industries. Record date for the demerger was 27 November 2014; Greenply Industries stock traded as a demerged entity from 26 November 2014. Greenlam Industries has issued and allotted to the share holders of Greenply Industries on equity share of Rs.5 each in Greenlam Industries for every one equity share of Rs.5 each held by them in Greenply Industries. Mr. Sarah Mittal, Joint Managing Director & CEO resigned from the Company with effect from the close of the working hours of November 10, 2014, to take up assignment in Greenlam Industries.

Rationale for Demerger

• Different product characteristics-The wood based products (plywood and made) form the backbone materials for furniture. The decorative products (laminates and decorative veneers) are surfacing materials

• Separate marketing reach-Both businesses require different sets of dealers, distributors and intermediaries. Plywood and MDF are sold primarily in the domestic market. Laminates are sold both in domestic as well as international markets.

• Dedicated management focus-Dedicated management focus and resource allocation in line with respective market trends to enable diversification and expansion into newer product portfolios for faster growth.

• Better cash management / utilization-Two separate companies will have independent cash flows and strengthen the prospects of each of the businesses towards mobilising funds to service their respective growth plans

• The Company expects rising residential/commercial construction, increasing urbanization, high disposable incomes and Government Announcement regarding construction of 100 smart cities will be key industry driver going forward.

• With Plywood industry size of around Rs 160 billion and MDF industry size of around Rs 18 billion, the Company expects rollout of GST helps the industry to facilitate faster shift from unorganised to organised players.

• The company plans to increase the number of distributors and retailers going forward. Presently, the company has around 1100 plywood and 450 MDF distributors/stockist and 6000 plywood and 4000 MDF retailers. Also, serviced by 33 branches for ply and 12 branches for MDF pan-India.

• The company plans to continue investments in advertisement and promotional spends to increase brand visibility pan-India, with higher Ad spends at around 3% of net sales.

• On expansion plans- The Company plans to optimise utilisation of plywood plants in existing facilities and increase outsourcing proportion to 30% from 20% presently over the next 3 years. Also, with plans to setting up new MDF plant in Andhra Pradesh over FY16-19 to cater to future demand.

• The company plans to upgrade IT infrastructure through implementing SAP Hana to strengthen overall supply chain.

• The company expects a 10-12% growth in FY16 trough volume utilization and better product mix realisation. Margins expected to improve by 50-70 bps in FY16 driven by better product mix and cost control.