Greenpanel Industries Ltd Management Discussions

Economy Overview

Global Economy

In 2024, the global economy demonstrated resilience, although growth varied across regions. While some parts of Asia and Europe experienced weaker economic performance, the United States maintained strong growth momentum in 2024. The global economy grew by 3.3% in 2024 compared to 3.5% in 2023. Global disinflation continued during the year; however, the pace of progress slowed as services inflation remained high in major economies and some emerging markets continued to face elevated inflation. Monetary policies varied across regions in 2024, with some central banks cautiously easing interest rates, while others maintained a more restrictive stance. The global economy navigated a dynamic environment, adapting to trade challenges, fiscal pressure and geopolitical tensions. Advanced economies grew steadily at 1.7% in 2023 and 1.8% in 2024, while Emerging Markets and Developing Economies (EMDEs) expanded by 4.7% in 2023 and 4.3% in 2024.

Source: IMF April 2025 report

Going forward, the monetary policies are expected to diverge, with central banks adjusting interest rates at varying speeds based on their respective economic conditions.

The global economy is projected to grow steadily over the next few years, with global growth forecasted at 2.8% in 2025 and 3.0% in 2026. Advanced economies are likely to experience different growth trajectories, influenced by variation in domestic demand and policy responses, while emerging markets, including China and India, are expected to maintain a stable growth rate. Advanced economies are projected to grow at 1.4% in 2025 and 1.5% in 2026, while EMDEs are expected to expand by 3.7% in 2025 and 3.9% in 2026. Global headline inflation is expected to decline from 2024 to 2026, falling to 4.3% in 2025 and further to 3.6% in 2026. Advanced economies are expected to reach their inflation targets more swiftly than EMDEs. However, despite the moderation in inflation, the global economy remains exposed to ongoing risks, including policy uncertainties, tariff issues and geopolitical tensions.

India is currently ranked as the fifth-largest economy in the world in terms of total Gross Domestic Product (GDP), underscoring its growing influence in the global economic landscape. Despite persistent global uncertainties, India has displayed strong economic resilience, supported by sound robust macroeconomic fundamentals and heightened emphasis on sustainability and innovation during the FY25. With a strategic focus on self-reliance, adaptability and alignment with global trends, India is well-positioned for sustained economic growth and long-term stability. Key government-led initiatives such as "Make in India", extensive infrastructure development and structural policy reforms have continued to fuel economic expansion and enhance the countrys global competitiveness.

The Ministry of Statistics and Programme Implementation (MoSPI), has projected a real GDP growth of 6.5% year-on-year (YoY) in FY25, following an impressive expansion of 9.2% in FY24. Election uncertainties in the first quarter, coupled with weather-related disruptions impacting construction and manufacturing in the following quarter, resulted in weaker-than-expected gross fixed capital formation. On a positive note, both private consumption and government spending experienced significant increases. The Reserve Bank of India (RBI)s monetary policy stance remained neutral due to sluggish economic activity. Consumer Price Index (CPI) inflation for FY25 is expected to be around 4.9%. Nonetheless, the countrys economic growth outlook remains susceptible to potential risks. These include uncertainties in global financial markets, fluctuations in energy prices, and adverse weather conditions, all of which could pose challenges to maintaining the projected growth trajectory.

Source*: MOSPI NSO Report dated February 28, 2025 RBI MPC report dated April 9, 2025

Going forward, household consumption is expected to remain robust, supported by tax relief measures introduced in the Union Budget for FY26. Fixed investment is also projected to grow, driven by higher capacity utilisation, the strong financial position of banks and corporations and the governments continued focus on capital expenditure. The RBIs Monetary Policy Committee (MPC) reduced the repo rate by 25 basis points to 6.00% on April 9, 2025, as part of its efforts to inject liquidity into the economy and support economic growth. This marks the second rate cut in fiveyears, since May 2020. The Monetary Policy Committee (MPC) has maintained a "neutral" stance despite the reduction in the repo rate, adapt to changing macroeconomic allowing flexibility conditions and financial market dynamics.

A positive business sentiment, as indicated by the RBIs enterprise surveys and Purchasing Managers Indices (PMIs), further reinforces this optimistic outlook. Under the Union Budget for FY26, the government has allocated Rs.1.5 trillion in 50-year interest-free loans to support states in enhancing capital expenditure, which will be directed towards infrastructure projects like roads, urban development and industrial growth. As a result, the RBI has projected the Indian economy to grow at 6.5% in FY26.

Source: https://pib.gov.in/PressReleasePage. aspx?PRID=2090875

The global furniture market is evolving rapidly, driven by changing consumer lifestyles, infrastructure development and a growing preference for aesthetically designed and functional spaces. Consumers are increasingly seeking furniture that combine style with practicality, fuelling the demand for minimalist, eco-friendly and multifunctional designs. In 2024, the global furniture market was valued at USD 649.8 billion and is expected to grow at a compound annual growth rate (CAGR) of 5.3%, reaching USD 1,089.1 billion by 2034. This growth is primarily driven by flexible designs, sustainability, wellness-focussed furniture, rental markets, luxury options and trends such as smart furniture, customisable designs, retro styles, biophilic design and space-saving solutions. Furthermore, rise in online shopping has contributed to a wider market reach, with manufacturers leveraging augmented reality (AR) technologies to improve the sales process and assist customers in decision-making. Source: https://www.factmr.com/report/furniture-market https://www.researchandmarkets.com/reports/5781240/furniture-global-market-report?srsltid=AfmBOopCuFAqkg 6T8-liAxq0csmUlOxVpJPxHtR3KKhkcw3afqF5rhOc

The global MDF market is gaining popularity due to its versatility, affordability and high quality. MDF is a preferred choice for furniture manufacturing, interior design and packaging. Due to Its smooth surface, ease of cutting and moisture resistance surpass advantage over traditional wood materials, like plywood. Additionally, MDF is considered a more environmentally friendly option because it utilises agroforestry wood fibres. In 2024, the global MDF market was valued at USD 27.3 billion and is projected to reach USD 45.8 billion by 2033, reflecting a CAGR of 5.61% from 2025 to 2033. Key driver of growth includes increasing demand for affordable and customisable furniture solutions, rising popularity of laminated flooring in residential spaces and growing construction activities. The demand for residential and non-residential structures has increased significantly due to the upsurge in global tourism, rise in metropolitan development and population growth.

This surge has led to a greater need for MDF, which is primarily used in the interior design of homes and buildings, as well as in flooring, doors and windows. Moreover, MDF is utilised in the production of various other products, including shipping boxes, speaker boxes, photo frames, gift and jewellery boxes, sports and educational equipment and temporary wooden structures. This diversification the growth of the MDF market. Overall, MDF offers several advantages over plywood, making it a preferred choice in many applications.

Source: https://www.imarcgroup.com/medium-density-fibreboard-market

Plywood remains a crucial material in construction, furniture and packaging due to its strength and versatility. The global plywood market is growing, driven by demand in construction and interior design, particularly in the Asia-Pacific region. Countries like China, India and Japan are driving this demand due to rapid urbanisation and infrastructure development. In 2024, the global plywood market was valued at USD 50.2 billion and is expected to grow to USD 74.5 billion by 2033, at a CAGR of 4.5% from 2025 to 2033. Growth is fuelled by increased demand in residential settings for walls, floors and roof coatings, as well as commercial spaces. The marine industry also supports market growth, as plywoods durability in seawater makes it ideal for use in marine applications. Source: https://www.imarcgroup.com/plywood-market

The Indian furniture market is expanding steadily. In 2025, the market is estimated to be valued at USD 25.75 billion

The Indian furniture market is expanding steadily. In 2025, the market is estimated to be valued at USD 25.75 billion and is expected to reach USD 37.18 billion by 2030, reflecting a CAGR of 7.63% during this period. This growth is driven by increasing urbanisation, leading to higher demand for modern and aesthetically designed furniture, rising disposable incomes enabling consumers to invest in better-quality furnishings. and is expected to reach USD 37.18 billion by 2030, reflecting a CAGR of 7.63% during this period. This growth is driven by increasing urbanisation, leading to higher demand for modern and aesthetically designed furniture, rising disposable incomes enabling consumers to invest in better-quality furnishings. The expansion of e-commerce has made furniture more accessible. Shiftingalso contributes to preference towards space-saving and multifunctional designs has contributed toward positive growth of the MDF and furniture markets. Wooden furniture continues to dominate the market due to its traditional appeal and durability, while awareness of environmental concerns has led to a growing interest in sustainable options made from agroforestry timber and recyclable materials. Despite challenges like high raw material costs and competition from international brands, the ongoing development of the real estate sector and growing interest in sustainable furniture are expected to continue driving market growth.

Source:

1.https://www.expertmarketresearch.com/reports/india-furniture-market

2. https://www.linkedin.com/pulse/india-furniture-market-growth-trends-key-insights-2032-tushar-arora-wswtc/

3. https://www.mordorintelligence.com/industry-reports/ india-furniture-market

As a cost-effective and eco-friendly alternative to plywood, MDF is increasingly used in modular furniture, cabinetry and flooring. Advancements in manufacturing technology and the expansion of domestic production capacities are helping the industry meet rising demand. According to a report by 6Wresearch, the Indian MDF market is expected to grow at a CAGR of 15.2% from 2025 to 2031, supported by the increasing adoption of modular and ready-to-assemble (RTA) furniture in urban households. As demand increases, leading manufacturers are scaling up production to meet market needs. Additionally, the governments focus on sustainability and promotion of engineered wood, further accelerates the growth of the MDF market.

The Indian MDF market has become one of the fastest-growing segments within the countrys wood panel industry. This rapid expansion is fuelled by urbanisation, growing demand for affordable and durable furniture and strong government support for housing and infrastructure development. As a result, MDF has emerged as preferred material for modular furniture, cabinetry and flooring owing to its cost-effective and environmentally friendly properties.

This growth trajectory is further driven by continuous advancements in manufacturing technology and the steady expansion of domestic production capacities, which have significantly improved the industrys ability to meet surging demand. With rising requirements from the furniture industry and consistent government support through housing and infrastructure initiatives, the MDF market is poised for substantial growth in the coming years.

Implementation of BIS Quality Control Orders (QCOS) for furniture items from February 13, 2026 is expected to provide a boost for domestic furniture manufacturing consequently leading to an increase in demand for indigenous furniture manufacturing raw materials like MDF and plywood.

Source : 1. 6Wresearch. https://www.industryarc.com/Research/Medium-Density-Fiberboard-Market-Research-509371?utm

In recent years, Indias plywood market has witnessed a notable shift towards eco-friendly and sustainable products, driven by growing environmental awareness amongst consumers and industries. Currently, the growing demand for plywood in India is largely driven by the expansion of distribution networks and exclusive outlets for premium furniture manufacturers. Advancement of production technologies have significantly enhanced the versatility of plywood, including the development of flexible variants that are shaping new applications. Plywood is increasingly being used in residential and commercial spaces for partitions and false ceilings boosting the market appeal. Additionally, the demand for lightweight, easy-to-assemble furniture especially for do-it-yourself (DIY) projects has increased, as plywood, is easy to drill, shape and cut to suit customised needs.

Moreover, an increase in government housing schemes and infrastructure projects along with the rise in urban settlements, renovation and home furnishing combined with the desire to incorporate unique accents into interior designs are driving the demand for plywood in India.

Source: https://www.techsciresearch.com/report/ india-plywood-market/25321.html https://www.imarcgroup.com/indian-plywood-market

Emerging Markets & Digital Transformation: Expanding into emerging markets like India, Brazil, Indonesia and

Vietnam, along with growing consumer demand and the presence of untapped customer segments are key factors driving the industrys growth. The rapid pace of urbanisation, coupled with rising disposable incomes in developing economies, is leading to increased consumer spending across various sectors. Digital transformation is enabling businesses to scale and reach wider global markets. Changing demographic trends, including a younger, tech-savvy population and the expansion of the middle class, are further contributing to the rising demand for innovative and personalised products. These factors collectively create a strong foundation for sustained industry growth.

Growing need for Commercial Spaces: The demand for commercial spaces in India is on the rise, driven by the evolution of workspace into more flexible, tech-driven and employee-centric environments. Open floor plans, hot-desking and hybrid work models are reshaping the requirement for adaptable furniture solutions. Features like IoT-enabled lighting, automated climate control and ergonomic furniture contributes to greater energy efficiency, sustainability and employee wellness. Eco-friendly materials and energy-efficient designs promote environmental responsibility. Innovative technologies make workspaces more adaptable, cost-effective and productive.

Robust MDF Demand: MDF continues to gain popularity as a cost effective and sustainable alternative to traditional wood. Its uniformity, termite resistance, and ease of customisation make it ideal for modular and ready-to-assemble furniture. Advances in manufacturing technology are enhancing the quality, textures, and versatility of MDF, further strengthening its position in modern furniture and interior design applications.

Supportive Government Initiatives: The Indian governments focus on boosting domestic manufacturing and infrastructure development is driving sustained demand for wood-based products. Key initiatives such as "Make in India" and efforts to promote self-reliance are promoting domestic production of MDF and plywood. Additionally, increased government investments in affordable housing, smart cities and commercial infrastructure – such as the Smart Cities Mission, Pradhan Mantri Awas Yojana (PMAY), NTR and the Delhi Development Authority (DDA) Housing Scheme, along with the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) are fuelling consistent demand for engineered wood solutions.

Government Policies are encouraging the demand for sustainable and eco-friendly materials like MDF as a viable alternative to traditional timber.

Moreover, tax incentives, subsidies and reduced import duties on essential raw materials present significant opportunities to accelerate growth within the industry.

The Ministry of Rural Development has been actively implementing PMAY-G since April 2016 to achieve Housing for All in rural areas, targeting 4.95 crore rural households by March 2029. As of February 2025, a totalof3.79 crore challenge for houses have been allocated, 3.34 crore houses being sanctioned and 2.69 crore houses were completed.

The Union Cabinets approval of 2 crore additional houses for FY24-FY29, including the allocation of 84.37 lakh houses for FY25, further strengthens the demand for housing solutions and building materials.PMAY-Urban scheme has already seen the sanctioning of 1.19 crore houses, with 90.25 lakh completed as of January 2025. Under the Smart Cities Mission, a total of 8,056 projects valued at 1,64,494 crore have been initiated, with 7,482 projects worth 1,50,072 crore successfully completed. Presently, 574 ongoing projects worth 14,422 crore are in progress. These urban housing and smart city initiatives are expected to significantly impact the furniture industry, providing new avenues for growth and expansion. Source: https://www.pib.gov.in/PressReleasePage. aspx?PRID=2100659 https://pmay-urban.gov.in/

Volatility in Raw Material Prices: The rising cost of raw materials such as timber, resins and chemicals poses a significant MDF and plywood industry. Fluctuations in fuel and transportation costs further escalate production expenses, adversely impacting overall profitability.

Shifting Consumer Preferences: The furniture market is constantly evolving, driven by rapidly changing consumers tastes. This dynamic environment requires companies to regularly adapt and innovate to meet the ever-evolving needs and expectations of customers.

Highly Competitive Industry: The furniture industry is highly competitive comprising a diverse mix of large domestic manufacturers, importers and numerous local unorganised players. Intense competition, particularly from unorganised entities, can limit the growth potential of organised players, by constraining their ability to expand their customer base and invest in innovation.

Supply Chain Disruptions: Global supply chain triggered by events such as natural disasters or geopolitical tensions, can hinder the flow of goods and delay production. Volatile raw material costs complicate budgeting, while dependence on international suppliers often results in shipping delays and increased operational costs.

Risk Related to Economic Downturns: Economic slowdown can reduce demand for non-essential products, such as premium furniture, as consumers cut back on discretionary spending. Declining disposable income results in lower willingness to invest in high-value items, impacting sales. Company may face challenges with excess inventory and may be compelled to offer discounts or leverage credit period to sustain demand.

Adverse Impact of Counterfeit Products: The spread of counterfeit products often sold at lower prices, can significantly damage a brands reputation by diminishing consumer trust in product authenticity and quality.

Greenpanel Industries Limited is a leading player in Indias wood panel industry, renowned for its enhanced capacity and strong expertise in MDF manufacturing. The Company offers a diverse range of products under the brand name Greenpanel, including MDF, High-Density Fibreboard (HDF), fire-resistant MDF, pre-laminated MDF, veneered MDF, wooden flooring, plywood, block boards and doors.Greenpanel operates state-of-the-art manufacturing facilities in Rudrapur, Uttarakhand and Tirupati, Andhra Pradesh, the latter housing the largest MDF plant in Asia. The Company ensures efficient supply to meet market demand with a combined MDF production capacity of 8,91,000 cubic metres per year and 9 million square metres annually for plywood. Greenpanel is committed to sustainability and exclusively utilises 100% renewable agroforestry wood for MDF and plywood production. The Company maintains a robust distribution network of active dealers/distributors across 7 countries, ensuring the efficient availability of its high-quality products to customers globally.

During FY25, the revenue from the MDF segment experienced a decrease of 10%, which accounted for approximately 90% of the Companys total revenue. Domestic MDF volumes fell by 6%, while export volumes saw a Year-over-Year (YoY) fall of 24%. However, export volumes faced challenges due to the rising wood prices, competition from other South-East Asian countries, reduced availability of containers and a freight rates. The EBITDA margins significant for MDF, recorded at 11.6%, were negatively affected by lower volumes stemming from competitive price reductions, intense competition within the domestic market and rising raw material prices.

The sales volume of plywood decreased by 15.5% compared to the previous year, mostly due to sluggish demand environment and high raw material costs, which resulted in operating margins of 3.9%. In FY25, the Company demonstrated its ability to adapt in response to challenges such as increasing wood prices, supply chain issues and changing market needs. It broadened its supplier network, strengthen its inventory reserves and improved its demand forecasting techniques.

(Rs. crore)

Greenpanel is poised to expand its distribution network, increase domestic sales volumes and enhance its portfolio of value-added products in the near future. The Company remains committed to strengthening the Greenpanel brand through its innovative 3H (Hero/Hub/Hygiene) approach. In addition to its focus on MDF, Greenpanel continues to promote growth within the plywood segment, and has restructured its plywood sales team to bolster market share and optimise production capacity in the near term. In response to evolving consumer preferences, the Company has adopted an omnichannel and transparent strategy within tailored to the dynamic retail environment. As part of its expansion strategy, Greenpanel has successfully completed a brownfield expansion at the existing plant in the Tirupati district of Andhra Pradesh, adding an installed capacity of 2,31,000 cubic metres (CBM). This has increased the Companys total MDF production capacity by approximately 35%, from 6,60,000 CBM to 8,91,000 CBM per annum.

The Company remains optimistic regarding its future, supported by robust growth drivers in the real estate sector. It expects to expand its customer baseandimproveprofitabilityas the wood price inflationstabilises, and economic conditions become more favourable. Greenpanel also recognises the Middle East as a vital export market while anticipating growing demand from other regions. The Company is dedicated to maintaining its leadership position by consistently delivering high-quality products to its consumer. Furthermore, Greenpanel is strategically positioned to capitalise on the ongoing industry shift from plywood to MDF, a trend aligned with global preferences. With a robust product portfolio, strong brand recognition and a comprehensive omnichannel presence, the Company is well-equipped to seize emerging opportunities in key markets.

Greenpanel operates in a dynamic environment and prioritising effective risk management through a structured framework that enables proactive risk identification and mitigation. This framework overseen by the Boards Risk Management Committee, supports informed and timely decision-making. The key risks and their corresponding mitigation measures are outlined below.

The Company regards its employees as a key pillar in driving growth objectives and maintaining its leadership position in the market. It is committed to fostering a high-performance culture that emphasises continuous development. Greenpanel places strong emphasis on developing employees capabilities by consistently investing in training and skill development initiatives aimed at enhancing knowledge, skills, productivity and teamwork. As a result, the Company promotes a positive work environment that encourages employee engagement and is supported by initiatives designed to improve retention.

Furthermore, the Company has instituted a leadership development programme to identify and nurture leaders from within the organisation. During FY25, the Company restructured its plywood sales team to enhance its higher market share and optimise capacity utilisation in the near future. As of March 31, 2025, the Companys total workforce stood at 1,698.

Technology plays a crucial role in supporting Greenpanels business operations. The Company has been consistently investing in advanced technologies, including data analytics, ERP software and people management systems, to enhance business processes and improve overall operational efficiency. It leverages the SAP ERP platform for seamless management of critical functions such as order processing, invoice generation, payment collection and credit note issuance. To further enhance field sales, Greenpanel has deployed the SAP C4C Sales Cloud CRM system. This system enables seamless integration of attendance, customer visits, order booking, effective monitoring, and tracking of sales performances in end-to-end integration with backend SAP ERP, which is the heart of the Business Operations.

To strengthen equipment reliability and ensure uninterrupted performance, Greenpanel has adopted Total Productive Maintenance (TPM) as part of its operational strategy.

Greenpanel has a robust internal control framework tailored to its size and operational requirements. The Audit Committee of the Board of Directors oversees the internal control system by establishing implementation guidelines and evaluating its adequacy, effectiveness and application. The system is designed to ensure operational efficiency, measurability and verifiability, along with the reliability of accounting and management information. The Company also ensures compliance with all relevant laws and regulations while safeguarding the Companys assets.

Consequently, the internal control system plays a key role in the timely identification and management of the Companys operational, compliance, economic and financial risks.

The Management Discussion and Analysis contains statements describing the Companys objectives, projections, estimates and expectations, which may be considered "forward-looking statements within the meaning of applicable laws and regulations. The Companys actual results, performances, or achievements may differ materially from those expressed or implied. Key factors influencing the Companys operations include but are not limited to, economic conditions affecting demand, supply and pricing, raw material price volatility, changes in government regulations and tax policies, economic trends, competitive pressures and other incidental factors. The Company assumes no obligation to publicly amend, modify, or revise any forward-looking statement in response to future events or developments.