Greenply Industries Ltd · NSE:GREENPLY
Greenply Industries — Investor Presentation (December 2018)
51 slides from Greenply Industries's investor presentation, Dec 6, 2018
Slide 1: Submission letter to stock exchanges
Greenply/2018-19 December 6, 2018 The Manager The Manager BSELimited National Stock Exchange of India Limited Department of Corporate Services Exchange Plaza, Bandra Kurla Complex Floor 25, P. J. Towers, Dalal Street Bandra (E) Mumbai - 400001 Mumbai - 400 051 Fax No. 022-2272-3121/1278/1557/3354 Fa
Slide 2: Greenply Industries Limited Analyst Meet Presentation
GREENPLY INDUSTRIES LIMITED ANALYST MEET PRESENTATION (DECEMBER 2018)
Slide 3: 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
Slide 4: Table of Contents
TABLE OF CONTENTS • Industry Overview • Company Overview • Recent Developments • Financial Performance • Plywood Segment • MDF Segment • Annexure
Slide 5: Table of Contents
TABLE OF CONTENTS • Industry Overview • Company Overview • Recent Developments • Financial Performance • Plywood Segment • MDF Segment • Annexure
Slide 6: Plywood & MDF Overview
PLYWOOD & MDF OVERVIEW 18,000 MARKET SIZE (RS. CRORE) AND BREAKUP 16,000 UNORGANIZED VS ORGANIZED (RS. CRORE) Plywood MDF 14,000 INDUSTRY CAGR 5-6% MDF, 12,000 1,800, 9% 10,000 14,500 INDUSTRY CAGR 15-18% 8,000 6,000 SMALL PRESENCE OF 4,000 UNORGANISED - 2,000 4,500 1,800 - Plywood, Plywood MDF 19,0
Slide 7: Plywood Overview
PLYWOOD OVERVIEW Plywood industry value chain - Price-wise (taking 19mm thickness as base) Luxury / • Market size: Rs 38bn FY13-18 Premium • Market share: 20% plywood • Market leadership: Largely organised CAGR of 10-12% (Rs 100-140 psf) • Organised to unorganised mix: 70:30 • Key brands: Luxury – G
Slide 8: Plywood Overview: Luxury/Premium Segment
PLYWOOD OVERVIEW 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: Rs 17 bn Market size: Rs 11 bn Market size: Rs10 bn Key highlights: Demand drivers: Current growth status: Segment opport
Slide 9: Plywood Overview: Mid/Mass Segment
PLYWOOD OVERVIEW Mid/mass market plywood space – Key highlights, demand drivers and opportunities Tier I brands Tier II brands Unorganised sector Market size: Rs 6bn Market size: Rs 10bn Market size: Rs 81bn Key highlights: Demand drivers: Current growth status: Segment opportunity for Tier I brands
Slide 10: Plywood Overview: Low-end Market
PLYWOOD OVERVIEW Low-end plywood market – Key highlights and challenges Low-end plywood market – Key highlights and challenges Unorganised sector Market size: Rs 54 billion Unorganised Key Highlights • Unorganised sector controls the entire low-end plywood market segment • Tier I and II brands have
Slide 11: MDF Overview
MDF OVERVIEW China EU South America ROW East Asia AU/NZ North America ROW AU/NZ 3% 1% GLOBAL MDF CAPACITY HAS CROSSED 100 MN CBM China North America 43% 120 108 6% 99 104 94 97 100 85 90 East Asia 77 REGIONAL CAPACITY: 80 71 10% 58 60 CHINA HAS 44% OF 60 WORLD’S TOTAL MDF CAPACITY 40 South America 2
Slide 12: MDF Overview
MDF OVERVIEW MDF Regional Demand- South India Demand For MDF Is MDF Is Potential Substitute For Cheap Quality Plywood- Highest Followed By North Total Current Market Size For Cheap Quality Plywood Is Rs.54bn Unorganized, Whereas The Total Plywood Market Size Is Rs. 180bn North South West Others Nort
Slide 13: Demand Drivers for MDF in India
DEMAND DRIVERS FOR MDF IN INDIA MDF Demand Is Expected To Grow By 15-18% CAGR To Rs 30 bn by the Year 2022 from Rs 18bn in the Year 2018 UNORGANIZED TO INCREASING PICK UP IN ORGANIZED SHIFT FROM CHEAP URBANIZATION- VALUE ADDED MDF COMMERCIAL ADVENT OF E-TAILERS TRANSITION OF PLYWOOD DEMAND FOR READY
Slide 14: Wood Based Product Categories – A Perspective
WOOD BASED PRODUCT CATEGORIES – A PERSPECTIVE FACTORS TRADITIONAL PLYWOOD MDF PARTICLE BOARD Produced by breaking down hardwood and softwood residuals MANUFACTURING Particle board is a waste-wood product made by Thin sheets of veneer are glued together in to wood fibers. Wood fibers are combined usi
Slide 15: Table of Contents
TABLE OF CONTENTS • Industry Overview • Company Overview • Recent Developments • Financial Performance • Plywood Segment • MDF Segment • Annexure
Slide 16: Business Segments, Brand, Distribution, Facilities
WELL ENTRENCHED 30 YEAR STRONG STRONG INDUSTRY MANUFACTURING BUSINESS SEGMENTS DISTRIBUTION BRAND POTENTIAL FACILITIES NETWORK • Wood based products - • Largest pan-India player • Plywood industry size – Rs. • Distributors/ stockiest - • 4 state–of-the-art Plywood and allied with 26% share of 190 bi
Slide 17: Capacity Utilization, Raw Material Sustainability, Returns
RAW MATERIAL FINANCIAL CAPACITY UTILIZATION RETURN RATIOS PRODUCTION MODEL SUSTAINABILITY PERFORMANCE • Plywood 106% utilization; • Plantation of fast growing • Pre-tax ROCE of 23.9% and • Plywood – 70% in-house, • Sales, EBIDTA and PAT optimum capacity and improved species of Post-tax ROCE and ROE
Slide 18: Milestones
MILESTONES 2006 SETTING UP NEW UNIT AT PANTNAGAR, UTTARAKHAND AND LAUNCH OF ECOTEC BRAND 1984 PROMOTERS START OPERATIONS WITH A SAW MILL 2007 ACQUISITION OF TWO PLYWOOD UNITS IN GUJARAT, NOW BAMANBORE FACTORY 1988 SETTING UP OF 1ST PLYWOOD UNIT IN TIZIT, NAGALAND 2008 IMPLEMENTATION OF SAP AND LAUNC
Slide 19: Our Business
OUR BUSINESS GREENPLY PLYWOOD PLYWOOD, BLOCK BOARDS, FLUSH DOORS AND DECORATIVE VENEERS THIN AND THICK MDF, PLAIN AND MDF PRE-LAM MDF AND HDF FLOORING
Slide 20: Well-Entrenched Distribution Network
WELL-ENTRENCHED DISTRIBUTION NETWORK PLYWOOD MDF & FLOORING DISTRIBUTORS / STOCKISTS RETAILERS BRANCHES
Slide 21: Table of Contents
TABLE OF CONTENTS • Industry Overview • Company Overview • Recent Developments • Financial Performance • MDF Segment • Annexure
Slide 22: MDF Plant – Andhra Pradesh
MDF PLANT – ANDHRA PRADESH Asia’s largest MDF Plant with an annual capacity of 360000 CBM commenced operations in July 2018. • Equipped with state-of-the-art European Machinery to manufacture the best MDF for the discerning customer • Will target customers in the South and the Western zones of the c
Slide 23: Face Veneer Facility – Gabon West Africa
FACE VENEER FACILITY – GABON WEST AFRICA Greenply through its wholly owned step-down subsidiary Greenply Gabon, SA has started commercial production of face veneer in the West Africa region in July 2017 with capacity for peeling 36000 CBM of Logs • Gabon forests are operated under a sustainable fore
Slide 24: Face Veneer Facility – Gabon West Africa
FACE VENEER FACILITY – GABON WEST AFRICA Okoume is now accepted as the best available species for Face Veneer world over and has found wide spread acceptability in India. In the international market, countries like Malaysia, Indonesia which were exporters of Face Veneer are now importing Okoume
Slide 25: GST Overview
GST OVERVIEW • Plywood industry is plagued by unorganised segment following unfair invoicing practices to remain competitive • Government needs to crack down on unorganised segment to provide a level playing field for branded players • Branded players are expected to have exponential growth over the
Slide 26: Table of Contents
TABLE OF CONTENTS • Industry Overview • Company Overview • Recent Developments • Financial Performance • Plywood Segment • MDF Segment • Annexure
Slide 27: Strong Performance Track Record
STRONG PERFORMANCE TRACK RECORD Net Sales Gross Profit 1,656 1,645 1,651 1,561 775 767 725 651 1,390 560 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 EBIDTA PAT 300.0 258 150.0 135 136 251 243 131 250.0 122 201 200.0 183 100.0 150.0 77 100.0 50.0 50.0 0.0 0.0 FY14 FY15 FY16 FY17 FY18 FY14 FY15
Slide 28: Key Financials
KEY FINANCIALS GREENPLY’S 29% REVENUES COME FROM MDF SEGMENT MDF CONTRIBUTES 54% OF TOTAL EBITDA 120% CAGR FY14 to FY18 120% Plywood 2.6 % MDF 7.5 % 100% 5.6% 25% 26% 29% 100% 80% 29% 29% 80% 42% 48% 50% 60% 54% 54% 60% 40% 75% 74% 71% 71% 71% 40% 20% 58% 52% 46% 50% 46% 0% 20% FY18 FY14 FY15 FY16 F
Slide 29: Financial Highlights – H1 FY 2019
FINANCIAL HIGHLIGHTS – H1 FY 2019 H1 FY 19 H1 FY 18 Key ratios (%) H1 FY19 H1 FY18 Gross Margin 44.9% 47.3% 841.1 NET SALES 833.7 EBITDA Margin 11.0% 14.6% -4.1% EBIT Margin 7.5% 11.8% 378.0 GROSS PROFIT 394.3 Net Margin 4.5% 8.0% Ad and promotions / Net Sales 4.6% 3.9% -24.2% Staff Cost/ Net Sales
Slide 30: Financial Highlights – FY 2018
FINANCIAL HIGHLIGHTS – FY 2018 FY 18 FY 17 Key ratios (%) FY18 FY17 (0.2)% Gross Margin 46.5% 46.8% 1,651.4 NET SALES 1,654.9 EBITDA Margin 14.7% 15.6% (1.0)% EBIT Margin 12.0% 12.6% Net Margin 8.2% 8.2% 767.3 GROSS PROFIT 775.1 Ad and promotions / Net Sales 3.3% 3.8% (5.5)% Staff Cost/ Net Sales 11
Slide 31: Financial Highlights – B/S Perspective
FINANCIAL HIGHLIGHTS – B/S PERSPECTIVE Balance Sheet Snapshot Sept 30, 2018 Sept 30, 2017 March 31, 2018 March 31, 2017 (Rs. crore) Net worth 944.86 847.88 915.05 787.02 Total debt 752.49 554.25 652.46 426.25 Long Term Debt (Including Current 591.42 422.15 483.98 307.85 Maturity) Short Term Debt
Slide 32: Financial Highlights – B/S Perspective
FINANCIAL HIGHLIGHTS – B/S PERSPECTIVE Key Ratios Sept 30, 2018 Sept 30, 2017 March 31, 2018 March 31, 2017 Inventory (days) 61 37 46 35 Debtor (days) 66 77 63 66 Creditor (days) 54 52 47 50 Working Capital Turnover (days) 73 62 62 51 RoE 8.1% 15.8% 14.8% 17.2% RoCE – Pre-Tax 7.4% 14.0% 12.7% 17.7%
Slide 33: Our Brands
OUR BRANDS DEFENDER , ECOTEC GREEN ™ GREEN Yaturals, Meter Crrests of No RE DOORS CP creenpanet &.
Slide 34: Shareholding 30th September 2018
SHAREHOLDING 30th September 2018 Non- Sr. % of No. Of Shares Institutional Name No. Holding (cr.) 17.64% 1 JWALAMUKHI INVESTMENT HOLDINGS 9.69% 1.19 2 HDFC TRUSTEE COMPANY LTD 8.37% 1.03 3 SBI FMCG FUND 3.58% 0.44 Promoter 51.03% 4 WESTBRIDGE CROSSOVER FUND, LLC 2.97% 0.36 Institutional 31.32% TATA
Slide 35: Board of Directors
BOARD OF DIRECTORS SHIV PRAKASH MITTAL VINOD KUMAR KOTHARI SUSIL KUMAR PAL NON-EXECUTIVE – INDEPENDENT NON EXECUTIVE - INDEPENDENT EXECUTIVE CHAIRMAN, PROMOTER DIRECTOR Veteran in the industry with over 40 years Erstwhile GM, Allahabad bank Qualified Chartered Accountant and Company experience Secre
Slide 36: Key Management Personnel
KEY MANAGEMENT PERSONNEL SUBHASH KUMAR AGARWAL – VISHWANATHAN VENKATRAMANI – CFO TECHNICAL HEAD (MDF) B com (hons.); CA; over 3 decades of experience in A.M.I.E in chemical engineering; over 35 years experience finance, accounting and taxation functions YOGESH ARORA – COUNTRY HEAD – SUBIR KUMAR PALI
Slide 37: Table of Contents
TABLE OF CONTENTS • Industry Overview • Company Overview • Recent Developments • Financial Performance • Plywood Segment • MDF Segment • Annexure
Slide 38: Facilities / Production Model and Regional Breakup
FACILITIES / PRODUCTION MODEL AND REGIONAL BREAKUP FACILITIES PRODUCTION MODEL REGIONAL PLYWOOD MIX 70 % IN-HOUSE,30 % OUTSOURCED IN VOLUME TERMS 22% Capacity Location (mn sqm.) 78 % IN-HOUSE, 22 % OUTSOURCED IN VALUE TERMS TO INCREASE PROPORTION OF OUTSOURCING TO 30% Tizit, Nagaland 4.50 OVER NEXT
Slide 39: Manufacturing Process – New (4 Press Technology)
MANUFACTURING PROCESS-NEW (4 PRESS TECHNOLOGY) VENEER PURCHASE/OWN MAT PLY MAT PLY GENERATION OWN OUTSOURCE DRYING CALIBRATION COMPOSING OF VENEER OVERLAYING ASSEMBLING INTO 8X4 BY CORE COMPOSER OVERLAYING PRE PRESS MAT PLY ASSEMBLING OVERLAYING HOT PRESS PRE PRESS TESTING, FINISHING, HOT PRESS STAM
Slide 40: Marketing Strategy & Initiatives
MARKETING STRATEGY & INITIATIVES Key Initiatives • To leverage strong brand presence built over 31 years o India’s leading plywood manufacturing company • 360 degree marketing initiatives targeted at trade and end-consumers through various ATL / o To continue investing ~3% of net sales going BTL act
Slide 41: Growth Plans
GROWTH PLANS MOVING TOWARDS AN ASSET LIGHT MODEL-FUTURE GROWTH BACKWARD THROUGH INTEGRATION OUTSOURCING THROUGH NEW ROUTE UNIT IN GABON FOR PRODUCTION OF FACE VENEERS • Generate higher ROCE’s • Increase in Plywood Manufacturing Capacity through outsourcing of MAT • Gabon has very sustainable forest
Slide 42: Financial & Operational Highlights – Plywood
FINANCIAL & OPERATIONAL HIGHLIGHTS Particulars FY14 FY15 FY16 FY17 FY18 CAGR Net sales (Rs. crore) 2.6% 1,037.30 1,152.07 1,165.36 1,167.99 1,147.94 EBITDA margin (%) - 10.3% 9.1% 9.4% 11.2% 10.0% EBIT margin (%) - 7.9% 6.8% 7.3% 8.9% 7.9% Annual capacity (million sqm.) - 32.4 32.4 32.4 32.4 32.4 Pr
Slide 43: Table of Contents
TABLE OF CONTENTS • Industry Overview • Company Overview • Recent Developments • Financial Performance • MDF Segment • Annexure
Slide 44: Facilities / Production Model and Regional Breakup
FACILITIES / PRODUCTION MODEL AND REGIONAL BREAKUP FACILITIES REGIONAL MDF MIX 55% Capacity Location (CBM) Pantnagar, Uttarakhand 1,80,000 Chitoor, Andhra Pradesh 3,60,000 Largest facility in India 10% 5% PRODUCTION MODEL • 100% IN-HOUSE • AP facility commissioning has taken place in July 2018 30%
Slide 45: Manufacturing Process
MANUFACTURING PROCESS CHIPPING SCREENING REFINING FIBRE SIFT-UP DRYING GLUE MIXING MAT FORMING PRE PRESSING HOT PRESSING SANDING INTERMEDIATE COOLING STORAGE VALUE ADDITION FINISHING -Pre Lamination -HDF Flooring
Slide 46: MDF – The Way Forward
MDF - THE WAY FORWARD KEY DRIVERS Shift towards Growing Real automation in the estate / furniture industry Commercial / Highly contributing to Government to Hospitality / automated; increasing demand incentivize MDF Health care consistency in manufacturers Sectors quality and owing to Transition fro
Slide 47: Financial & Operational Highlights – MDF
FINANCIAL & OPERATIONAL HIGHLIGHTS Particulars FY14 FY15 FY16 FY17 FY18 CAGR Net sales (Rs. crore) 352.72 408.51 476.08 476.74 471.70 7.5% EBITDA margin (%) 21.6% 23.3% 28.5% 27.1% 28.8% - EBIT margin (%) 17.0% 18.5% 24.6% 22.7% 24.4% - Annual capacity (cubic metre) 180,000 180,000 180,000 180,000 1
Slide 48: Table of Contents
TABLE OF CONTENTS • Industry Overview • Company Overview • Recent Developments • Financial Performance • MDF Segment • Annexure
Slide 49: Greenply Industries – Industry Position
GREENPLY INDUSTRIES – INDUSTRY POSITION Highly Credible Brand Secured Long-term Availability Of Quality Face Robust & Efficient Manufacturing Facilities Products Sold Under A Range Of Well Regarded Veneer Through Jv In Myanmar And Step-down Ensuring Optimal Quality Sub Brands Subsidiary In Gabon (We
Slide 50: Growth Outlook
GROWTH OUTLOOK INDUSTRY DRIVERS PRODUCT PROFILE • Rising demand from the real estate sector • Improve mix of plywood through increase of • Increasing urbanisation, higher disposable value-added products like Green Defender, Green incomes and a growing middle class Gold Prima and Natural Veneers • Tr
Slide 51: About Greenply Industries Limited
ABOUT GREENPLY INDUSTRIES LIMITED Greenply Industries Limited (GIL) enjoys leadership position in plywood and medium density fibreboards (MDF) accounting for almost 26 percent of the organized plywood and 22 percent of the MDF market in India. GIL has four state–of-the-art manufacturing facilities f
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