Greenlam Industries Ltd Management Discussions.

Global economic review

The global economy grew 2.9% in 2019 compared to 3.6% in 2018 as the result of an increase in trade disputes globally and slowdown of the manufacturing sector, coupled with a global financial crisis and Brexit. Global trade grew a mere 1.2% in 2019 due to trade tensions and slower economic growth.

Global economic growth over five years (%)

World output Advanced economies Developing and emerging
2015 3.5 2.3 4.3
2016 3.4 1.7 4.6
2017 3.9 2.5 4.8
2018 3.6 2.2 4.5
2019 2.9 1.7 3.7

(Source: IMF)

Indian economic review

The Indian economy slowed to 4.2% in FY2019-20, compared to 6.1% in FY2018-19. In FY2019-20, GDP growth slowed, which contributed to an increase in fiscal deficit mainly on account of lower aggregate demand, lower fiscal revenue, lower economic activity and higher fiscal expenditure on account of the measures to address the economic slowdown.

India emerged as the fifth-largest world economy in 2019. India jumped 14 places to 63 in the 2020 World Banks Ease of Doing Business ranking. The country climbed 79 positions in five years and was among the top 10 performers for the third year running.

The nominal per capita net national income was estimated to be RS.34,226 in FY2019-20, up 6.1% from RS.26,521 in FY2018-19. Retail inflation climbed to a six-year high of 7.59% in January 2020, breaching the RBIs upper band of 6% while settling at 5.91% in March 2020. Growth in nominal rural wages, both for agricultural and non-agricultural labourers, remained subdued averaging around 3.4% and 3.3% respectively during FY2019-20 so far (until January 2020), reflecting a continued slowdown in the construction sector. The outbreak of COVID-19 and the subsequent lockdown enforced in the country are expected to moderate demand. Intensification of social distancing is expected to lead to supply side as well as demand side shocks. Supply chain disruptions could hurt domestic production in sectors which are dependent on imported inputs such as pharmaceuticals, automobiles, chemicals, power, etc.

Growth of Indias GDP in FY2019-20

Q1, FY20 Q2, FY20 Q3, FY20 Q4, FY20
Real GDP growth (%) 5.2 4.4 4.1 3.1

(Source: Economic Times, CSO, Economic Survey, IMF, RBI, Franklin Templeton, PIB)

Key government initiatives

National infrastructure pipeline: To achieve a GDP of US$5 trillion by 2025, the government announced a National Infrastructure Policy with an investment plan worth RS.02 trillion in five years. It laid down the vision of the government in terms of job creation: about 50 million people are expected to leave farming from 2012 to 2030, the transition being underway.

Corporate tax relief: Indian companies were unable to compete globally, with the cost of capital and corporate income tax (CIT) being significantly higher than overseas competitors. In view of this, the government reduced the corporate tax rate to 22% from 30%; it announced a new tax rate of 15% for new domestic manufacturing companies, strengthening the Make-in-India initiative. The new effective CIT would be 25.17%, inclusive of a new lower surcharge of 10% and cess of 4%. Indias CIT is now closer to the global average statutory CIT of 23.03%.

Furniture market overview

The Indian furniture market, expected to cross US$32 billion by 2019, is projected to attain a market value of around US$61 billion by 2023. While the residential sector contributed around 63% to the market value of the countrys furniture industry in 2018, the share of the most dominant market segment in the sector, wooden furniture, is expected to grow at a CAGR of around 11% during the period of 2018-23.

The lockdown caused by the COVID-19 pandemic affected the wood panel industry and business. Even after the lockdown is lifted, the market could be affected as furniture is considered a luxury segment. (Source: Economic times, Ply Reporter)

Demand drivers

Increasing incomes: According to World Bank, India has halved its poverty rate since the 1990s. According to NITI Aayog, as many as 300 million Indians were lifted above the poverty line between 2004 and 2018. Urbanisation: 34% of Indias population is urban and by 2030, urbanisation is expected to reach 40%, driving the laminate market in the country.

Real estate development: This Indian sector is expected to reach a market size of US$1 trillion by 2030 from US$120 billion in 2017. Increasing share of real estate in Indias GDP is likely to be supported by increasing industrial activity, improving incomes, growing aspirations and urbanisation.

Hospitality space: The sector is likely to attract an annual investment of US$0.5-0.6 billion during 2018-2022 and a total investment of up to US$2.8 billion by 2022, resulting in increased demand for furniture. Rising population: By 2027, India is projected to overtake China as the worlds most populous country. India is adding nearly 15 million people to its population every year, the largest annual increment anywhere. This will ensure that the companys addressable market will grow sustainably.

Housing for All: Under the scheme, 60 million houses are to be built which include 40 million in rural areas and 20 million in urban area by 2022.

Growing retail space: The countrys office leasing volume rose 27 percent year-on-year to an all-time high of 60.6 million square feet in 2019, increasing the requirement for furniture.

(Source: United Nations, Bloombergquint, Economic Times, IBEF)

Global laminates industry overview

The global laminate industry is estimated at US$ 7.2 billion and is growing at 3-5% per annum. On a regional basis, the US leads the market with a share of 20%. With rising population and improving standards of living, there has been an increase in the demand for modern housing, particularly in emerging nations, which has grown the market. Advancements in printing technologies and the introduction of innovative designs have been other drivers of the global laminates market. The high-pressure laminates market is sub-divided in terms of surfaces, applications and end-users.

By surface By application By end-user
• Horizontal • Furniture and cabinets • Residential
• Vertical • Flooring • Commercial
• Wall panels • Industrial
• Others


Indian laminates industry overview

The Indian laminates manufacturing sector saw less new plants in 2019 compared to the previous three years, but several new presses started commercial production in Northern India between January and November 2019.

Demand in 2019 was subdued and various laminate manufacturers in western and northern parts of the country were compelled to increase the production of liner grade laminates. Favourable raw material prices throughout the year helped liner grade producers survive the year. Out of 300 HPL manufacturing units, more than 100 units ran their plants on liner laminate supplies. The rise in liner laminate was due to demand from Nepal, Bangladesh, Bhutan and other neighbouring countries.

The 1 mm laminates market continued to see consolidation. GST, product offering, showrooms, innovation, aggressive working, project approvals from government, among others helped companies to maintain their growth despite oversupply and dull market. Mid-sized 1 mm laminate brands struggled, which increased supply of 0.92 mm laminates. The year 2019 also witnessed the growth in all value-added products such as exterior grade laminates, digital, interior cladding, anti-finger print laminate etc. that helped stronger brands to outgrow the market. (Source: Ply Reporter)

About Greenlam Industries

Greenlam Industries has emerged as a one-stop solution provider for surfacing products. The Company has evolved as the largest laminate manufacturer in Asia and among the three largest in the world. The Company is also Indias only manufacturer of engineered wooden flooring and first organised manufacturer of engineered wooden doors.

Greenlams products are produced in state-of-the-art manufacturing facilities in Behror and Nalagarh with a cumulative manufacturing capacity of 15.62 million laminate sheets per annum and 4.20 million square metres per annum of decorative veneers. Greenlam enjoys an export presence in >100 countries. The Companys entrenched presence, qualitatively consistent products, wide variety, unique designs, professionally-managed team and experienced sales personnel have allowed it to carve out a organised domestic market share of 19.2% in the laminates segment and 11% in the decorative veneers segment.

Laminates and allied segment

Manufacturing facilities: Behror, Rajasthan, and Nalagarh, Himachal Pradesh Installed capacity: 15.62 million sheets per annum Leading brands: Greenlam, New Mika, Greenlam Clads and Greenlam Sturdo Production during FY2019-20: 13.74 million sheets Production growth over FY2018-19: 0.4%

Capacity utilisation: 92% (on proportionate enhanced capacity)

Sales, FY2019-20: 13.30 million sheets

Sales volume growth over FY2018-19: (2.1%)

Revenues, FY2019-20: RS.032.5 crore

Segment contribution to total revenues, FY2019-20: 84.1%

Revenue growth, FY2019-20: 3.3% Capital employed, FY2019-20: C392.7 crore


During the year under review, growth in the Indian laminates market remained subdued due to slower real estate growth, tightened liquidity, slower overall economic growth and came to a halt during the last 10 days of the fiscal due to a lockdown to contain the spread of COVID-19.

On the backdrop of operational issues in the first quarter due to migration of ERP, coupled with a business loss in the fourth quarter due to COVID-19, Greenlams laminate business grew revenues 3.3% during the year, retaining its position as the largest Indian laminates manufacturer. Greenlam is also one of the three largest laminate players in the world.

Highlights, FY2019-20

• Sales de-growth of 2.1% owing to the drop in demand in the fourth quarter and operational challenges in the first quarter

• Capacity utilisation at 92% (on proportionate enhanced capacity) compared to 98% in FY2018-19

• Gross margin strengthened 370 bps over FY2018-19

• Laminate exports by value grew by 12% y-o-y

• Added 300+ channel partners across the country

• Launched shade card ‘Greenlam 2020-22 at a global event in Baku, Azerbaijan. This new range comes with 82 new decors and 3 new textures (Trace, Aria & Satin). The collection has been introduced to a number of dealers and retail counters where it received an overwhelming response for innovative display and features with a blend of physical and digital presentations through folder and QR code of every shade in the catalogue

• Introduced full sheet display in a number of centres

Challenges and counter-initiatives

• Weak real estate sentiment is a challenge which is affecting our downstream demand. In order to mitigate this challenge, we have been increasingly focusing on Tier-II cities in order to increase our people outreach and expand our customer base.

• Pricing pressure from competition has been a constant challenge even we lost some orders as we did not compromise with our bottom-line. In order to mitigate this challenge, we focused on expanding our outreach to central and state government projects, railway projects and airport projects. Further, we have also differentiated ourselves in the year under review on the back of the launch of new catalogue ‘Greenlam Collection 2020-22.

• The year 2019-20 was marked by an economic downfall which has led to sluggish overall economic outlook for the next fiscal as well. We have focuses extensively on enhanced engagement with the specifiers and influencers by giving them presentations on various product range, in order to lure in more customers. Further, we have also focused on product training, soft skill training and presentation training to employees in order to increase our customer-centricity, which we believe will help us sustain customers in these difficult times.


• One of the largest sectoral manufacturing capacities providing scale and economies

• More than twenty-five years of sectoral experience

• Consistent focus on quality resulting in enhanced consumer trust

• Best-in-class product generation on the back of superior technological expertise

• Established brand recall based on quality products at competitive prices

• Global footprint spanning > 100 countries, with exports accounting for > 48% of revenues

• Portfolio comprising > 10,000 SKUs

• Best-in-the-sector product catalogue


• Increasing manufacturing capacity and enhancing capacity utilisation

• Leveraging technology to accelerate the introduction of innovative value-added products.

• Focus on pharma and healthcare sector

• Reinforcing laminates in 0.7 mm thickness, with an enhanced range to cater to the liner category

Decorative veneers and allied products segment

A. Decorative veneers

Brand: Decowood

Manufacturing facility: Behror, Rajasthan

Installed capacity: 4.20 million square metres per annum Production, FY2019-20: 1.57 million square metres

Production growth: (10.7%)

Sales during FY2019-20: 1.54 million square metres

Revenues earned during FY2019-20: RS.12.7 crore Contribution to total revenues during FY2019-20: 9.2%

Revenue growth during FY2019-20: (13.7)%


The decorative veneer market was valued at RS000 crore with organised players accounting for nearly 60% share. Greenlam is Indias largest decorative veneer manufacturer with an installed capacity of 4.20 million square metres per annum. The veneer segment is largely driven by demand from the residential, HNI and hospitality segments.

Highlights, FY2019-20

• Maintained product quality, policies and commercial practices inspite of unhealthy competition

• March 2020 sales were affected due to the pandemic

• Introduced variants in the same product categories

• Witnessed a rise in demand for dyed range of veneers

• Price wars emerged in veneers

• Selective expansion in dealer network of Teak Veneers

• Segmented the range to cater to specific tastes, preferences and price points in natural veneers

• Added features in veneers in terms of texture (impressions or cuts), treatment and patterns

• Enhanced demand generation through specific applications

• Introduced contactless sample deliveries for architects and designers, which was widely appreciated

• During the lockdown period, the sales and specification team engaged in product training and design for architects through Zoom/Skype

Challenges and counter initiatives

The overall market conditions were not favorable and there was a price erosion due to generic competition with significantly lower prices. The market suffered from a liquidity crunch, impacting working capital efficiency. We addressed these challenges by focusing on the right customers, stronger specifications of our brand with personalized connect, increased intensity of service in terms of quick response, better understanding of requirements and catering to them.


• More than twenty five years of rich sectoral experience

• More than 25 dedicated relationship managers were deployed, each to interact with 60 key architects and designers

• Ability to launch 15-20 new products each quarter

• Ability to connect and engage with the design fraternity

• Strong sales team, infrastructure bandwidth, knowledge capital, selling tools and aids

• CRM to track and monitor customer journeys


• The Company expects to leverage its pricing power while introducing value-added products

• Promoting mid-range products as viable and cost- competitive alternatives

• Expect to venture deeper in the existing market.

B. Engineered wooden flooring segment

Brand: Mikasa Floors

Manufacturing facility: Behror, Rajasthan

Installed capacity: 1.0 million square metres per annum

Production, FY2019-20: 0.2 million square metres

Production growth: 19.3%

Sales during FY2019-20: 0.2 million square metres

Revenues earned during FY2019-20: RS.8.4 crore

Contribution to total revenues during FY2019-20: 3.9%

Revenue growth during FY2019-20: 12.2%


The engineered wooden flooring market in India is driven by the recommendation of architects, carpenters and contractors. Greenlam is the only Indian manufacturer of these products with an installed capacity of 1.0 million square metres per annum. The Companys state-of-the-art manufacturing processes and a variety of styles and designs have empowered Greenlam to attain sustainability. The product is engineered to withstand climactic vagaries typical to India. With a unique product positioning, wide range and up to a 30-year warranty, Mikasa is affordable and technologically-superior than most imported brands. In 2019-20, the pace of new project orders in flooring reduced due to slow completion. Although the industry relies on imports, yet a shift from imports to domestic brands was visible during the year.

Highlights, FY2019-20

• New products for specific applications like stair case flooring with accessories was introduced

• Grew revenues 12.2% over the previous year by banking on the growing trend of wooden flooring in high-end master bedrooms, luxury hotel rooms and business complexes

• Added 35+ new channel partners across the country.

Further, the brand ‘Mikasa also got specified for four mega-projects

• Highlighted product superiority and product awareness through demonstrations and presentations

• Major billing was disrupted in March 2020 due to the lockdown

• Several top importers and retailers of wooden flooring partnered with Greenlam during the year, which highlights product acceptability and confidence

Challenges and counters

Slowdown in real estate activity resulted in execution delays. Addition of new customers in retail and private labels helped Greenlam stay ahead of the curve


• Greenlam is the only Indian engineered wooden flooring manufacturer

• The Companys experience of more than 25 years in providing interior solutions and expertise in transforming interiors lends it a strategic edge in the wooden floorings business


• The Company will continue to engage with high- end developers, designers and architects, widening the appeal of its products

• The Company is in a position to capitalise on the initiative ‘Vocal for local

C. Engineered doors segment

Brand: Mikasa Doors & Frames

Manufacturing facility: Behror, Rajasthan

Installed capacity: 1.2 lakh doors per annum

Production, FY2019-20: 34596 units

Production growth: 62.9%

Sales during FY2019-20: 37834 units

Revenues earned during FY2019-20: C33.7 crore

Contribution to total revenues during FY2019-20: 2.8%

Revenue growth during FY2019-20: 50.0%


Greenlam is Indias first organized manufacturer of engineered wooden door sets with an installed capacity of 1.2 lakh doors per annum, addressing a widening replacement opportunity while venturing into institutional sales where there is a premium on timely delivery. Engineered wooden door sets are considered premium over traditional door sets. The company is optimistic about prospects in these businesses leading to sustained market outperformance. The company offers laminated, veneered or painted doors and frames. Mikasa offers solutions in line with fire safety regulations such as FD30, FD60, FD90 and FD120 mins doors which have been recognized for their performance by leading certification bodies such as Exova UK with the Q-Mark Certification. Mikasa Doors is also registered under Maharashtra Fire Prevention and Life Safety Measures Act, 2006. This opens a vast opportunity in the hospitality, healthcare, retail and high-end residential markets. The company organises B2B and influencer outreach programs and tie-ups with real estate developers, addressing every opportunity in the market. The industry is also transforming from traditional carpentry to factory-finished door solutions owing to super finish and product performance.

Highlights, FY2019-20

• The Company consolidated its market share and position across five focused markets (Delhi-NCR, Mumbai, Hyderabad, Bangalore and Chennai)

• The business is relationship-driven instead of transaction-driven. The result: 60% of revenues generated from 23 repeat orders across its markets

• The Company bagged contracts to supply products to some of the major real estate developers such as Oberoi Realty, Kalpataru, Prithu Homes, Great Value, Mahavir Builders, Ajmera Realty, Vajram Developers, Bren Corporation and CPR construction, among others in India

• The Company identified the gaps in the value chain and took necessary measures such as choosing quality suppliers, identifying the right product for the right place, improved packaging, and post- installation services to streamline the process from raw material to installation and delivery

• The Company introduced peak frames collection

• The Company added 10 new project clients to its engineered door business

• The Company generated 15% of its revenues by exporting engineered doors to UK (Britain and Scotland) and Dubai and generated 85% of its revenues from the domestic business

• The Company launched a mid-premium product Dura collection series in 2018-19, attracting more customers across the mass premium category. There are 3-4 projects in the pipeline for the product

• The Company focused on fire-resistant, veneer- based designer and acoustic doors, enhancing value-added sales

• Fire-resistant doors and Dura series accounted for 20% of total door revenues, veneer designers doors accounted for 60% and acoustic doors are at a nascent stage

Key challenges and counter initiatives

• Competition from local players impacted the business. The Company created awareness of its product (engineered doors) and product benefits by reaching out to major real estate developers in its chosen markets. The Companys post-sales services attracted more customers. The company enjoys bandwidth across quality services, availability, installation, protection and warranty management.

• In this competitive industry, it is difficult for a new brand to enter the market. Gradually real estate developers are shifting from local door manufacturers to engineered door manufacturers.

This shift is driven by government regulations such as the RERA Act where the developer is allocated a specified time for the completion and delivery of projects. Earlier, site-made doors accounted for 80% of the door industry, which has come down to 40%. Moreover, the Company acts as a consultant to developers instead of just selling products. Strengths

• Forward integration solution backed by manufacturing capabilities of laminates and decorative veneers enable us to provide a wider choice to customers at the best price

• Mikasa offers a wide variety of designs at various price points across segments

• The Company enjoys a strong brand recall around quality, durability, availability and service.

• The Company has a footprint across major cities in India.

• The Company sourced cutting-edge equipment from Taiwan and France, ensuring quality products for customers.

• The Company acts as a consultant in the best interest of clients, ensuring timely delivery and providing post-installation services.


• The Company expects to add >20 clients to its repeat order clientele base

• The Company bagged export orders for engineered doors from Sri Lanka and Bahrain

• The Company is looking forward to expand its footprint to Ludhiana, Chandigarh, Jaipur, Indore, Cochin, Lucknow, Pune and Visakhapatnam

• Although the Covid-19 outbreak could impact business, the Company made a proactive decision to maintain inventory of raw material for six months, protecting from raw material price increases Fire-resistant and veneer doors are expected to enhance realisations. The company is focusing on achieving 60% capacity utilisation. The company is expecting 100% growth in its domestic and international business.


The Company has a strong and robust procurement and supply chain mechanism. The Company ensured timely payments to MSME suppliers. Greenlam procures all resources from GST-compliant vendors.

The Company has a well-defined system for currency hedging and fluctuations in raw material prices, handled by its Treasury department. The company makes stable and regular orders and ensures timely payments to its suppliers, establishing long-term relationships.

Highlights, 2019-20

• The Company implemented an online boarding process for vendors where essential details like billing address, GST number, phone numbers and email id, among other information of the suppliers, was updated, ensuring transparency.

• The Company approved pre-defined norms with international suppliers for the forward buying of global materials, whereas the materials were delivered at a later date when required, reducing storage costs.

• The Company implemented software to monitor MSME suppliers and ensure timely payments.

• The Company started bidding for a quarterly reverse option for fuel sourcing to get the lowest price.

Outlook, 2020-21

Going ahead, the Company will strengthen the procurement team to meet accelerated demand from the expanding footprint. It is expected that the cost of crude-dependent raw materials could reduce and ease procurements.


Greenlam is not just the largest laminates manufacturer in the country but also the most technologically advanced in its peer group. Various initiatives undertaken towards automation helped optimise costs, improve efficiency and enhance qualitative consistency. The Company undertook measures to make processes energy-efficient and sustainable, which helped grow competitiveness, market share and margins.

Information technology

Owing to the increasing disruption brought in the laminates industry on the back of ever-changing technology, the importance of adopting the latest technology has become critical. Technology plays a vital role in gathering information and evaluating them based on their potential and helps evaluate the processes of the business value-chain. Greenlam focuses on gauging correctly the potentially high- information intensity variables associated with stakeholders (customers, suppliers, employees, etc) and products (raw material alternatives, processing schedules, etc) to devise a strategy with greater flexibility in operations, which help in identifying priority business processes for investment in information technology.

Highlights, FY2019-20

• The Company focused on re-implementing ERP as a green-field project during the year under review. Greenlam upgraded its ERP from SAP ECC 6.0 to S4 Hana 1809, ensuring increased transparency and the automation of processes.

• The Company brought the plant maintenance processes under the ERP system, ensuring improved transparency and allowing the Company to act proactively in debottlenecking in addressing operational challenges.

• Considering the uniqueness of Greenlams business processes and diverse nature of business operations (B2B, B2C, MTO, MTS), the Company focused on developing its own technological digital core by developing its CRM, which would be aligned to the processes and needs. By having its digital core, the Company got an edge in terms of improved agility and flexibility.

• Considering the varied requirement and flexibility by the ongoing IT initiatives, the Company decided to move on to a Hybrid Cloud setup for its infrastructure needs, ensuring easy deployment and management.


Greenlam outlined a long term technology roadmap with its specified intent of moving forward. The Company intends to enhance CRM platform capabilities to meet the requirements of OEM and trade business, building a robust platform for taking care of marketing process management, building capabilities to develop partner eco-systems and supply chain optimisation using technology over the next five years.

The Companys outlook for the next fiscal is as follows:

• Leveraging further on the S4H platform to enhance transactional transparency, ease of operations and information availability to make decision-making more effective.

• Creating Warranty Management System for Floors/ Doors/RC business

• Enhancing Customer Support & Redressal Portal (CSRP) and increasing its reach to other lines of business

• In light of COVID-19, enhancing the Companys backbone technologies to support the ‘work from anywhere environment.

• In order to increase employee productivity and efficiency, the Company is in need of ensuring proper governance in a remote/work from anywhere environment on the back of right collaborative technologies for video-conferencing and data sharing, among others

• Reviewing and re-designing the Companys IT policies in line with General Data Protection Regulation (GDPR) and Indian Data Privacy Law structures

Quality Assurance

Greenlams products appear on the surface of decorative furniture, which makes durability and quality aspects one of the major attributes that customers look for in the product. Productivity from each process is a combined measure of quality assurance and output. Greenlam focuses on a strict quality assurance, wherein each process is monitored with respect to specified quality parameters at each step. In view of this, a culture of encompassing quality control has been inculcated across the organisation. Greenlams definition of Quality Assurance extends beyond meeting specified standards and attributes in meeting the primary interest of customers since the products are aimed at imparting health, hygiene and environment conservation.

Highlights, FY2019-20

• Quality assurance specifications for incoming and final products have been adapted to SAP Hana-QA module and driven accordingly

• Set up a full-fledged laboratory for the Mikasa engineered door plant

• Upgraded laboratories by adding a color comparison cabinet, ensuring improved evaluation of color capacity of inspection personnel by Munsell Fransworth Hue test

• Initiated the training of supplier laboratory teams in testing schemes and reporting results

• Newer tests for balcony applications and advanced fire conformance certifications were bestowed on the Company for products in European test labs


• Quality assurance function would be upgraded to IMS (Integrated Management Systems) to drive the organisations compliances

• The Company is aiming to attain ISO 45001 certification for the validation of safety systems, among one of the first companies in the laminates industry to achieve this

• Increase customer awareness and support by imparting more training and sharing vital and updated product application aspects. This would help in the reduction of field failures and, in turn, generate an improved customer satisfaction

Human resources


Greenlam has always viewed its human capital as its most critical asset. Sourcing of such right assets and managing them well has always been its philosophy. Greenlam believes that the industry we operate in, where products in the market are mostly look alike, people are the real differentiator and game changers. Employing the right people and doing things the right way would be the key to long-term profitable journey. As of March 31, 2020 the Company had 1944 employees on its payroll.

Highlights, FY2019-20

• Infusion of talent from varied industries at all levels ensuring new learning that challenge the status quo

• The Company focused on conducting exhaustive product training for the sales team, to prepare them better and inculcate in them a sense of pride and confidence

• The Company focused on improvement and automation of some of HR processes; Greenlam went live with the base module on SAP HANA for the HR function

• The Company undertook investments to offer employees an improved workplace and facility, ensuring optimal productivity


The last few days of the previous fiscal were marked by the spread of the COVID-19 virus, which gave rise to a global crisis, following which India went into a nation-wide lockdown. This lockdown has impacted the Companys people practice. The primary focus will be on supporting the business and driving productivity as a culture rather than through one-off initiatives in the current fiscal (2020-21). The Company has the following outlook towards the current fiscal:

• Planned a transition to a new HRMS system to ensure that all people practices come one umbrella and right analytics is available to take progressive business decisions

• The Company will continue to focus on people development initiatives to ensure employees are trained on hard and soft skills to capture the market. In doing so, the Company plans to take the following initiatives:

• Adopting new ways of engaging employees in a different and changed working environment

• Last mile closure of all HR processes with the help of an automation drive

Financial overview

The Companys revenues grew by 2.6% to RS.227.2 crore in 2019-20 compared to C 1196 crore in the previous fiscal. EBIDTA stood at RS.60.9 crore compared to RS.38.5 crore in the previous year.

Key numbers
Particulars 2019-20 2018-19
Debtors turnover (days) 36 42
Inventory turnover (days) 99 88
Particulars 2019-20 2018-19
Interest coverage ratio 10.19 8.96
Current ratio 1.41 1.39
EBIDTA margin (%) 13.1 11.6
EBIDTA/Net interest ratio 10.19 8.96
Debt-equity ratio (x) 0.51 0.57
Operating profit margin (%) 13.1 11.6
Net profit margin(%) 7.5 5.4
Return on net worth 18.9 15.6
Book value per share (Rs.) 203.27 172.43


Note: Return on net worth was higher for the year ended March 31, 2020 due to a higher growth in Profit After Tax

Risks and concerns

Competition risk: There is a risk of market share erosion because of increased competition.

Mitigation: Greenlams strong distribution network and wide bouquet of products across laminates, veneers, engineered floors and doors categories have enabled it to deepen market penetration. The focus on product quality and innovation has paved way for growth across market cycles.

Product risk: The Companys products might lose relevance and weaken offtake, leading to inventory pileup and declining revenues.

Mitigation: The Company manufactures product keeping in mind the current and future trend, product usability, quality, aesthetically-pleasing and price-value proposition. The Company diversified offerings ranging from engineered wooden floorings to doors, cementing its reputation as a complete home dcor solution provider.

Finance risk: Inability to manage finances effectively could impact operational sustainability.

Mitigation: The Company has a robust receivable and payable management mechanism. The result during the fiscal gone by Greenlams cash position stood at RS5.3 crore, ensuring financial stability. The Company also enjoys a debt service ratio of 3.23 with a healthy interest cover of 10.19.

Quality risk: Inability to maintain qualitative consistency could impact product sales and brand image.

Mitigation: The Companys state-of-the-art facilities manufacture products of the highest standard, ensuring maximal resource utilisation and minimal wastage.

Distribution risk: An inefficient distribution network could restrict the Companys market access.

Mitigation: Greenlams wide and robust logistics network, comprising >14,000 distributors, dealers and retailers spread across the country, helps address customer needs with speed. Besides, its presence in >100 countries allows it to cater to a wide customer base.

Technology risk: Technology obsolescence could dent the Companys competitiveness.

Mitigation: Greenlam recently upgraded its IT infrastructure to the latest edition of SAP HANA, aiding decision-making, improving efficiencies and ensuring access to real-time information.


Growing consumer preference for branded products is causing a shift from the unorganised to the organised market and we believe that when the market recovers from Covid-19 pandemic, there will be a greater preference to work with organised brands over unorganised ones, widening the market for companies like ours. We feel that imports could decline (especially in the engineered wooden flooring and engineered door segments), creating a larger opportunity for world-class home-grown brands like ours. We believe that in this sectorial churn, local and regional players could yield ground to large international brands like Greenlam.


Unorganised players pose a threat to branded products on account of a pricing pressure. Further regulatory restrictions on imports from neighboring countries could also pose a challenge as in a deeply price-competitive market, passing entire increased costs to consumers may not be feasible.

Internal control systems and their adequacy

The Company has established internal control systems in line with its size, operations and complexity. These systems are verified and tested routinely by certified auditors as well as internal audits, which cover all the key areas of the business. The internal control system ensures measurability and verifiability, reliability of accounting management efficiency and management information. The system also ensures compliance with all applicable laws and regulations, protection of the Companys assets and identification of critical risk areas to address them effectively.

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.