stylam industries ltd share price Management discussions

Global economy

Volatility in food and commodity prices, together with geopolitical conflicts in Europe were the major impediments that adversely impacted the global economy. These disruptions led to runaway inflation in most economies of the world, prompting central banks to tighten their monetary policy stance to rein in inflation.

According to the IMFs April 2023 World Economic Outlook report, the global economy will register a growth of 2.8% this year before touching 3.0% in CY24. The European Unions economy is projected to experience modest growth, driven by lower gas prices and improved consumer spending. Supply chain constraints and market volatility have considerably dampened consumer sentiment and lowered capital outflows.

Several nations continue to grapple with persistent demand- supply imbalances and decadal-high inflation rates.

In the second half of the fiscal year 2022-23, the global economy appears poised for a gradual recovery from the waning effects of the pandemic and geopolitical tensions. The economic output is expected to witness steady growth, driven by stabilising inflationary pressures, reviving consumer sentiment and investor confidence.

The employment scenario in the US and other advanced economies has recovered from pandemic levels and rising disposable income is also likely to support growth in the coming years, even though the instability in the banking system in the US may have global ramifications. The rate hike cycle of central banks is peaking as inflation is gradually stabilising.

Indian economy

The Indian economy demonstrated resilient growth amid geopolitical tensions and high inflation-induced global economic headwinds. India has emerged as one of the fastest growing major economies and, according to the final advance estimates of the National Statistical Office (NSO), is set to register a growth of 7.2% in FY 2023. The growth in FY 2023 can largely be attributed to the relatively strong performance of the economy in the fourth quarter.

The Reserve Bank of India (RBI) is maintaining a stable monetary policy stance given the sliding inflation trajectory, positive macro tailwinds and increasing consumer aspiration. It maintained a hawkish pause and decided to keep the repo rate unchanged for the second consecutive time.

The Indian Governments initiatives, such as the PM Gati Shakti (National Master Plan), the National Monetisation Plan (NMP) and the Production Linked Incentive (PLI) plan, helped in fostering economic growth. Additionally, stronger prospects for manufacturing, services, agriculture, and related industries, along with improved business and consumer confidence, are expected to support domestic consumption. These factors coupled with accelerated credit expansion, are anticipated to contribute to overall economic growth in the near term.

The Union Budget, 2023-2024, has provided a promising outlook for the consumer products and retail sector. The Governments emphasis on financial inclusion, measures to stimulate rural demand, the Make in India initiative, and support for start-ups are expected to create significant employment opportunities. This will result in an increase in disposable income and consumer demand, leading to further economic growth.

Industry overview Indian real estate sector

India demonstrated extraordinary resilience to global uncertainties while maintaining robust development in all sectors, owing mostly to strong domestic demand. The consumer confidence and optimism were also evident in the real estate market, which rebounded from a protracted downturn in FY 2023 and witnessed growth in all real estate-related segments including residential, commercial, retail, and warehousing. Strong demand from homebuyers has prompted developers to announce new projects, increasing supply and driving up real estate prices in Indias main cities, where demand has surged in the preceding year.

In FY 2023, the property sales index climbed by 36% year on year, with a minor sequential increase of 1.2% from October to December. The upward trend is due to increased end-user demand for homeownership, which is complemented by growing confidence in residential real estate as a secure investment option. 1

Increase in property sales index Outlook

The real estate markets in major cities will continue to increase in the upcoming year due to surge in both current and new demand. Foreign investors, who intend to purchase real estate in India in the future, have taken notice of the decline in the value of rupee, which has dropped by 12% over the last eight months. Although there are few headwinds but increased confidence among stakeholders and a rise in institutional investment will promote the development of solid foundations for the real estate market in major cities.2

Growth drivers

Urbanisation - Major corporations are getting more and more interested in commercial real estate. In light of the recent reopening of several MNCs and large business offices followed by adoption of a back-to-office strategy, this sector is one of the fastest-growing real estate categories. The adoption of digitalisation, increased tenant confidence and a host of other factors are contributing to the expansion of the commercial real estate sector in India. Likewise, overall economic expansion, openness, and competence have had an impact on the development and tenancy of commercial real estate.

Foreign investments - The Indian real estate market has also been significantly influenced by foreign investment. Due to the potential for long-term growth, a number of significant foreign investors have recently poured money into the nations real estate market. This has supported market stability by countering any decline in domestic demand.

Rebounding economy - The rebound in the economy have raised the demand for commercial real estate. The long term commercial real estate contracts increase by 15% for every 3 years. The developers make a substantial earning from their venture which simultaneously supports the development of new office space projects. Additional factors influencing the increase in demand include creative office space concepts, business- friendly initiatives, and top-notch amenities for renters.3

Global furniture industry

The global furniture market is expected to grow annually at a CAGR of 5.02% for the forecast period of 2023-2027. The furniture market is set to generate revenue of USD 766.20 billion in 2023, with the category of living room furnitures accounting for the markets largest share with a USD 227.70 billion valuation.4 Industry expansion is also being accelerated by the growing need for adaptable, multifunctional furniture that are portable and fit easily in compact spaces. Product demand is additionally impacted by residential and infrastructure development, such as the construction of community centres, hospitals and government institutions.

Indian furniture industry

The rapidly expanding construction industry and the advancement of smart city programmes are currently two major drivers favouring the furniture market in India. The Indian furniture market is expected to grow annually at a CAGR of 8.19% for the forecast period of 2023-2027. The markets largest category, home decor, is expected to generate a market volume of USD 1.75 billion in 2023.5 A number of major drivers are driving the market, including the continued rise of smart cities, the inclusion of cutting-edge technology in manufacturing, and growing living standards.

Global laminates industry

The growing importance of the construction industry, which drives the laminates market has been fueled by the rising demand for commercial space in both developed and emerging nations as a result of the expansion of service industries like IT, BFSI and telecom. The extensive features of high-pressure laminates and the rapidly growing construction sector with rising purchasing power are the two aspects anticipated to increase demand for laminates and support the expansion of the global market. The decorative laminate market is projected to grow from USD 45.55 billion in 2022 to USD 71.0 billion by 2030 exhibiting at a CAGR of 5.72% during the period between 2022 and 2030.6 The increase in demand for decorative laminates, which are widely used in the construction industry, is driving market growth. Performance optimisation of the product through technological innovation and progress will increase its utilisation in downstream applications.

Indian laminates industry

Indias market for decorative laminates is primarily driven by rising consumer spending per capita on home furnishings. The decorative laminates market in India is predicted to grow at a CAGR of 5.8% between FY 2023 and FY 2028, reaching an estimated value of USD 2.4 billion by 2028. The increasing number of ready-to-assemble (RTA) cabinets, flooring and furniture has

also influenced buyers to choose more contemporary styles for their home furnishings. The need for ornamental interior items like laminates in gymnasiums, convention centres, indoor sports clubs, and auditoriums has also expanded as a consequence of Indias brisk commercial infrastructure development. 7

Global acrylic solid surface industry

The size of the global market for acrylic solid surfaces was estimated at USD 1,536.19 million in 2022. Moreover, it is anticipated to grow at a CAGR of 6.95% over the following five years to reach USD 2,298.35 million by 2028.8 The key element driving market expansion is an increase in the usage of aesthetically pleasing designs in a variety of colours and shapes to decorate homes, as well as an increase in the rapid urbanisation of non-residential buildings. Additionally, increasing research and development efforts in the industry and rising demand from emerging nations will further open up additional opportunities for the acrylic solid surface market during the projected period between 2023 and 2028.

Company overview

Stylam Industries is one of the fastest growing companies in the high-quality decorative laminates and associated goods sector. In India, the company is regarded as a pioneer in establishing the PU+ Lacquer Coating process and producing laminate finishes of high quality and significant added value. They also manufacture solid acrylic surfaces and panels using cutting-edge technology. With over thirty years of experience in the field, the Company runs Asias largest single-location laminate production factory with a diversified product line that caters to a wide range of customer demands. The Company has also expanded into a new market and built a short cycle press capacity for laminating impregnated paper on Medium Density Fibre (MDF) panels.


• Stylam Industries holds a dominant market position in southern India due to the regions supremacy in the domestic material. The Company primarily focuses on increasing investment and concentrate on growth in that region prior to turning their attention to the northern, western and eastern part of the country.

• (Current Disposable income data to be added. Not available in any reliable sources)

• Growing urbanisation is another key factor that is fuelling the expansion of the Indian furniture industry. It is estimated that 40% of Indias population will reside in urban regions by 2025 which will account for more than 60% of the overall consumption of the country. Moreover, it also offers a business potential to the Company given it is a significant player in the industry.

• Supportive government programmes such as the push towards the creation of smart cities and the Pradhan Mantri Awas Yojana are promoting the expansion of the real estate sector9.


• What are the potential challenges that the Company has faced in achieving its revenue target?

• What changes has the company made to its business procedures with respect to the challenges it has faced?

• What challenges did the Company have acquiring raw materials the year prior, and how did it overcome those challenges?

Risk and mitigation

• Is there any new system that the Company has undertaken to identify potential risks?

• What are the various strategies taken by the Company to mitigate those risks for the year under review?

The Company operates with a clear organisational framework. To avoid any disagreements or communication gaps between two or more departments, the information flow is explicitly specified. Each Department has second-level positions set up to provide uninterrupted work in the event that the functional heads are unavailable. In order to guarantee the availability of raw materials, consumables, essential spares, and tools for scheduled production programmes, certain policies are followed with respect to inventory maintenance. A continuous process of efficient cost-cutting measures is being implemented, considering the markets changing conditions.

Internal control systems

The Company has built internal control systems that are appropriate for its size, operations, and complexity. These systems cover all of the crucial business areas that qualified auditors and internal auditors routinely evaluate and test. The internal control system assures that accounting management effectiveness and management information are reliable, measurable and verifiable. The system also guarantees adherence to all relevant rules and regulations, safeguards of the Companys assets, and the recognition of crucial risk areas for effective mitigation.

Performance at a glance of last 10 years - standalone


FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23


184.9 213.8 249.4 294.3 338.0 460.6 462.2 479.5 659.4 952.13


32% 16% 17% 18% 15% 36% 0% 3% 38% 44%


20.5 22.4 30.1 46.8 51.6 79.9 79.6 99.04 103.6 154.81


11% 10% 12% 16% 15% 17% 17% 21% 15.71% 16%

Other income

2.0 0.7 0.7 0.1 0.0 1.6 1.0 1.1 8.0 1.4

Depriciation & Amortisation

3.3 4.2 4.7 5.7 10.8 18.2 21.0 23.1 23.3 19.9


19.2 18.8 26.2 41.2 40.8 63.3 59.6 77.0 88.3 136.2

EBIT Margin

10% 9% 10% 14% 12% 14% 13% 16% 13% 14%

Finance Cost

6.7 4.9 6.5 10.0 7.7 11.4 10.9 6.0 7.83 8.2


12.5 13.9 19.7 31.2 33.1 51.9 48.7 71.0 80.48 128.0

PBT Margin

7% 6% 8% 11% 10% 11% 11% 15% 12% 13%

Extra-ordinary Items-Expense

PAT- Reported

9.4 9.4 12.2 19.6 20.1 38.8 18.9 55.3 61.0 95.9

PAT- Margin-Reported

5% 4% 5% 7% 6% 8% 4% 12% 9.3% 10%

PAT- Adjusted

9.4 9.4 12.2 19.6 20.1 38.8 34.1 55.3 61.01 95.9

PAT margin-adjusted

5% 4% 5% 7% 6% 8% 7% 12% 9% 10%

Interest Coverage Ratio

2.9 3.8 4.0 4.1 5.3 5.5 5.5 12.8 11.3 16.6



FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23

Share Capital

7.3 7.3 7.3 7.3 8.5 8.5 8.5 8.5 8.5 8.5

Other Equity

27.3 36.7 49.0 69.2 138.1 177.0 195.8 251.2 307.98 403.9

Shareholders Fund

34.7 44.0 56.3 76.5 146.6 185.5 204.3 259.7 316.45 412.4

Loan Funds

73.3 81.7 117.0 184.0 162.0 189.0 118.5 59.2 79.5 46.9

Trade Payables

14.3 13.1 21.0 18.4 34.2 27.4 35.5 51.5 58.0 39.8

Other Liabilities

9.0 10.6 16.7 24.2 31.8 36.2 37.1 37.0 35.3 39.2

Total Liabilities

131.3 149.4 211.0 303.1 374.6 438.1 395.3 407.4 489.3 538.4

Gross Block

77.0 79.2 91.3 120.1 223.5 252.0 283.1 296.6 310.0 322.8

Net Block

50.7 48.7 56.3 79.7 173.3 184.5 195.0 187.8 178.7 171.8


20.4 30.7 55.4 108.7 0.9 12.7 11.2 0.0 - 12.8

Property held for sale

49.0 49.0


24.6 25.5 43.2 53.9 60.9 66.2 66.7 71.9 132.9 159.8


26.3 33.6 40.2 46.9 57.2 78.9 87.4 98.8 118.7 125.9

Cash and Bank Balances

3.6 1.9 1.5 1.4 4.3 2.2 6.1 15.1 7.6 25.7

Other Assets

5.7 9.1 14.4 12.6 28.9 44.6 28.9 33.7 51.2 42.4

Total Assets

131.3 149.4 211.0 303.1 374.6 438.1 395.3 407.4 489.3 538.4


Return Ratios

FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23


29.9% 23.8% 24.2% 29.6% 18.0% 23.4% 17.5% 23.8% 21.2% 26.3%

ROCE- Pre Tax

19.5% 16.5% 17.7% 19.1% 14.5% 18.7% 17.3% 24.8% 26.0% 31.6%

ROCE -Post Tax

14.2% 10.9% 10.8% 12.0% 8.7% 13.9% 12.0% 18.0% 20.28% 24.2%

Gearing Ratio

1.9 1.9 2.0 2.2 1.8 1.6 1.5 1.2 1.2 1.30

Net Debt/Equity

2.0 1.8 2.1 2.4 1.1 1.0 0.5 0.2 0.2 0.05

FA Turnover Ratio

2.8 2.7 2.9 2.8 2.0 1.9 1.7 1.6 2.2 3.0

Inventory Days

55 43 50 60 62 50 53 53 61 56

Debtor Days

46 51 54 54 56 54 66 71 60 47

Creditors Days

22 23 25 24 28 24 25 33 51 32

Cash Conversion Cycle

79 70 79 90 90 80 93 91 70 71