V. Venkatramani, Chief Financial Officer (CFO), Greenply Industries Ltd. He is responsible for finance, accounting and direct taxation functions of the company. Venkatramani is a qualified chartered accountant from the Institute of Chartered Accountants of India. He has an overall experience of 22 years and has been associated with the Company since July 1, 1995. Prior to joining Greenply, he was Financial Controller of MKJ Enterprises Ltd.
Greenply Industries Ltd. is India's leading interior infrastructure company. It is a leader in plywood, laminates, decorative veneers and particle boards. Greenply's success has been spurred by the recent economic boom in India and it continues to be the brand of choice among office and home builders. Greenply is the only integrated manufacturer of plywoods, laminates, decorative veneers, particle boards and prelam particle boards/MDF. The company's popular brands include Greenply Plywood, Green Club Premium Ply, Greenlam Laminates, Green Decowood, Green Lamieboard and Ecotec. Its five modern production units are located in six states - Nagaland, West Bengal, Uttarakhand, Rajasthan, Himachal Pradesh and Gujarat. Greenlam, the flagship decorative laminate brand from Greenply is exported to more than 50 countries.
In an exclusive interaction with Hemant P. Maradia of India Infoline, Mr. Venkatramani says: "The industry is currently expanding at around 6% and is expected to grow at around 10% in the next three years."
Tell us about the recent expansion of the Laminate unit at Solan, Himachal Pradesh? What is the Laminate capacity at Solan right now? How much Laminate are you producing right now?
The Company’s existing unit at Behror, Rajasthan was operating at a capacity utilisation of more than 115%; Hence the need for expanding our laminates capacity. The location at Nalagarh, Himachal Pradesh was chosen because of its close proximity to the paper mills and key markets of Northern and Western India.
Besides, fiscal incentives in the form of Excise Exemption for 10 years and Corporate Tax deduction of 100% for the first five years and 30% for the next five years were also available for new units in that location. This unit is manufacturing laminates in different dimensions of 4.25 * 10 feet, 5 * 12 feet, 6 * 12 feet besides the traditional 4 * 8 feet. The bigger sizes are primarily targeted at the overseas markets.
The total capacity of the unit at 100% capacity utilisation for three press lines will be 3.3 million sheets. At present, all the three presses are operational. The unit operated at a capacity utilisation of 109% in Q3 FY 2010 with two press lines. The third press started production on Feb 8, 2010.
You recently did a Rights Issue cum Warrants Issue? How much money did you raise from the twin issues? What was the main purpose behind the fund raising plan? What is the promoters' stake in the company after the issue?
We have raised Rs 458.93mn. The warrants will be due for conversion before the expiry of 18 months from the date of allotment i.e., October 16, 2009. At the floor price of Rs 90 we can raise Rs183.57mn from the warrants. The purpose of the issue was to fund the new MDF and Laminate projects. Post the issue the promoters’ stake stands at 55%.
Will you need more money to drive future growth?
We do not have any fund raising plans at the moment.
Give us a sense of what kind of potential this industry holds in India? What is the size of this industry? What rate are the various industry segments growing annually at the moment?
The industry is currently expanding at around 6% and is expected to grow at around 10% over the next three years. The total industry size is approx. Rs 130bn. Of this, Plywood & Decorative Veneers comprise Rs78bn, Laminates Rs30bn and Particle Board and MDF together constitute Rs22bn. The Particle Board and MDF segment is growing at around 25%.
What is the roadmap over the next five years for Greenply Industries?
The Company expects to grow its top line by 18-20% over the next three years. We have also decided to expand out Nalagarh Laminate facility by setting up a fourth press, which will be operational on or before March 31, 2010.
Currently, the company does not have any other expansion plans. It will consolidate its position in the industry by increasing its market share to around 35% in the organised segment for both the product verticals.
Which are the consumer industries that will drive demand for your products? Would you like to add any new segment or category?
Both, the residential and the commercial sectors are expected to drive the demand for the company’s products. Currently, we do not have any plans to enter into any new segment or category.
Tell us about your plans for various product categories? What kind of demand do you see for these product categories?
Greenply is focused on growth in all the product categories where it is present. We plan to increase our market share in all categories by constant innovations, increasing the range of our products and designs, presence in different price points and through superior customer service.
We also have multi-media advertising campaigns to maintain the brand pull. We have also set up an Architect Leadership Council for the select and exclusive set of Business Leaders from the domain of Architecture. We also send regular updates to Interior Designers, Architects and Contractors to update them on new designs and finishes of Laminates and Decorative Veneers. We are currently in the process of building our marketing team and distributor/dealer network for marketing of MDF.
We see increased and sustained demand for all our product categories with the strong growth expected in both the residential and commercial sectors over the next five years. We also see strong demand for our MDF which will be a superior quality product as compared to those available currently, both imported and domestic.
How do you keep pace with changing consumer trends? What are the latest trends in the interior design space?
Ans. We take part in International Furniture Fairs; our teams visit the international design houses and suppliers. International suppliers give preference to us whenever they launch new collection of designs and finishes of papers and veneers by virtue of our status of being the largest purchaser of design papers and veneers in India.
Which markets or regions are you bullish on (Metros, Tier I, II or III)? How strong is your distribution network? What is your marketing strategy?
We see strong demand in small urban Tier II and III towns and cities, besides Metros and Tier I cities. We have a strong network of over 12,000 distributors, dealers, sub-dealers and retailers. We are working on ways and means to increase this network substantially over the next 2-3 years.
Our marketing strategy will be to increase our market share in both our product segments to around 35% in the organised segment of the industry. We have set up a Greenply Esplanade at our Behror factory where our entire range of Laminates and Veneers is showcased for the architects, interior designers and contractors.
Besides, we have set up Green Design Studios in Bangalore, Delhi NCR, Kolkata, Ludhiana, Gangtok and Bhopal. These are exclusive brand shops for a large display of Laminates and Decorative Veneers, showcased for customers to feel and experience the entire range of products.
We are planning to have around 25 studios like this across India. The company has also launched various attractive schemes for architects, interior designers and carpenters to increase the demand for its products.
What are your plans for the overseas markets? Which geographies are you targeting for expanding your global footprint? What is the share of exports out of the total revenues?
"Greenlam" is already an established brand in the international markets. We have distributors in ASEAN, Middle East, Russia, CIS countries, UK, Australia and New Zealand. We have representative offices in Indonesia, Hong Kong, Thailand and Dubai to promote the brand and strengthen the marketing network. We have subsidiaries in Singapore and the USA to market our laminates in those countries/regions. During the current year we have opened a branch office in Rotterdam (Netherlands, Europe) to promote and market our laminates in Europe.
Greenlam is available internationally in more than 50 countries, which we plan to take to 100 countries by end of FY2011. Currently, we are focused on the South-East Asia, Far East, North America, South America and European markets. The share of exports was 11.05% and 13.10% of the net revenues for the current nine months and quarter ended December 31, 2009, respectively.
How do you tackle the threat from the unorganised players?
The Company is present in the premium and mid-segments of the Plywood and Laminates industry. It does not have a presence in the lower segment dominated by the unorganized players. The company tackles competition from the unorganized players in the mid-segment by supplying superior, eco-friendly products backed by the Greenply assurance of quality and service.
What is the debt equity ratio? What is the plan to reduce the same in future?
The debt equity ratio of the company was 1.39:1 as on December 31, 2009. While this is expected to increase in the short term, the company is confident of reducing it to 1:1 by March 31, 2012 through the proposed warrants conversion and internal accruals.
How much carbon credits have you received so far? What is the expectation going forward? Will you be registering more projects for carbon credit benefits with the UNFCCC?
We are eligible for 17,475 CER’S for our Behror unit. The company will also be submitting an application to UNFCCC for Carbon Credits in respect of its MDF unit at Uttarakhand.
Are you open to inorganic growth or acquisitions?
We are open to both organic and inorganic growth. Will look for opportunities in future, but we do not have anything concrete at this point of time.
What is your message to the shareholders of the company?
The Company will strive for sustainable growth for the benefit of all its stakeholders namely our shareholders, customers, vendors and employees. We are committed to manufacture eco-friendly products as well as to manufacture our products in an eco-friendly environment.