Greenlam Industries Ltd Management Discussions

Global Economy

Overview: Global economic growth declined from 3.5% in 2022 to an estimated 3.1% in 2023. A disproportionate share of global growth in 2023- 24 is expected to come from Asia, despite the weaker-than-expected recovery in China, sustained weakness in USA, higher energy costs in Europe, weak global consumer sentiment on account of the Ukraine-Russia war, and the Red Sea crisis resulting in higher logistics costs. A tightening monetary policy translated into increased policy rates and interest rates for new loans.

Growth in advanced economies is expected to slow from 2.6% in 2022 to 1.5% in 2023 and 1.4% in 2024 as policy tightening takes effect. Emerging market and developing economies are projected to report a modest growth decline from 4.1% in 2022 to 4.0% in 2023 and 2024. Global inflation is expected to decline steadily from 8.7% in 2022 to 6.9% in 2023 and 5.8% in 2024, due to a tighter monetary policy aided by relatively lower international commodity prices. Core inflation decline is expected to be more gradual; inflation is not expected to return to target until 2025 in most cases. Interest rate hike by The US Federal Reserve took the benchmark borrowing costs to their highest in more than 22 years.

Regional growth (%)	2023	2022
World output	3.1	3.5
Advanced economies	1.69	2.5
Emerging and developing economies	4.1	3.8

(Source: UNCTAD, IMF)

Performance of Major Economies, 2023 United States: Reported GDP growth of 2.5% in 2023 compared to 1.9% in 2022

China: GDP growth was 5.2% in 2023 compared to 3% in 2022

United Kingdom: GDP grew by 0.4% in 2023 compared to 4.3% in 2022

Japan: GDP grew 1.9% in 2023 unchanged from a preliminary 1.9% in 2022

Germany: GDP contracted by 0.3% in 2023 compared to 1.8% in 2022

(Source: PWC report, EY report, IMF data, OECD data, Livemint)

Outlook: Asia is expected to continue to account for the bulk of global growth in 2024-25. Inflation is expected to ease gradually as cost pressures moderate; headline inflation in G20 countries isexpected to decline. The global economy has demonstrated resilience amid high inflation and monetary tightening, growth around previous levels for the next two years (Source: World Bank).

Indian Economy

Overview: The Indian economy was estimated to grow 7.8% in the 2023-24 fiscal against 7.2% in 2022- 23 mainly on account of the improved performance in the mining and quarrying, manufacturing and certain segments of the services sector. India retained its position as the fifth largest economy. The Indian rupee displayed relative resilience compared to the previous year; the rupee opened at Rs 82.66 against the US dollar on the first trading day of 2023 and on December 23 was Rs 83.35 versus the greenback, a depreciation of 0.8%.

In FY 2023-24, the CPI inflation averaged 5.4% with rural inflation exceeding urban inflation. Lower production and erratic weather led to a spike in food inflation. In contrast, core inflation averaged at 4.5 percent, a sharp decline from 6.2%in FY 23. The softening of global commodity prices led to a moderation in core inflation.

The nations foreign exchange reserves achieved a historic milestone, reaching $645.6 billion. The credit quality of Indian companies remained strong between October 2023 and March 2024 following deleveraged Balance Sheets, sustained domestic demand and government-led capital expenditure. Rating upgrades continued to surpass rating downgrades in H2 FY24.

Growth of the Indian economy

	FY 21 FY 22	FY23	FY24E
Real GDP growth (%)	-6.6 8.7	7.2	7.8

E: Estimated

Growth of the Indian economy quarter by quarter, FY 2023-24

	Q1FY24	Q2FY24	Q3FY24	Q4FY24
Real GDP growth (%)	8.2	8.1	8.4	8.2

(Source: Budget FY24; Economy Projections, RBI projections, Deccan Herald)

The FY 24 growth in the economy was the highest since FY17, excluding the 9.7% post- Covid rebound in gross domestic product (GDP) in FY22 from the 5.8% contraction in FY21.

As per the first advance estimates of national income released by the National Statistical Office (NSO), the manufacturing sector output was estimated to grow 6.5% in 2023-24 compared to 1.3% in 2022-23. The

Indian mining sector growth was estimated at 8.1% in 2023-24 compared to 4.1% in 2022-23. Financial services, real estate and professional services were estimated to record a growth of 8.9% in 2023-24 compared to 7.1% in FY 2022-23.

Real GDP or GDP at constant prices in 2023-24 was estimated at Rs 171.79 lakh crore as against the provisional GDP estimate of 2022-23 of Rs 160.06 lakh crore (released on 31^st May 2023). Growth in real GDP during 2023-24 was estimated at 7.3% compared to 7.2% in 2022-23. Nominal GDP or GDP at current prices in 2023-24 was estimated at Rs 296.58 lakh crore against the provisional 2022-23 GDP estimate of Rs 272.41 lakh crore. The gross non-performing asset ratio for scheduled commercial banks dropped to 3.2% as of September 2023, following a decline from 3.9% at the end of March 2023.

Indias exports of goods and services were expected touch $900 billion in 2023-24 compared to $770 billion in the previous year despite global headwinds. Merchandise exports were expected to expand between $495 billion and $500 billion, while services exports were expected to touch $400 billion during the year. Indias net direct tax collection increased 19% to Rs. 14.71 lakh crore by January 2024. The gross collection was 24.58% higher than the gross collection for the corresponding period of the previous year. Gross GST collection of Rs 20.2 lakh crore represented a 11.7% increase; average monthly collection was Rs 1,68,000 crore, surpassing the previous years average of Rs 1,50,000 crore.

The agriculture sector was expected to see a growth of 1.8% in 2023-24, lower than the 4% expansion recorded in 2022-23. Trade, hotel, transport, communication and services related to broadcasting segment are estimated to grow at 6.3% in 2023- 24, a contraction from 14% in 2022-23. The Indian automobile segment was expected to close FY 2023- 24 with a growth of 6-9%, despite global supply chain disruptions and rising ownership costs.

The construction sector was expected to grow 10.7% year-on-year from 10% in 2022-23. Public administration, defence and other services were estimated to grow by 7.7% in FY2023-24 compared to 7.2% in FY2022-23. The growth in gross value added (GVA) at basic prices was pegged at 6.9%, down from 7% in 2022-23.

India reached a pivotal phase in its S-curve, characterized by acceleration in urbanization, industrialization, household incomes and energy consumption. India emerged as the fifth largest economy with a GDP of US$3.6 trillion and nominal per capita income of INR 123,945 in 2023-24.

Indias Nifty 50 index grew 30% in FY2023-24 and Indias stock market emerged as the worlds fourth largest with a market capitalization of US$4 trillion. Foreign investment in Indian government bonds jumped in the last three months of 2023. India was ranked 63 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. Indias unemployment declined to a low of 3.2% in 2023 from 6.1% in 2018.

Outlook: India withstood global headwinds in 2023 and is likely to remain the worlds fastest-growing major economy on the back of growing demand, moderate inflation, stable interest rates and robust foreign exchange reserves. The Indian economy is anticipated to surpass USD 4 trillion in 2024-25.

Union Budget FY 2024-25: The Interim Union

Budget 2024-25 retained its focus on capital expenditure spending, comprising investments in infrastructure, solar energy, tourism, medical ecosystem and technology. In 2024-25, the top 13 ministries in terms of allocations accounted for 54% of the estimated total expenditure. Of these, the Ministry of Defence reported the highest allocation at Rs 6,21,541 crore, accounting for 13% of the total budgeted expenditure of the central government. Other ministries with high allocation included Road transport and highways (5.8%), Railways (5.4%) and Consumer Affairs, food and public distribution (4.5%).

(Source: Times News Network, Economic Times, Business Standard, Times of India)

Global Furniture Market

The worldwide furniture market, estimated at $541.52 billion in 2023, is expected to reach $780.43 billion by 2030, with a compounded annual growth rate (CAGR) of 5.36%. This upward trajectory is propelled by various factors including urbanization, population expansion, rising disposable incomes and evolving lifestyle preferences across the globe. With urbanization surging, particularly in emerging markets, there is a heightened demand for furniture both in residential and commercial settings such as apartments, offices, hotels, and restaurants. The real estate sectors expansion and the growing inclination towards home renovation and interior design is expected to act as a demand driver.

A significant trend reshaping the global furniture industry is the increasing emphasis on eco- friendliness and sustainability. Heightened consumer awareness of environmental issues and concerns regarding the ecological impact of furniture production have spurred a growing interest in eco- friendly manufacturing methods and furniture crafted from sustainable materials such as bamboo, recycled materials and wood.

In the global home furniture market, there has been a surge in demand for environmentally conscious and sustainable furniture, highlighting a preference for ethically sourced materials and production methods that reduce environmental harm. Technological advancements have also influenced the industry, driving consumer interest in smart furniture and innovative materials.

For global office furniture market, the Asia Pacific region is expected to command the largest market share, driven by the proliferation of business zones and IT parks, which fuel the need for office furniture. There is a growing emphasis on aesthetically pleasing and eco-friendly office furniture, which is positively impacting the market. The increase in new office constructions and expansions of IT parks and commercial areas are significant drivers of global office furniture demand. Renovation and modification activities are also gaining traction in countries like the United States, China and India fostering market growth. Favorable trade dynamics and government initiatives, such as relaxed FDI regulations and trade regulations in Asia and the Middle East, have led to the emergence of multinational corporations, global technology hubs and business parks, boosting revenue transactions in the market.

(Source: Fortune Business Heights, Mordor

Intelligence, Exactitude, IMARC Group)

Indian Furniture Market

India holds only a 5% share of the global market which is expected to witness much growth in the near future. International enterprises are actively implementing the China plus one policy, seeking alternative manufacturing bases outside of China. Both governmental and industrial authorities express optimism regarding Indias potential, citing its skilled workforce and port accessibility as key advantages. Domestic demand is on the rise, spurred by the expansion of IT and other sectors into smaller towns.

Indias furniture industry is renowned for its rich heritage of distinctive designs and traditional craftsmanship, transitioning from basic furniture to a wide array of interior furnishings such as wardrobes and sofas. The sectors growth is propelled by factors like a burgeoning middle-class population, rising disposable incomes and urbanization. Although previously dominated by small, local firms, organized players have emerged as significant contributors. Market expansion is also fuelled by the booming residential real estate sector, with a surge in demand for furniture in luxury housing complexes. The growth of the tourism and hospitality industry has led to increased demand for hotel accommodations and consequently, hotel furniture. (Source: Barchart. com, Times of India, ibef.org, Statista, The Hindu Businessline, Times of India)

Global Laminates Market

The global decorative laminates market size was estimated at USD 8.47 billion in 2023 and is projected to grow at a CAGR of 2.9% from 2024 to 2030. This industry is expected to witness rapid growth due to increasing middle-income population and increased disposable income in developing countries in around the world.

Decorative high-pressure laminates offer exceptional resistance to oil, liquid stains, and heat, along with high durability, scratch resistance, and cost- effectiveness. They find applications in manufacturing furniture for home decor, including sofas, beds, and tables. Moreover, they are utilized in wall shelves across bathrooms, kitchens, and studies, as well as in modular cabinets and ready-to-assemble (RTA) furniture. These laminates are also employed for wall highlighting and ceiling coverings, further enhancing their versatility.

The global market for decorative laminates is expected to witness positive growth, driven by factors such as increasing consumer purchasing power and preferences for aesthetically pleasing home furnishings. The rising demand for commercial spaces, fueled by the growth of service sectors like IT, BFSI, and telecom, is propelling the construction industry forward, consequently boosting the decorative laminates market. Therefore, the combined benefits of high-pressure laminate properties and the expanding construction sector, coupled with growing purchasing power, are anticipated to drive the demand for decorative laminates and foster global market growth in the coming years.

(Source: imarcgroup.com, grandreviewresearch)

Global Veneers Market

Veneer sheets serve as a popular finishing material for door, cabinets, walls, and ceilings, offering an aesthetically pleasing touch. The global veneer was valued at USD 68 billion in 2020 and is expected to grow to USD 84 billion by 2032 at CAGR 1.8% during the period of 2020-32.

The construction industrys increasing demand is driving the popularity of veneer sheets, extensively utilized in paneling and cladding, adding aesthetic value and a natural appearance to structures. With rising population and urbanization, the construction industry is expected to witness much traction which, in turn, will drive the demand for veneers.

The veneer sheet market is experiencing steady growth, driven by their increasing use to enhance the aesthetic appeal of woodworks. This trend is expected to persist due to the easy availability of veneer resources.

Veneer sheets offer smooth finishing, durability, and attractive wood grain, making them popular in the construction industry for building cabinets, paneling, and musical instruments, among other uses. These features are driving strong market growth, which is expected to continue in the coming years.

(Source: Future Market Insights)

Global Engineered Wooden Flooring Market

The global engineered wooden flooring market size was estimated to be worth USD 78 billion in 2022 and is expected to grow to USD 103 billion by 2028 with a CAGR of 4.9%from 2022-28. This growth is driven by large collection, dimensional stability, polished and attractive appearance, installation as per stringent standards, ability to withstand high volumes of foot traffic in various settings.

The engineered wooden flooring market is witnessing strong growth due to various factors fueling demand in the construction and interior design industries. Urbanization and a growing emphasis on contemporary, sustainable construction methods have driven the need for engineered wooden flooring. This flooring option provides heightened stability rendering it suitable for diverse settings, including residential and commercial spaces. Furthermore, advancements in manufacturing techniques have resulted in engineered wood flooring with enhanced features and simplified maintenance. (Source: Business Research Insights)

Global Engineered Wooden Doors Market

Engineered doors are gaining popularity worldwide due to their ability to be mass-produced with factory finishes quickly and efficiently. Furthermore, their off-site fabrication and precise machining to specific requirements add to their appeal. The growing use of engineered wood in door manufacturing is enhancing accessibility to home affordability, as well as facilitating reconstruction, renovation, and remodeling of older buildings. Globally, the demand for doors is fueled by urbanization and infrastructure development, spanning residential, commercial, and industrial sectors, offering lucrative prospects. Moreover, the emphasis on energy efficiency and sustainability is driving the adoption of eco-friendly doors, spurred by environmental consciousness and the promise of long-term cost savings, thus fostering further market growth. (Source: Coherentmarketinsights.in, globalnewswire, Business Research Insights)

Global Plywood Market

The global plywood market, valued at US$ 48.0 billion in 2023, is expected to grow to US$ 73.3 billion by 2032, with an anticipated compound annual growth rate (CAGR) of 4.7% from 2024 to 2032. This growth is driven by factors such as increasing urbanization and a rising number of residential and commercial construction projects worldwide. Plywoods versatility, offering enhanced stability, high strength and improved impact resistance, makes it a preferred material in furniture manufacturing and construction.

Demand for plywood is particularly strong in residential and commercial spaces, where it is used for cupboards, ceiling treatments, decorative beams, distinctive wall features and other furnitures. Rising living standards and increasing income levels globally are fueling the demand for aesthetically pleasing and durable furniture, further boosting the plywood market. Additionally, plywoods resistance to occasional seawater exposure has increased its use in the marine industry.

The market is highly competitive and fragmented, with numerous small, medium and large players. This competitive landscape is characterized by low product differentiation and low switching costs, though high economies of scale present a moderate barrier to new entrants.

Emerging trends in the plywood market include a growing emphasis on eco-friendly products that reduce carbon emissions, reflecting a favorable market outlook. The demand for cost-efficient, durable, smooth, and flexible materials is rising, driven by technological advancements that enhance plywoods properties. These innovations are crucial for applications in concrete shuttering, doors, stairs, seating, framing, and various interior fixtures. Moreover, the increasing use of plywood-based products, such as desks, almirahs, and cabinets in offices and commercial areas, supports market growth. These factors indicate a robust expansion of the plywood market in the coming future. (Source: IMARC).

Indian Market Overview Laminates

The Indian decorative laminates market stood at Rs. 12,200 crore and is growing attractively, This growth is being driven by factors such as rising living standards and increased consumer expenditure on home decor items. The India home decor market was estimated USD 33.45 Bn in 2023 and is expected to reach USD 40.98 Bn by 2028, growing at a CAGR of 4.14% from 2023-28. There is a growing preference for contemporary home furnishing designs, leading to heightened popularity of furniture and cabinets. The rapid expansion of commercial infrastructure in India is driving higher demand for decorative interior products like laminates, seen in various facilities such as gymnasiums, convention centers, indoor sports clubs and auditoriums.

Decorative veneers

The steady rise in decorative veneer demand is attributed to its capacity to enhance the aesthetic appeal of residential interiors, attracting those in search of stylish and refined home environments. Particularly within the residential segment, there is a noticeable surge in demand for decorative veneers, notably for applications such as wall paneling, ceilings, furniture, and staircases, as homeowners seek sophistication and uniqueness in their living spaces. Furthermore, commercial spaces, including retail fixtures and architectural artworks, as well as the dynamic hospitality and tourism sector, are embracing decorative veneers for their inherent elegance. The ability to craft bespoke designs with decorative veneers aligns with the trend of personalized and distinctive interiors across residential, commercial, and hospitality sectors.

(Source: futuremarketinsights.com)

Floors

The Indian wood flooring market is expected to witness significant growth, driven by the rapidly expanding construction industry across the country, which increases flooring opportunities. Government initiatives to promote tourism are boosting the hospitality industry, leading to the construction of hotels and premium accommodations such as villas and resorts. Additionally, the entertainment sector is experiencing growth due to rapid population increase and urbanization, which supports the expansion of shopping malls, family entertainment centers and other related facilities.

Doors

The demand for engineered wooden doors is on the rise, fueled by its increasing popularity as cost- effective alternative to hardwood options coupled with durability and low maintenance requirements. Apart from this, macroeconomic factors such as the expanding population and the increasing need for housing are expected to further drive the demand for wooden doors. In the Indian wooden doors segment, factors like ease of installation, long-lasting shine and durability and aesthetic appeal make them highly suitable for the hospitality industry.

(Source: Mordor Intelligence, Grandview Research)

Indian Plywood Market

The Indian plywood market is estimated to be valued INR 30,000 crore approx and is growing attractively. The key drivers of this growth include expanding distribution networks, and the proliferation of exclusive outlets by premium furniture manufacturers. The adoption of advanced production methods has led to the creation of innovative plywood types, such as flexible plywood, further boosting market expansion. The rising use of plywood in partitions and false ceilings in residential and office spaces offers a positive market outlook. Additionally, the market is benefiting from the growing use of plywood in lightweight and easy-to-assemble furniture. Government housing schemes and rapid urbanization are further propelling market growth. Moreover, the increasing preference for unique interior design elements, driven by renovation and infrastructure development activities is enhancing demand in the Indian market.

(Source: Blueweave Consulting)

Growth drivers

Rising population: In April 2023, India has overtaken China as the worlds most populous country with a population of 1.4286 billion. This is expected to lead to a greater demand in the construction industry for the building of homes and public infrastructure.

Urbanisation: As of 2020, around one-third of Indias population was likely living in cities. By 2031, 75% of Indias national income is expected to come from cities.

Growing middle class income: India is expected to form 23% of the global middle class, leading to an increase in households earning between USD10,000 and USD50,000 per year, expanding the wallet share for spending on home or office interiors

Demographic dividend: In 2022, the average age of an Indian was 28.7 years. More than half of Indias population is under 25 years of age, fostering demand for furniture

Rise of Indian consumerism: Indian consumer market is set to become the worlds third largest by 2027 due to 29% growth in real household spending.

Rise in demand for houses: The Indian real estate market is expected to reach a value of US$ 1 trillion by 2030. This will, in turn, drive the demand for Indian furniture.

Medical tourism: The medical tourism sector is predicted to increase at a CAGR of 21.1% from 2020- 27 with a greater number of people coming into India from foreign places to avail treatment of major diseases at a reasonable cost.

Hospitality sector demand: The travel market in India is projected to reach US$ 125 billion by FY27 from an estimated US$ 75 billion in FY20. International tourist arrivals are expected to reach 30.5 million by 2028.

Traction in commercial space: Over 60 million square feet of office space will be occupied in both metro and non-metro cities in 2023 with top occupants being consulting, e-commerce, business process management and IT.

(Source: Population U, Business Standard, Indian Retailer, Statista, India.com, Business Today.in)

Company Overview

Greenlam Industries Limited is a leading provider of interior solution products, renowned as the largest laminate producer in Asia and one of the top three globally. It is Indias foremost decorative veneer brand. Moreover, it holds the distinction of being the exclusive manufacturer of engineered wooden flooring and the pioneering organized producer of engineered wooden doors in India.

With an annual production capacity of 21.02 million sheets for laminates (24.52 million sheets at group level), 4.2 million square meters for decorative veneers, 1.0 million square meters for engineered wooden flooring, 18.9 million square meters for plywood and 0.12 million units of doors and frames, the company operates state-of-the-art manufacturing facilities located in Behror, Rajasthan, Nalagarh, Himachal Pradesh, Tindivanam, Tamil Nadu, and Prantij, Gujarat. Greenlams diverse range of products not only enhances spaces but also elevates lifestyles.

Laminates & Allied Business

Manufacturing facilities: Behror, Rajasthan, Nalagarh, Himachal Pradesh and Prantij, Gujarat

Installed capacity: 21.02 million sheets per annum. Leading brands: Greenlam, New Mika, Greenlam Clads and Greenlam Sturdo.

Production during FY2023-24: 19.32 million sheets Production growth over FY2022-23: 11.0%

Capacity utilisation: 93.0%

Sales volume, FY2023-24: 18.75 million sheets Sales volume growth over FY2022-23: 10.1% Revenues, FY2023-24: Rs.1857.08 crore Segment contribution to total revenues, FY2023-24: 87.5%

Revenue growth, FY2023-24: 10.7%

9.000 h cr, total size of the domestic market in India 3,200 h cr, total exports from India

3.000 h cr, share of the unorganized market in India

6.000 h cr, share of the organized market in India

Overview

Greenlam retained its position as the leading brand in the decorative laminates segment, recognised for its ability to bring a variety of best laminates to the market.

Outlook

The Company plans to strengthen relationships with trade influencers such as architects, interior designers, contractors, carpenters as well as OEMs and project segment and also to increase the percentage of premium laminates in its product portfolio, improve its visibility on social media platforms and enhance trade confidence through the use of QR codes on its products.

Decorative Veneers Business

Manufacturing facilities: Behror, Rajasthan

Installed capacity: 4.20 million square meters per annum

Brand: decowood

Production during FY2023-24: 1.42 million square meters

Production growth over FY2022-23: 14.4%

Capacity utilisation: 33.0%

Sales Volume, FY2023-24: 1.40 million square meters

Sales volume growth over FY2022-23: 15.3%

Revenues, FY2023-24: Rs. 125.50 crore

Segment contribution to total revenues, FY2023-24: 5.9%

Revenue growth, FY2023-24: 17.6%

Overview

Greenlam retained its position as the leading manufacturer of veneer in India with an installed capacity of 4.20 million square meters per annum. The market is being propelled by two main factors, namely the growth in affluence and income levels. Additionally, there is an increase in demand from the residential and hospitality segments, which is providing a further boost to this sector.

Outlook

By utilizing its extensive product range, the Company is expecting to enhance its phygital (physical and digital) engagement and expand product access and demand. The Company has plans to grow its veneers business through retail and brand outreach programs, with the goal of achieving attractive growth in this segment.

Engineered Wooden Floors Business

Manufacturing facilities: Behror, Rajasthan

Installed capacity: 1.00 million square meters per annum Brand: Mikasa

Production during FY2023-24: 0.12 million square meters

Production growth over FY2023-24: 18.1%

Capacity utilisation: 12.0%

Sales Volume, FY2023-24: 0.13 million square meters Sales volume growth over FY2022-23: 13.3% Revenues, FY2023-24: Rs. 50.98 crore Segment contribution to total revenues, FY2023-24: 2.4%

Revenue growth, FY2023-24: 20.4%

Overview

Engineered wooden floors offer several advantages such as a premium aesthetic appeal and easy installation. Greenlam is the sole manufacturer of this product in India, with a manufacturing capacity of

1.00 million square meters per annum.

The Companys products are designed to withstand the typical climatic changes in the country. The Companys Mikasa brand provides customers with a unique selling proposition, a wide range of products, support with installation and warranties of up to 30 years, thereby offering peace of mind to consumers.

Outlook

Anticipated substantial growth in the Indian wooden flooring market is propelled by the burgeoning hospitality sector within the country. Greenlam aims to unveil new products and collections, prioritizing consistent communication regarding its offerings.

Engineered Wooden Doors Business

Manufacturing facilities: Behror, Rajasthan Installed capacity: 0.12 million doors per annum Brand: Mikasa

Production during FY2023-24: 18,823 units Production growth over FY2022-23: 2.4%

Capacity utilisation: 16.0%

Sales Volume, FY2023-24: 19,761 units

Sales volume growth over FY2022-23: 16.8%

Revenues, FY2023-24: Rs. 32.02 crore

Segment contribution to total revenues, FY2023-24:

1.5%

Revenue growth, FY2023-24: 32.0%

Overview

The Indian doors segment is witnessing remarkable expansion, fueled by factors like escalating urbanization and the rise in middle-class incomes. In a market traditionally dominated by conventional flush doors, Greenlam has introduced a groundbreaking concept with its Mikasa doors and frames. These upgraded versions of traditional carpentry boast superior quality. Moreover, they are supplied as ready-to-install integrated sets, offering customers a convenient and efficient solution.

Outlook

The momentum in the real estate sector is anticipated to amplify the demand for this segment.

Plywood

Manufacturing facilities: Tindivanam, Tamil Nadu Installed capacity: 18.9 million square meters plywood per annum Brand: MikasaPly

Production during FY2023-24: 2.56 million square meters

Capacity utilisation: 14.0%

Sales Volume, FY2023-24: 2.43 million square meters Revenues, FY2023-24: Rs. 57.92 crore Segment contribution to total revenues, FY2023-24: 2.7%

Overview

Greenlam entered the Indian plywood market in June 2023 with the launch of the MikasaPly brand. This market is largely dominated by the unorganized sector, which is characterized by inconsistent quality, poor infrastructure, unhygienic working conditions, regulatory challenges, and a lack of warranties.

Outlook

The company aims to expand its footprint and establish itself as one of the top three national plywood brands by enhancing its market presence across India.

Financial overview

Revenue from operations of the Company grew 14.7% from Rs. 1851.1 crore in FY 2022-23 to Rs. 2,123.5 crore in FY 2023-24. The EBITDA margin of the Company improved 200 basis point from 10.5% in FY2022-23 to 12.5% in FY2023-24.

Key ratios

Particulars	FY 2023-24	FY 2022-23
Gross Debt-equity ratio	0.40	0.44
Net Debt equity ratio	0.24	0.19
Return on net worth (%)	13.9	13.1
Book value per share (Rs.)	82.02	72.51
Debtors Turnover (days)	26	25
Inventory turnover (days)	82	89
Interest C overage Ratio	8.92	10.22
Current Ratio	1.24	1.5 7
Operating Profit Margin (%)	12.5	10.5
Net Profit Margin (%)	6.9	6.5

Note:

1. Increase in Net Debt-equity ratio was largely due to decrease in cash and cash equivalent which was deployed in the capex/projects.

2. Return on net worth was increased in line with the increase in net profit adjusted for dividend payment during the year.

Risks and Concerns

Competition risk: Rising competition poses a potential threat to the Companys market share.

Mitigation: Greenlam leverages its extensive distribution network and diverse product range, including laminates, veneers, engineered wooden floors, and doors, to deepen market penetration. Additionally, a focus on product quality and innovation is anticipated to drive growth throughout the market cycle.

Product risk: The risk of product obsolescence may hinder business growth, resulting in inventory excess and revenue erosion.

Mitigation: Greenlam proactively considers current and future trends in product development, prioritizing usability, quality, aesthetic appeal, and value for money. Moreover, offering a comprehensive range of products positions Greenlam as a complete home decor solution provider.

Finance risk: Inadequate debt management could jeopardize operational sustainability.

Mitigation: Greenlam maintains robust receivable and payable management practices, with cash and liquid investments totaling Rs. 165.47 crore as of March 31, 2024, ensuring optimal financial stability. The Company boasts a debt-service ratio of 1.80 and a healthy interest cover of 8.92 times.

Quality risk: Substandard products may negatively impact sales and brand reputation.

Mitigation: Greenlam operates state-of-the-art manufacturing facilities to produce high-quality products, maximizing resource utilization and minimizing wastage.

Distribution risk: Inefficient distribution networks may impede geographical expansion.

Mitigation: With a network of over 30,000 dealers, distributors, and retailers across India, Greenlam maintains a robust logistics network to address customer needs promptly. Additionally, its presence in over 120 countries worldwide enables it to serve a diverse customer base.

Technology risk: Outdated technology could hinder the Companys competitiveness.

Mitigation: Greenlam has updated IT infrastructure which include the latest edition of SAP HANA, as well as CRM and DMS systems, enhancing decision-making, efficiency, and access to real-time information.

Human Resources

Greenlam Industries Limiteds human resource strategies have solidified its position as a market leader. During the year under review, the company enhanced its Regional HR capability to increase the reach and connect with the people and People Development Strategy by establishing dedicated teams for both technical and soft skills training to focus on skill development. These teams adopted a structured, calendarized approach, ensuring the workforces continuous skill improvement. As a result, employees benefited from a comprehensive development programme addressing both technical expertise and interpersonal skills. Team has been continuously trying to create an engaged and productive workplace and also an aspirational brand to work with by continuously improving the processes and practices and making it most contemporary . As of March 31, 2024, the companys total number of payroll employees was 2623.

Opportunities

Greenlam Industries Limited is poised to capitalize on shifting consumer preferences, which increasingly prioritize superior quality over simply the lowest price. This trend is anticipated to drive consumers towards the organized sector from the unorganized one. With its steadfast dedication to quality, innovation, and customer satisfaction, Greenlam is strategically positioned to establish itself as a prominent industry leader, both domestically and globally.

Threats

Importing raw materials from neighboring countries might encounter regulatory constraints, presenting a hurdle in a highly price-competitive market. Additionally, transferring the entirety of the escalated costs to consumers may not be viable.

Internal control systems and their adequacy

The Company has strong internal control procedures in place that are commensurate with its size and operations. The Board of Directors, responsible for the internal control system, sets the guidelines and verifies its adequacy, effectiveness and application. The Companys internal control system is designed to ensure management efficiency, measurability and verifiability, reliability of accounting and management information, compliance with all applicable laws and regulations and the protection of the Companys assets. This is to timely identify and manage the Companys risks (operational, compliance-related, economic and financial).

Cautionary statement

This statement made in this section describes the Companys objectives, projections, expectation and estimations which may be forward-looking statements within the meaning of applicable securities laws and regulations.