greenply industr share price Management discussions

Global economy

The global economy has been reeling under the impact of several macro-economic challenges over the past year, including geopolitical headwinds like the Russia-Ukraine war, food and energy crisis in Europe, and mounting inflationary pressures across key economies. Consequently, these have resulted in widespread supply chain disruptions. The commodity prices shot up and profoundly impacted global trade.

However, reviving consumer sentiment and investor confidence, global economic output is expected to witness steady growth. The employment scenario in the US and other advanced economies has improved from pandemic levels and rising disposable income is also likely to facilitate growth in the coming years. Few major emerging economics are showing signs of recovery, fuelled by government focus on infrastructure and manufacturing sectors.

Central banks monetary policies are expected to result in a drop in global inflation from 8.7% in CY22 to 7.0% in CY23 to 4.9% in CY24. It is anticipated that the pent-up demand in numerous economies, along with a considerable reduction in inflation, will contribute to accelerated economic growth in CY23. The global economy is anticipated to experience a growth rate of 2.8% in CY23, which is expected to gradually increase and stabilise at 3.0% in CY24. Emerging markets and developing economies, including India, are powering ahead in many cases, with growth rates expected to witness a significant upsurge this year.

[Source- IMF World Economic Outlook, April 2023]

Outlook

Structural improvements can have a positive impact in an inflationary environment by bolstering productivity and unwinding global supply chains. Efforts by central banks to tighten monetary policy are also anticipated to curb inflation, which has been a concern for past few years. This will also aid in stability in the prices of essential commodities, thereby offering some relief to the consumers. Targeted, need-based measures of governments and central banks across the globe will help shape a promising outlook for global economic growth, going forward.

Indian economy

The Indian economy emerged as one of the fastest growing major economies in the world in FY23. The economy experienced a strong rebound during the second quarter of the same year, driven by the normalisation of domestic supply chains and improved consumer sentiments. The corporate sector came out of the pandemic with healthy balance sheets demonstrating strong rebound in the consumer demand. Banking sector depicted a steady growth in corporate credit implying strong overall industrial activity. Furthermore, the Central Governments significant boost on capital expenditure played a crucial role in facilitating this rebound.

The Government has managed to maintain a favourable domestic policy environment and prioritise structural reforms, allowing the countrys economy to remain resilient amid global challenges. Government initiatives, including the PM Gati Shakti - National Master Plan, the National Monetisation Plan (NMP) and the Production-Linked Incentive (PLI), have been instrumental in fostering economic growth. The Reserve Bank of India (RBI) has also exercised prudent and proactive measures to ensure financial stability and address liquidity constraints.

Private consumption in FY23 is projected to have clocked a growth rate of 7.7%. The surge in private consumption has also fuelled production activities, leading to higher capacity utilisation across various sectors. In the Union

Budget FY24, there has been a notable surge of 37.4% in budgeted capital expenditure, with the railways receiving the highest-ever capital allocation of INR 2.4 lakh crore. Additionally, the allocation of interest-free loans to states for capital expenditure has been increased to INR 1.3 lakh crore, up from INR 1.0 lakh crore in FY22. Projections indicate that Indias economy will continue to progress and expand at a rate of 7.2% during the fiscal year 2022-23.¹

Outlook

The International Monetary Fund (IMF) has recognised India as a relative ‘bright spot in the global economy. This recognition stems from the countrys sound macroeconomic policies, the presence of a robust digital public infrastructure and a remarkable increase in exports. The availability of credit, stable financial markets and the Governments focus on infrastructure are expected to aid substantial investments. India shows signs of recovery and pent-up demand over the last two years offers hope for new growth opportunities in the domestic market.

Industry overview

Indias real estate industry

Real estate is the second-largest employer in India after agriculture. Being a crucial sector of the Indian economy, it is estimated to account for approximately 13% of Indias GDP by FY25 and reach USD 1 trillion by FY30². Housing, retail, hospitality and commercial are the four broad subsectors of this industry.

Residential demand in India has remained relatively unaffected in light of elevated inflation, construction costs and the synchronised rate hikes implemented by the Reserve Bank of India. In fact, the sector witnessed a surge in annual sales, reaching a nine-year high in CY22, indicating strong market demand.

The demand for office spaces, urban housing and semi-urban housing is on the rise due to a growing population and rapid urbanisation.³ This has attracted investors to both the residential and commercial real estate. The Government has introduced various incentives to support the industry, including investments in smart city projects and tax exemptions on housing loan interest. In line with the PM Awas Yojana (PMAY), the Government has allocated INR 79,590 crore in the affordable housing segment in the Union Budget 2023-2024. The objective of this is to construct 80 lakh houses for eligible beneficiaries of the PMAY in both rural and urban areas, addressing the need for affordable housing.⁴

Outlook

Two years following the pandemic, the real estate sector in the country gained momentum in the year 2022 as consumer sentiments improved. The low interest rates and government support to the sector aided this recovery in the housing sector demand. Apart from the residential sector, the commercial space too attracted investors and homebuyers. This rebound in residential and commercial demand will act as a key growth driver to the furniture and allied industries. In addition to this, rapid population growth, low mortgage rates and inflated housing demand will have a positive contribution to this sectors expansion.

Housing sales are at a nine-year high

Indias furniture industry

India is the fifth-largest producer and the fourth-largest consumer of furniture worldwide. The domestic furniture market is presently estimated to be at USD 32 billion. However, it is anticipated to reach USD 37.7 billion by 2026, expanding at a double-digit CAGR of 13%⁵ during 2020-2026. It has been observed that northern and southern India are the primary regions boosting this demand for furniture. Rapid urbanisation and expanding real estate in India are two major propellers for the furniture industrys growth. This sector has also witnessed substantial investments due to an enhanced focus on infrastructure renovation.

Rising disposable income and higher living standards are boosting the demand for aesthetic and unique home d?cor options. Consumers today prefer affordable products with enhanced aesthetics, rather than prioritising durability. This trend has significantly contributed to the growth and popularity of ready-made furniture. Ready-made furniture is also favoured due to minimal maintenance and mobility.

Indias overall exports in FY23 were estimated to be USD 770 billion, marking a remarkable growth of 13.8% over FY22⁶. This can be attributed to numerous interventions from the Government. Export promotion schemes such as the Merchandise Exports from India Scheme (MEIS) are incentivising furniture manufacturers and are catalysing exports.

Additionally, the governments focus on improving infrastructure and the ease of doing business has also contributed to the growth of Indias furniture exports. However, challenges such as increasing competition from other countries and fluctuating global demand continue to pose a threat to the sustainability of this growth.

Online platform

The online space for Indias furniture industry players has grown substantially in recent years. With the rise of e-commerce platforms, furniture companies are now able to reach a wider audience and expand their customer base. Additionally, the use of advanced technology such as virtual reality and augmented reality has revolutionised the way customers shop for furniture online, providing them with a more immersive and personalised experience.

The e-commerce market for Indias furniture and appliances is projected to reach a value of USD 8.6 billion, representing 12% of the total e-commerce market in India. This segment is anticipated to sustain the growth momentum in the coming years, with a projected CAGR of 13.9% from 2023 to 2027. As a result, the market volume is expected to reach USD 14.4 billion by 2027⁷.

Indias wood panel industry

Indias wood panel industry includes plywood, MDF, particle boards and laminates. This segment is estimated to be worth INR 40,000 crore⁸ in FY23 and is anticipated to record an upsurge due to rising urbanisation, a greater thrust on infrastructure and a higher demand for affordable housing. Demand for wood-based panels is likely to grow from investments in domestic and commercial development projects. Despite the availability of numerous alternatives for wooden furniture, the demand for wood panels remains high due to its durability, cost-effectiveness, easy repair ability and the versatility.

Indias plywood industry

Indias plywood market showed a substantial growth in FY23. The demand for plywood in India is driven by urbanisation and consumer preferences due to its strength, dimensional stability, durability, and versatility. Additionally, the rising demand for renovation activities, coupled with the growing popularity of semi- and fully furnished apartments, is contributing significantly to the markets expansion. The Indian governments thrust on low-cost housing for its citizens is also expected to spur plywood demands. The Government has implemented several policies, such as Pradhan Mantri Awas Yojana, Delhi Development Authority (DDA) Housing Scheme and NTR Housing Scheme in Andhra Pradesh, to name a few, aimed at encouraging the development of real estate sector. Additionally, the increasing demand for superior quality and premium plywood variants, driven by the improving living standards of consumers, is anticipated to further bolster the plywood market in India in the coming years.

Indias MDF (Medium Density Fibreboard) Industry

The MDF industry in India is currently estimated to be over INR 4,000 crore and is expanding at a compound annual growth rate (CAGR) of 15%.⁹ The medium-density fibreboard (MDF) industry is witnessing an upsurge in demand for wood-based products for applications in furniture, flooring, and construction. However, the Indian MDF industry faces several hurdles, such as raw material availability, high energy costs, and intense competition from other wood-based products.

Around 30% of the worlds furniture needs are satisfied by plywood and 70% by MDF, whereas in India, this is other way round. However, with the rising acceptance of MDF, has been increasing its penetration over the past decade, this gap in the Indian market is anticipated to decrease.

Additionally, the industry faces a significant challenge from cheap imports, which has prompted industry associations to combat this issue through the imposition of anti-dumping duties. However, the Central Government possesses discretionary power to accept or reject the findings of the review conducted by the Directorate General of Trade Remedies (DGTR).

Growth drivers of the organised wood panel industry

• Revived real estate demand

The residential real estate market in India experienced a consistent upswing in demand and prices during the first quarter of 2023, signifying the continuation of a positive trend observed over the past five quarters. Notably, Bengaluru, Mumbai, Chennai, and Hyderabad took the lead in price appreciation, with a notable increase ranging from 5% to 7%. In terms of sales, Q1 FY23 sales totalled 79,126 units, representing 1% growth compared to the previous year. ¹⁰

Commercial properties, including office buildings, hotels, and restaurants are an important part of the real estate sector. The growth of the commercial real estate industry in India is influenced by various factors, including the implementation of digitalisation and increasing number of tenants. Additionally, economic growth, transparency, and efficiency have boosted the development and occupancy of commercial real estate. Commercial real estate leases are typically long-term, with rental rates increasing by 15% every three years, making it a lucrative prospect for developers. This has spurred the construction of numerous new office space projects that are currently in progress and will soon be available for use. The expanding real estate industry presents significant opportunities for furniture manufacturers, distributors, and retailers, acting as a key catalyst for their growth .¹¹

• Increased acceptance of sustainable and eco-friendly products

A majority of consumers believe that companies should strive hard to reduce their carbon footprint and transition to becoming net-zero emitters. Moreover, most of them have expressed that these factors are crucial in determining their purchasing decisions, indicating a growing demand for goods and services from environmentally responsible businesses.

In response to this, the Company has introduced an innovative product known as Green Club Plus Seven Hundred. This cutting-edge product is Indias first 2-in-1 zero emission plywood, and is in line with Greenplys commitment to environmental responsibility by providing interior spaces with improved air quality. As part of the Green Club range, which represents the Companys premium plywood offerings, Green Club Plus boasts an impressive array of features, including fire retardant properties and exceptional acoustic performance.

• Higher consumer spending

As the disposable income of consumers rises, they tend to increase discretionary expenses on home decor and furniture, consequently increasing demand for wood panels. This has led to a shift towards branded products and an increased preference for high-quality, durable wood panels.

• Growth of organised players and consumer preference for branded products

In the post-pandemic era, consumers are increasingly seeking seamless experiences in discovering, researching, evaluating options, and making purchases. This shift in consumer behaviour has prompted organised players to develop new retail formats designed to cater to the preferences of modern consumers. This has also revitalised the demand for branded products and brought with it access to innovative technologies. The expansion of organised players is a key catalyst for the industrys growth, as they have made substantial investments in state-of-the-art manufacturing facilities, ensuring consistent quality and a reliable supply chain. All these improvements have contributed to a surge in consumer demand for branded furniture.

Government initiatives

The PLI scheme offers financial incentives to qualified businesses to ramp up furniture production. The programme intends to scale up domestic manufacturing and Indias share in the global furniture industry.

The ‘Make in India campaign promotes domestic manufacturing and promotes foreign investment in a variety of sectors, including furniture. These government initiatives are meant to accelerate the development of the furniture industry in the country and establish the nation as a major economic player.

The Governments initiative to create Urban Infrastructure Development Funds (UIDFs) will be supervised by the National Housing Bank. As per the Union Budget 2023-24, an allocation of INR 10,000 crores has been made to this end .^13.15 UIDFs will

facilitate infrastructure development in Tier II and Tier III cities, which will have a spillover effect on furniture demand.

A sum of INR 79,000 crores for the Pradhan Mantri Awas Yojana has been allocated according to the Union Budget 2023–24. This is an increase of 66% when compared to the previous year. The PMAY will utilise this amount to ensure the availability of affordable housing¹³ .

The Government has launched several initiatives to upskill workers in the plywood industry. The Pradhan Mantri Kaushal Vikas Yojana (PMKVY) and the National Skill Development Corporation (NSDC) are two such programmes that offer training and skill development opportunities to these workers, helping them to improve their productivity and efficiency.

The Government has announced the establishment of a furniture park in Uttar Pradesh, which will provide common facilities for manufacturing and marketing, testing and certification facilities, and training facilities for artisans and craftsmen in the furniture industry. This initiative is expected to boost the furniture industry in the state and create employment opportunities for local furniture retailers.

A scheme that has been instrumental in promoting the growth of the furniture industry is the Duty Drawback Scheme. Under this scheme, exporters are refunded the duty paid on inputs used in manufacturing exported products. This has helped furniture manufacturers reduce their input costs and has increased their competitiveness in the global market.

The Export Promotion Capital Goods (EPCG) scheme is another important initiative that has helped the furniture industry in India. This scheme allows manufacturers to import capital goods at zero duty for the purpose of manufacturing goods for export. This has enabled manufacturers to upgrade their technology and improve product quality.

Company overview

Greenply Industries Limited (hereafter referred to as ‘the Company or ‘Greenply) is a leading brand of plywood & allied products Greenplys cutting-edge manufacturing facilities in Tizit (Nagaland), Kriparampur (West Bengal), Bamanbore (Gujarat), and Sandila (Uttar Pradesh) have an annual plywood production capacity of 48.4 million square metres. Notably, the Company has commenced trial production at its Medium Density Fibreboard (MDF) unit in Vadodara, Gujarat. Greenply also has a facility in Gabon,

Products and brands

Greenply has a comprehensive range of renowned brands, comprising high-quality products, to cater to diversified customer preferences across regions and price points. The products are aligned with evolving consumer and market trends. Greenply maps and analyses these trends and continues to innovate its offerings in tandem with evolving consumer needs.

Plywood and blockboards

Incorporating technological advancements armed with several certifications, Greenply not only provides excellent plywood and blockboard with maximum precision, uniform thickness and greater strength, but it also ensures safe indoor air quality. Being the best-selling brand of plywood in India, Greenply offers branded, quality plywood at reasonable prices. Greenply also manufactures the finest commercial, marine-grade or blockboard plywood of different sizes and thicknesses, across various price points. Plywood and blockboards are branded as Green, Optima G, Ecotec, Bharosa and Jansathi.

Greenply, as industry pioneers in the plywood sector, has consistently strived to introduce innovative solutions, such as introducing E-0 emission plywood to the Indian market. The zero-emission plywood comprises various products, including Green Absolute Calibrated Ply, Green Gold, Green Gold Platinum, Green Defender, Optima-G and numerous others. This plywood adheres to one of the strictest formaldehyde emission standards and is certified by the California Air Resources Board (CARB), as authorised by the Environment Protection Agency (EPA).

The Company also offers an extraordinary product, Green Club Plus Seven Hundred, which has remarkable features. It is Indias first zero-emission plywood and has an antibacterial coating that makes the product safe for every household. This pioneering 2-in-1 plywood, with the combined power of two functionalities, conforms to the structural grade of IS:10701 and possesses fire-retardant properties as per IS:5509 standards. Undergoing the rigorous Penta (5) Tech process, the Green Club Plus Seven Hundred plywood guarantees precision, strength, and quality by eliminating core gaps and undulations.

Decorative veneers

Made from unique, hand-picked varieties from America, Brazil, Europe and Africa, Greenplys veneers add a hint of a wooden look to contemporary furniture. Each veneer flake has a distinctive pattern, is sturdy and complies with E1 criteria. The Company offers a vast range of decorative veneers.

Flush doors

Greenplys flush doors are designed to provide security, protection, strength, dimensional stability, and high impact resistance. The flush doors are specifically designed to cater to consumers demands for residential or commercial usage. These doors come in three varieties: non-decorative wooden flush doors, one-sided decorative doors and doors with ornamental panels on both sides. All these doors have lock provisions on both sides. The doors undergo protective treatment and are sturdy enough to withstand knocking and slamming. To prevent warping and delamination of products, several precautionary measures are also taken. Greenply offers a selection of flush doors at affordable prices.

Speciality plywood

Greenply has the best selection of products from Green Compreg. Green Compreg is used in several products, from railways to automobiles and building structures. Backed by exceptional quality and performance, Greenplys plywood is resilient and tightly compressed.

PVC products

Greenplys PVC products have always been the preferred material for interiors. Products from Greenply Ndure are of stellar quality and durable. Green Ndure promises to make living spaces good looking and complete and are affordable, fireproof and waterproof. The Green Ndure line of PVC/WPC boards and uPVC doors offers dual assurance of aesthetic appeal and durability. Sustainability has become even more crucial now. Also, Green Ndure is eco-friendly and is a perfect choice for customers who are environmentally conscious.

Medium Density Fibreboard (MDF)

Medium-density Fibreboard (MDF) is one of the fastest-growing wood panel products. Its high demand is fuelled by changing consumer preferences. MDF also offers a cost advantage over its substitutes. The portfolio includes all possible product sub-categories, such as thin and thick, pre-lam and other value-added products, under the brand name Greenply MDF.

Greenply has employed the best-in-class technology, PROD-IQ NEO TECH, to manufacture MDF (Medium Density Fibreboard) with exceptional precision. This innovative German technology harnesses the power of Artificial Intelligence to analyse microfibres, ensuring that each board is crafted with the utmost accuracy and precision. The Company also offers MDF boards that incorporate advanced technology to withstand high humidity levels and maintain dimensional stability. Additionally, Greenply provides HDF (High-Density Fibreboard) boards that are built to resist expansion and contraction caused by fluctuations in humidity levels, making them ideal for demanding applications. Moreover, they offer pre-laminated MDF boards that exhibit exceptional durability, resistance to abrasion, and protection against cracks and stains.

Manufacturing facilities

Currently, with four state-of-the-art manufacturing facilities for plywood at Tizit (Nagaland), Kriparampur (West Bengal), Bamanbore (Gujarat) and Sandila (Uttar Pradesh), the Company has a total capacity of 48.4 million square metres per annum. Outside India, the Company has a unit in Gabon, West Africa, with a face veneer peeling capacity of 96,000 CBM per annum. It has recently started production at its Medium Density Fibreboard (MDF) unit in Vadodara, Gujarat.

Plywood and allied (Own Manufacturing) Locations	Capacity (Mn Sq mtrs pa)
Bamanbore, Gujarat	15.80
Sandila, Lucknow (U.P.)	13.50
Kriparampur, West Bengal	11.00
Tizit, Nagaland	8.10
Total plywood & Allied Existing Capacity	48.40
Plywood & allied (Domestic Pa_ner) Location	Capacity (Mn SqM pa)
Bareilly, U ar Pradesh	10.00
Hapur, U ar Pradesh (Upcoming)	7.50
Face Veneer Peeling Location	Capacity (CBM / pa)
Gabon, West Africa	96,000
MDF Manufacturing Location	Capacity (CBM / pa)
Vadodara, Gujarat	2,40,000

Business strengths

Having a leading position and high brand equity

Greenply is a trusted name in the plywood sector, with rich industry expertise spanning three decades. It has consistent positioning and strong brand recall.

Innovative and eco-friendly products

The Company makes investments in cutting-edge technology to promote product innovation and superior quality. The Company was the first to release E-0 plywood that was approved by the California Air Resources Board (CARB) and issued by the Environmental Protection Agency (EPA). This highlights the Companys ongoing efforts to introduce unique products to the market to gain competitive advantage

Catering to all customer segments

The Company offers a broad selection of products at all price points, catering to both the premium and value market segments. Brands such as Green, Club, and Optima G serve as indicators of Greenplys presence in the premium market.

Through brands like Ecotec, Bharosa and Jansathi, the Company meets the requirements of the mid- and mass-market segments.

Pan-India distribution network

The Company has a robust dealer network of more than 2,300 dealers who are present in over 1,100 cities, towns, and villages in 27 states and 6 union territories. They are served by 56 branches, which are prudently positioned between urban and contemporary construction hubs. As a result, the Company can market its products all over the nation.

Strategically located manufacturing facilities

The Companys manufacturing facilities are strategically located close to raw material sources. This guarantees the necessary raw material supply at a reasonable cost.

Operational sustainability

Greenply is committed to promoting sustainable growth, and thus, each of its manufacturing facilities is surrounded by plantation operations. As a result, the Company has been able to source a steady supply of raw materials and offer inclusive, long-term growth.

• Expanding the product portfolio

The Company intends to diversify its product portfolio by introducing various products under the wood panel and building material industry.

• Making ESG a priority

Greenply prioritises the production of plywood that is environment-friendly, ensuring that it is free from harmful emissions and gases, making them the preferred option for usage in furniture, construction and interior design. Greenply also focuses on waste reduction and the promotion of Agro-forestry methods, which help preserve natural resources and minimise environmental impact.

• Introducing cutting-edge and futuristic products

The Company is diversifying its product portfolio with the introduction of MDF boards. It has made substantial advancements in its manufacturing processes and facilities and adopted digital advancement across multiple organisational levels. The Companys customer-centric approach and focus on product innovation have played a pivotal role in driving its growth in the MDF segment.

• Encouraging employee engagement

Greenply encourages a culture of learning and growth as it considers its people its most valuable asset. The Company has been recognised as a ‘Great Place to Work for three successive years, starting in 2020.

• Promoting automation and digitisation

The company has enhanced its manufacturing and supply chain capabilities by prioritising the establishment of a digital ecosystem and implementing automation. This strategic approach has enabled the Company to achieve seamless operations and improved tracking capabilities.

• Increasing the manufacturing base in various locations

Greenply has established a unit in Vadodara, Gujarat, equipped with European machinery and manufacturing items at an impressive daily installed capacity of 800 Cubic Board Metres (CBM). In addition to this, Greenply has further expanded its existing plywood capacity through their new unit in Sandila, Uttar Pradesh. The Sandila facility will manufacture value-added products, adding to the Companys diverse offerings. Furthermore, Greenply has two units in Bareilly, Uttar Pradesh, operating through partnerships that specifically focus on the production of plywood, doors, film face plywood, and other related products.

Threats

Intense competition

The plywood and wood products industry are highly competitive, with both local and international players vying for market share. The Company may face challenges from competitors offering similar products at lower prices or with innovative features.

Raw material availability and cost

Fluctuations in the availability and cost of raw materials, such as wood and adhesives, can impact production costs and profitability of the Company. Changes in environmental regulations or unsustainable sourcing practices could also affect the supply chain.

Technological disruption

Advances in technology and new manufacturing methods could render the Companys existing production processes obsolete, requiring significant investments in research and development to stay competitive.

Changes in consumer preferences

Changes in consumer preferences and trends towards alternative materials or construction methods could affect demand for traditional plywood products.

Financial overview

Standalone

Income statement analysis

The total income of the Company rose to INR 1,66,707.07 lakh in FY23, surpassing the previous years figure of INR 1,39,005.94 lakh in FY22. This represents a YoY growth of 19.92%.

EBITDA experienced a surge to INR 16,200 lakh in FY2023, against the previous years value of INR 14,360 lakh in FY2022. This indicates a YoY growth of 12.81%.

The Company witnessed an EBITDA margin of 9.72 % as compared to the recorded EBITDA margin of 10.4 % in FY22.

There was an increase in the profit after tax to INR 10,934.52 lakh in FY2023, as compared to INR 8,881.33 lakh in FY2022. This indicates a YoY change of 23.1 %.

PAT margin increased to 6.65 % in FY2023 from 6.45 % in FY2022.

Balance sheet analysis

Total debt amounts to INR 1,830 lakh as of March 31, 2023, compared to INR 4,370 in March 31,2022.

Net debt stood at INR 632 crore as on March 31,2023

As of March 31, 2023, the net debt-equity ratio stood at 0.03 times.

The net working capital days as of March 31, 2023, were 28 days, as compared to 29 days reported on March 31, 2022.

The Return on Capital Employed (Pre-tax) was 20.75 % as of March 31, 2023, as compared to a recorded ROCE of 24.5% recorded on March 31, 2022.

As of March 31, 2023, the Return on Equity was 19.2 %, as compared to 19.3% recorded on March 31, 2022.

Key operating metrics-Plywood

Particulars	FY2023	FY2022
Annual Capacity (million. sq. mtrs)	34.9	34.9
Production (million. sq. mtrs)	29.8	31.3
Sales Volume (million. sq. mtrs)	65.4	57.5
Capacity Utilization (%)	86	90
Details of significant change in key financial ratios
Particulars	FY2023	FY2022
Debt Equity ratio (times)	0.03	0.09
Debt Service Coverage Ratio (times)	5.45	5.3
Return on Equity ratio (%)	19.2	19.3
Trade Receivables Turnover ratio (times)	9.27	8.51
Trade Payables Turnover ratio (times)	5.63	5.29
Net Working Capital Turnover ratio (times)	13.58	20.63
Return on Investments (%)	-4.5	14.9
EBITDA/Net Interest (times)	26.31	24.84
Return on Capital Employed (ROCE) (%) (Pre tax)	20.75	24.5
Inventory turnover ratio (in times)	9.45	9.03
Operating Profit Margin (%)	35.51	38.73
Net Profit Ratio (%)	6.67	6.48

Business outlook

The outlook for Greenply remains promising owing to several reasons. There is a rising demand for eco-friendly and sustainable products and Greenply has established itself as a pioneer of such products. It is expected that this pattern will persist, bolstering the demand for Greenplys products. The Company has made significant strides towards sustainability by introducing its zero emission plywood (E0 Grade). This innovative product not only enhances the air quality within interior spaces but also contributes to a safer and healthier environment.

The Company has actively undertaken several branding and marketing initiatives to enhance brand equity and improve visibility in the future. One such initiative involved the launch of a new product, a ‘wooden fragrance diffuser as part of the Demonstration kit for Club 700, which was successfully distributed to trade partners. Additionally, the Company has expanded its reach by establishing over 980 outlet points of sale for effective communication with customers.

Greenply places a high priority on research and development. This enables the Company to innovate and launch new products in response to evolving market trends. Greenply also has an expansive distribution network that enhances its customer outreach across numerous geographies and market sectors.

The Companys future objective is to capitalise on the benefits of the furniture sectors transformation by leveraging the governments decision to broaden the scope of the Goods and Services Tax (GST) under the new regime. Before the introduction of GST, different tax rates across regions caused price differences. However, the implementation of the new GST regime has resolved this concern, bringing about standardized pricing and also more efficient procurement procedures. Consequently, the Company has experienced enhanced growth and is poised to continue thriving sustainably in the years ahead.

Risk management

Risk	Description	Mitigation
Macro-economic risk	An economic slowdown or recession can adversely affect consumer spending for products such as furniture or housing, which can affect the demand for products.	In response to this risk, the Company has developed a diverse product po_olio, offering products at reasonable price points. It also produces emission free products which are in line with the growing awareness of climate change and environmental conservation.
Regulatory risk	Wood is the Companys main raw material, regulations that restrict its sources would have an impact on the Companys operations.	The Company follows sustainable sourcing for all its wood requirements. The catchments areas of all its manufacturing facilities have plantations.
Competition risk	The entry of new competitors into the industry would likely result in intense competition, which could pose a threat to the Companys future expansion.	The Company possesses extensive scale, strong brand recall and operational efficiency that has enabled it to a ain a leadership position in the industry. Its unwavering focus on product innovation, robust dealer network and wide product line across plywood and allied product categories has helped the Company deepen its market presence.
People risk	The inability to acquire and/or retain skilled employees can hinder the Companys ability to manufacture quality products.	The Company offers defined career paths to ensure talent retention and provides the best compensation packages in the industry. On top of that, training and skill development programmes are conducted.

 

Risk	Description	Mitigation
Transpofiation risk	Transpofiation expenses may escalate as a result of geopolitical tensions and rising fuel costs.	The Company has a well-structured logistics management processes beginning from raw material procurement to final product delivery, which ensures uninterrupted operations. The Company has also introduced and implemented an integrated material tracking system for seamless logistics management, enhancing transparency and efficiency at every step of supply chain cycle.
Raw material risk	The Companys inability to source adequate raw materials may impact its capacity to meet the growing demand.	The Companys manufacturing units are located in close proximity to the raw material sources, and it procures raw materials from multiple suppliers at competitive prices.
Brand risk	Any controversy or negative incidents pe_aining to the Company can damage the brands reputation.	The Company maintains a hawkish stance on the market and identifies of any risks associated with its reputation.

Internal control systems and their adequacy

Strong internal control systems appropriate for Greenplys size and operations have been established. The Company exercises appropriate internal controls and standardises operational procedures to protect its assets and maximise its corporate effectiveness. The organisations corporate governance policy, principles and requirements are followed in the establishment and implementation of its internal control and risk management systems.

IT controls system

Greenply has consistently been at the forefront of embracing new technologies and is adopting digitisation to enhance its operational efficiency. An integrated material tracking system is in place for seamless logistics management. To bolster workforce productivity and ensure more proactive business executions, a single mobility platform has also been introduced.

The company has also implemented IT interventions in ramping up infrastructure security, application transformation and sustainability efforts. It uses 2-3 layers of security to prevent spam and phishing and diligently follows e-waste norms. Additionally, it has employed SAP for MDF Division and the Utkarsh tool for quality tracking at its plants.

Empowering our human capital

Greenply retains its industry leadership owing to its proactive human resource management policies. This year, the Company recorded its highest number of new hires. To attract top talent, the Company implemented numerous initiatives for both campus and lateral talent placements. It conducted formal and informal training sessions as well as on-the-job training to assist its people in advancing their careers and improving their skills and knowledge. With the help of both internal and external faculties, several innovative learning programmes were organised to help the Companys talent pool in enhancing their skills and overall development. The Company also organised a monthly incentive programme called ‘Khulke Kamalo Plan and a recognition programme called the ‘High Performance Club, for rewarding stellar performers in its sales team. As of 31st March 2023, the Company has 2,596 employee strength.

Implementing HSE initiatives

Greenply believes that health, safety and environmental (HSE) management key for companys sustainability in the long term. In keeping with this, the Company has launched social and environmental initiatives which will benefit its workforce, the environment and society, at large. The Company also ensures compliance with all applicable industry specific HSE regulations. During the year, it has built concrete houses for its workers close to its manufacturing facilities in Sandila and Vadodara offering them safe and hygienic living conditions.

Caring for the community

Striving to bring about positive change, the Greenply Foundation has undertaken several CSR initiatives centred on healthcare, education and social aid in FY23. Some of these initiatives included actions taken to improve the overall quality of life of the local communities by conducting programmes to ensure girl child education, preventive health care and other similar activities in areas close to the manufacturing facilities.

Greenply has taken a number of CSR initiatives to demonstrate its commitment to the health and well-being of its stakeholders, environmental sustainability, and inclusive growth of the community. These initiatives include product innovation on zero emission (E-0) and programmes on health and well-being. Greenply has successfully acquired the FSC?-FM Certification, which ensures that its plantations are sourced sustainably. The Company also offers accident insurance coverage, health screenings, and eye examination camps for the safety and benefit of its partners. Additionally, Greenply has made a considerable additional contribution to the Friends of Tribals Society (FTSEkal)s Abhiyan movement, which supports the education of tribal and rural children. These initiatives have a positive impact on the community and contribute to building a strong brand reputation.

Environmental preservation

• Through Project Plantation, Greenply focuses on promoting sizable, replenishable plantations with the aim of improving environmental resources and offering additional income to farmers. In Tizit, a nursery and clonal propagation centre were established to distribute planting materials with superior genetics. Free saplings were distributed among local farmers and eventually, they acquired ownership of a particular tree.

• A clonal propagation centre is also set up near the MDF unit in Vadodara for promoting quality saplings.

Healthcare initiatives

• The Greenply Foundation recognises the need for attention in the healthcare sector.

The Companyhas decided to address this concern by offering the necessary healthcare assistance to enhance the lives of those who make up its community.

Educational development

• Along with Udayan Care, a non-profit organisation in West Bengal, Greenply undertook an initiative to help talented and deserving girls from economically underprivileged sections of society. The Udayans Shalini Fellowship Programme, a unique initiative for academic excellence and personality development, was organised to empower girls and women. The Company conducted skill development programme for females to bridge the manpower demand/ supply gap in the industry.

Being a responsible corporate entity

Sustainability remained at the core of business at Greenply. As its operations significantly impact the environment, Greenply has created an Integrated Farm Management Plan/Manual to develop and implement sustainable farm management practices in the project area The ultimate goal of this project is to advance farm forestry in Nagalands Mon district to improve the lives and livelihoods of the local group participants. Greenply received recognition for its approach to forest management and is the first company in the panel industry to have received the FSC?- FM certification.

The recent #Plastic Free Tiranga campaign organised by Greenply, reached over 150 trade architects and 1000 dealers. As part of this campaign, the company distributed flags made of wood and cotton with a letter outlining its sustainability initiatives. The company also chose to offer sustainable festive gifts, such as branded Diwali celebration kit made from eco-friendly materials., to its 1500+ dealers. By prioritizing sustainability in all aspects of its business, the company is committed to making a sustained positive impact on environment and society.

Cautionary statement

The objectives, projections, estimates, expectations, plans, or predictions made by the Company in the Management Discussion and Analysis are forward-looking statements within the meaning of applicable securities laws and regulations. Several factors, including but not limited to global and domestic economic conditions, successful implementation of devised strategies, R&D, growth plans, technological advancements, changes in laws and regulations that apply to the Company, rising competition and the conditions of its customers, suppliers and the overall industry, are likely to have an impact on the Companys performance, causing final results to differ materially from those expressed or projected. Any subsequent development, new information, future events, or other factors that may have an impact on any forward-looking statements do not have to be publicly updated, amended, modified, or revised by the Company except as required by applicable laws.