Greenply Industries Ltd · NSE:GREENPLY
Greenply Industries — Investor Presentation (November 2016)
52 slides from Greenply Industries's investor presentation, November 2016
Slide 1: Greenply Industries Ltd Analyst Meet Presentation – November 2016
GREENPLY INDUSTRIES LTD Analyst Meet Presentation – November 2016
Slide 2: Disclaimer
DISCLAIMER Certain statements in this communication may be ‘forward looking statements’ within the meaning of applicable laws and regulations. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those s
Slide 3: Table of Contents
TABLE OF CONTENTS • Industry Overview • Company Overview • Plywood Segment • MDF Segment • Annexure 3
Slide 4: Industry Overview
Industry Overview te
Slide 5: Plywood & MDF Brief: Strong Growth
PLYWOOD & MDF BRIEF Market Size (Rs. Crore) and Breakup Industry CAGR 5- Unorganized vs Organized (Rs. Crore) MDF, 6% Industry 1,600 CAGR 12- 15% Greenply 13,500 Greenply 26% 30% No market market un-organised share share segment - Plywood, 4,500 1,600 18,000 Plywood MDF Organized Unorganized • Enorm
Slide 6: Plywood industry value chain – price-wise
PLYWOOD Plywood industry value chain - Price-wise (taking 19mm thickness as base) Luxury / • Market size: Rs35bn FY10-15 Premium • Market share: 20% plywood • Market leadership: Largely organised CAGR of 15% (Rs 100-140 • Organised to unorganised mix: 70:30 psf) • Key brands: Luxury – Green Club & C
Slide 7: Luxury/premium plywood market space
PLYWOOD Luxury/premium plywood market space: Key highlights, demand drivers and opportunities for tier-I brands Tier I brands Tier II brands Tier III brands Market size: Rs15 bn Market size: Rs10 bn Market size: Rs10 bn Key highlights: Demand drivers: Current growth status: Segment opportunity for T
Slide 8: Mid/mass market plywood space
PLYWOOD Mid/mass market plywood space – Key highlights, demand drivers and opportunities Tier I brands Tier II brands Unorganised sector Market size: Rs4 bn Market size: Rs11 bn Market size: Rs90 bn Key highlights: Demand drivers: Current growth status: Segment opportunity for Tier I brands going fo
Slide 9: Low-end plywood market
PLYWOOD Low-end plywood market – Key highlights and challenges Unorganised sector Market size: Rs40 billion Unorganised Key highlights: • Unorganised sector controls the entire low-end plywood market segment • Tier I and II brands have no presence in this category • This category is either not growi
Slide 10: Global and Indian MDF capacity
MDF Global MDF capacity has reached 100mn cbm Regional Capacity – China has 44% of world’s total MDF capacity ROW AU/NZ 97 99 102 1% 94 North 3% 85 90 China 77 America 43% 71 6% 58 60 East Asia 10% South America 2009 2014 2008 2010 2011 2012 2013 2015 2016 2017E 12% EU 25% India’s MDF capacity (‘000
Slide 11: MDF regional demand and substitution of cheap plywood
MDF MDF Regional Demand- South India demand for MDF is MDF is potential substitute for Cheap quality Plywood- Total highest followed by North current market size for cheap quality plywood is ~40bn North 30% Others 10% Organised Cheap Category 25% 30% West Premium / 15% Mid Category Unorganised 70% 7
Slide 12: Demand Drivers for MDF in India
DEMAND DRIVERS FOR MDF IN INDIA MDF demand is expected to grow by 15% CAGR to Rs 30bn from Rs 15bn currently 2016 2021 Current MDF Expected MDF Market Size: Market Size Rs. 16bn Rs. 30bn 12
Slide 13: Plywood, MDF, and Particle Board
PLYWOOD, MDF, AND PARTICLE BOARD MDF is composed of finer wood fibers, whereas Particle board has larger and coarser wood fibers Wood based product categories – a perspective Factors Traditional Plywood MDF Particle board Produced by breaking down hardwood and softwood Particle board is a waste-wood
Slide 14: Company Overview
Company Overview
Slide 15: Company Overview
COMPANY OVERVIEW BUSINESS SEGMENTS • Wood based products - Plywood and allied products, Medium Density Fibreboards (MDF) • Demerged the Decorative Business –listed as separate entity STRONG BRAND PRESENCE BUILT OVER 30 YEARS • Largest pan-India player with 26% share of organized plywood market; 30%
Slide 16: Company Overview
COMPANY OVERVIEW CAPACITY UTILIZATION • Plywood 101% utilization; optimum capacity utilization expected to be around 120% and incremental demand to be catered through outsourcing • MDF 99% utilization; optimum capacity utilization expected to be around 115%; to undertake greenfield expansion in Andh
Slide 17: Milestones
MILESTONES 1984 Promoters start operations with a saw mill 2006 Setting up new unit at Pantnagar, Uttarakhand and Launch of Ecotec brand 1988 Setting up of 1 plywood unit in Tizit, Nagaland st 2007 Acquisition of two plywood units in Gujarat, Now Bamanbore factory 1990 Incorporated as company under
Slide 18: Our Business
OUR BUSINESS Premium segment (Market share 20%) GREENPLY Medium Segment Plywood (Market Share 58%) Low end Segment (Market Share 22%) Thin and Thick MDF, Plain MDF and Pre-Lam MDF and HDF Flooring 18
Slide 19: Well-Entrenched Distribution Network
WELL-ENTRENCHED DISTRIBUTION NETWORK Plywood MDF Distributors / Stockists Retailers Branches 19
Slide 20: Recent Developments
Recent Develo opments oe 4
Slide 21: MDF Plant – Andhra Pradesh
MDF PLANT – ANDHRA PRADESH Funds of Rs. 750 crore (combination of debt, equity and internal accruals) tied up for the new MDF facility at Andhra Pradesh o Successfully completed QIP of Rs. 50 crores which was subscribed to by well regarded Institutional investors o Debt portion of Rs. 490 crore fo
Slide 22: Face Veneer Facility – Gabon West Africa
FACE VENEER FACILITY – GABON WEST AFRICA Greenply through its wholly owned step-down subsidiary Greenply Gabon, SA is setting up operations for a face veneer plant in the West Africa region Capex of ~ Rs. 100 crore is earmarked for this facility - would help in securing future supply of face ven
Slide 23: GST Overview - Plywood
GST Overview - Plywood Pre-GST Post-GST • Plywood dealers pay Excise • Central GST (CGST), which will replace Excise Duty) and State GST (SGST), will replace VAT as well as Duty and Value-Added Tax some other State levies) will both be cenvatable for (VAT). Excise Duty is the dealers. charged @ 12.5
Slide 24: GST Overview - MDF
GST Overview - MDF Pre-GST • At present a 5-6% price gap exists between MDF and cheap plywood Post-GST • Beneficial for MDF as GST is expected to have an inflationary impact on cheap plywood prices • In case prices of cheap plywood increases post GST then that segment could see a gradual replacement
Slide 25: Financial Performance
Financial Performance
Slide 26: Strong Performance Track Record
STRONG PERFORMANCE TRACK RECORD NET SALES GROSS PROFIT 1,646 725 1,561 651 1,314 1,390 538 560 1,059 427 FY12 FY13 FY14 FY15 FY16 FY12 FY13 FY14 FY15 FY16 EBIDTA PBT 173 251 201 139 180 183 110 104 118 42 FY12 FY13 FY14 FY15 FY16 FY12 FY13 FY14 FY15 FY16 Due to de-merger of Decorative Business, sepa
Slide 27: Key Financials
KEY FINANCIALS Greenply’s 30% revenues come from MDF segment MDF contributes 55% of total EBITDA CAGR FY12 to FY16 7.6% 14.3% Plywood MDF Plywood MDF 23% 28% 25% 26% 29% 33% 44% 42% 45% 54% 77% 72% 75% 74% 71% 67% 56% 58% 55% 46% FY12 FY13 FY14 FY15 FY16 FY12 FY13 FY14 FY15 FY16 Pre-Tax & post –tax
Slide 28: Financial Highlights – Q2 FY 2017
FINANCIAL HIGHLIGHTS – Q2 FY 2017 Q2 FY 17 Q2 FY 16 Key ratios (%) Q2 FY17 Q2 FY16 8.5% Gross Margin 46.0% 45.0% 434.6 NET SALES 400.7 EBITDA Margin 15.5% 14.2% 10.9% EBIT Margin 12.7% 11.1% Net Margin (*) 8.1% 6.8% 200.1 GROSS PROFIT 180.5 Ad and promotions / Net 3.5% 3.9% Sales 18.2% Staff Cost/ N
Slide 29: Financial Highlights – H1 FY 2017
FINANCIAL HIGHLIGHTS – H1 FY 2017 H1 FY 17 H1 FY 16 Key ratios (%) H1 FY17 H1 FY16 8.5% Gross Margin 45.8% 44.7% 849.5 NET SALES 781.5 EBITDA Margin 15.5% 14.4% 10.9% EBIT Margin 12.6% 11.3% Net Margin (*) 8.1% 7.0% 389.5 GROSS PROFIT 349.3 Ad and promotions / Net 3.4% 3.5% Sales 18.2% Staff Cost/ N
Slide 30: Financial Highlights – B/S Perspective
FINANCIAL HIGHLIGHTS – B/S PERSPECTIVE Balance Sheet Snapshot March 31, Sept 30, 2016 Sept 30, 2015 (Rs. crore) 2016 Net worth 722.82 537.42 613.50 Total debt 248.07 321.39 258.81 Long Term Debt (Including 132.40 160.82 161.81 Current Maturity) Short Term Debt 115.67 160.57 97.00 Capital Employe
Slide 31: Our Brands
OUR BRANDS SrectrRumwoop: 4 > GREEN” CHUB PANEL Max es J 4 > @ > GREEN” CIUB ‘DEFENDER ar y J y ‘ € GREEN READY LINES d 31
Slide 32: Shareholding 30th September 2016
SHAREHOLDING 30TH SEPTEMBER 2016 Non- Institutional 16.68% Promoter 54.13% Institutional 29.19% Sr. No. Name % of Holding No. Of Shares 1 JWALAMUKHI INVESTMENT HOLDINGS 9.69% 11,884,420 2 HDFC TRUSTEE COMPANY LTD 8.85% 10,856,855 3 WESTBRIDGE CROSSOVER FUND, LLC 2.97% 3,639,875 4 SBI FMCG FUND 2.52%
Slide 33: Board of Directors
BOARD OF DIRECTORS • Shiv Prakash Mittal – Executive Chairman, • Anupam Kumar Mukerji – Non Executive – Promoter Director - Independent o Veteran in the Plywood industry with over o Retired as the Director General of 40 years experience Forests • Rajesh Mittal– Managing Director • Sonali Bhagwati Da
Slide 34: Key Management Personnel
KEY MANAGEMENT PERSONNEL • Vishwanathan Venkatramani – CFO • Subhash Kumar Agarwal – Andhra Plant Head o B Com (Hons.); CA; Over 3 decades of experience in Finance, Accounting and o AMIE in Chemical Engineering; Over 36 Taxation functions. years experience • Yogesh Arora – Country Head – Sales & • D
Slide 35: Plywood Segment
Plywood Segment
Slide 36: Facilities / Production Model and Regional Breakup
FACILITIES / PRODUCTION MODEL AND REGIONAL BREAKUP Facilities Regional Plywood Mix Capacity Location 22% (mn sqm.) Tizit, Nagaland 4.50 Kriparampur, West Bengal 6.00 Pantnagar, Uttarakhand 10.50 Bamanbore, Gujarat 11.40 Total Capacity 32.40 22% 21% Production Model 70% in-house, 30% outsourced in vo
Slide 37: Manufacturing Process
MANUFACTURING PROCESS STORING OF LOGS Blocking DEBARKING •(Logs are stored in pond) •(Logs are cut in required size) •(Barks of the Blocks are removed) TENDERISER MACHINE VENEER CLIPPING PEELING •(Tenderised to make stress free) •(Veneer clipped as per required size) •(Blocks are peeled for Veneer)
Slide 38: Marketing Strategy & Initiatives
MARKETING STRATEGY & INITIATIVES • To leverage strong brand presence built over 31 years Key Initiatives o India’s leading plywood manufacturing company • 360 degree marketing initiatives targeted o To continue investing ~3% of net sales going at trade and end-consumers through forward towards ad ex
Slide 39: Growth Plans
GROWTH PLANS Moving towards an asset light model - future growth through Backward outsourcing integration route through new unit in Gabon for production of face veneers • Generate higher ROCE’s • Mid-segment variants will be outsourced, freeing existing capacities for premium • Gabon has very sustai
Slide 40: Financial & Operational Highlights – Plywood
FINANCIAL & OPERATIONAL HIGHLIGHTS Plywood Particulars FY12 FY13 FY14 FY15 FY16 CAGR Net sales (Rs. crore) 815.58 940.17 1037.30 1152.07 1165.36 9.3% EBITDA margin (%) 9.8% 10.6% 10.3% 9.1% 9.7% EBIT margin (%) 7.2% 8.9% 7.9% 6.8% 7.3% Annual capacity (million sqm.) 28.35 32.4 32.4 32.4 32.4 Product
Slide 41: MDF Segment
7% DFSegment yy eae a “F px 4 "E
Slide 42: Facilities / Production Model and Regional Breakup
FACILITIES / PRODUCTION MODEL AND REGIONAL BREAKUP Facilities Regional MDF Mix Capacity Location 55% (mn sqm.) Pantnagar, Uttarakhand 1,80,000 Largest facility in India 10% 5% Production Model 100% in-house To undertake greenfield expansion in Andhra Pradesh – abundance of plantation wood 30% Expans
Slide 43: Manufacturing Process
MANUFACTURING PROCESS 1. Chipping 2. Screening 3. Refining 4. Glue Mixing 5. Drying 6. Fibre Sift-up 7. Mat Forming 8. Pre Pressing 9. Hot Pressing 10. Cooling 11. Inter-Mediate Storage 12. Sanding 13. Finishing 14. Value Additions - Pre Lamination - HDF Flooring 43
Slide 44: MDF – The Way Forward
MDF - THE WAY FORWARD Key Drivers Shift towards Boom in Real automation in the estate / furniture industry Highly contributing to Government to Commercial / automated; increasing demand incentivize MDF Hospitality / consistency in manufacturers Health care quality and owing to Transition from finish
Slide 45: Growth Plans
GROWTH PLANS Expansion of Premium Portfolio Capacity Expansion • Expansion of pre-laminated capacity • Entry into Laminated Flooring / Veneer Flooring • Tripling capacity to cater to rising acceptance and demand • Forayed into UV Coated boards • Proposed new facility in Andhra Pradesh o Large planta
Slide 46: Financial & Operational Highlights – MDF
FINANCIAL & OPERATIONAL HIGHLIGHTS MDF Particulars FY12 FY13 FY14 FY15 FY16 CAGR Net sales 243.72 374.18 352.72 408.51 476.08 18.2% EBITDA margin (%) 15.4% 21.6% 21.6% 23.3% 29.0% EBIT margin (%) 9.0% 17.5% 17.0% 18.5% 24.7% Annual capacity (cubic metre) 180,000 180,000 180,000 180,000 180,000 Produ
Slide 47: Greenply Industries – Industry Position
GREENPLY INDUSTRIES – INDUSTRY POSITION Highly credible brand Robust & efficient manufacturing facilities Secured long-term availability of quality face • Products sold under a range of well ensuring optimal quality veneer through JV regarded sub brands Diversification of production capabilities thr
Slide 48: Growth Outlook
GROWTH OUTLOOK INDUSTRY DRIVERS PRODUCT PROFILE • Rising demand from the real estate sector • To improve mix of plywood through increase in • Increasing urbanisation, higher disposable mix of value-added products like Green Defender, incomes and a growing middle class Green Gold Prima and Natural Ve
Slide 49: Annexure
9 EXURE sd SF LOVER TOA, ANN CS ee —_— —
Slide 50: Demerger of Decorative Business
DEMERGER OF DECORATIVE BUSINESS • Demerged the decorative business (comprising of laminates and allied products and accounting for 37.2% of FY14 consolidated sales) of the company with all its assets and liabilities into Greenlam Industries • Record date for the demerger was 27 November 2014; Greenp
Slide 51: Rationale for Demerger
RATIONALE FOR DEMERGER Better cash management / utilization Dedicated • Two separate management focus companies will have Separate marketing independent cash • Dedicated flows and strengthen reach management focus the prospects of Different product and resource each of the • Both businesses allocati
Slide 52: About Greenply Industries Ltd.
ABOUT GREENPLY INDUSTRIES LTD. Greenply Industries Limited (GIL) enjoys leadership position in plywood and medium density fibreboards (MDF) accounting for almost 26 percent of the organized plywood and 30 percent of the MDF market in India. GIL has four state–of-the-art manufacturing facilities for
Greenply Industries — Investor Presentation (November 2016) on 6ix