Greenply Industries Ltd · NSE:GREENPLY
Greenply Industries — Investor Presentation (December 2017)
51 slides from Greenply Industries's investor presentation, December 2017
Slide 1: Greenply Industries Ltd Analyst Meet Presentation (December 2017)
GREENPLY INDUSTRIES LTD ANALYST MEET PRESENTATION (DECEMBER 2017)
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
Slide 3: Table of Contents
TABLE OF CONTENTS • Industry Overview • Company Overview • Recent Developments • Financial Performance • Plywood Segment • MDF Segment • Annexure
Slide 4: Table of Contents
TABLE OF CONTENTS • Industry Overview • Company Overview • Recent Developments • Financial Performance • Plywood Segment • MDF Segment • Annexure
Slide 5: 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 1,600, 8% 10,000 13,500 INDUSTRY CAGR 12-15% 8,000 6,000 NO UN-ORGANISED 4,000 SEGMENT - 2,000 4,500 1,600 - Plywood, Plywood MDF 18,000, 92
Slide 6: Plywood Overview
PLYWOOD OVERVIEW Plywood industry value chain - Price-wise (taking 19mm thickness as base) Luxury / • Market size: Rs 36bn FY11-16 Premium • Market share: 20% plywood • Market leadership: Largely organised CAGR of 12% (Rs 100-140 psf) • Organised to unorganised mix: 70:30 • Key brands: Luxury – Gree
Slide 7: 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 16 bn Market size: Rs 10 bn Market size: Rs10 bn Key highlights: Demand drivers: Current growth status: Segment opport
Slide 8: Plywood Overview: Mid/Mass Market
PLYWOOD OVERVIEW Mid/mass market plywood space – Key highlights, demand drivers and opportunities Tier I brands Tier II brands Unorganised sector Market size: Rs 5bn Market size: Rs 8.5bn Market size: Rs 76.5bn Key highlights: Demand drivers: Current growth status: Segment opportunity for Tier I bra
Slide 9: 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 10: MDF Overview
MDF OVERVIEW China EU South America ROW East Asia AU/NZ North America ROW AU/NZ 3% 1% GLOBAL MDF CAPACITY HAS REACHED 100 MN CBM China North America 43% 120 6% 97 99 102 100 90 94 85 East Asia 77 REGIONAL CAPACITY: 80 71 10% 58 60 CHINA HAS 44% OF 60 WORLD’S TOTAL MDF CAPACITY 40 South America 20 12
Slide 11: 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.40bn Unorganized, Whereas The Total Plywood Market Size Is Rs. 180bn North South West Others Nort
Slide 12: Demand Drivers for MDF in India
DEMAND DRIVERS FOR MDF IN INDIA MDF Demand Is Expected To Grow By 15-20% CAGR To Rs 30 bn By The Year 2021 From Rs 16bn As In The Year 2016 UNORGANIZED TO INCREASING PICK UP IN ORGANIZED SHIFT FROM CHEAP URBANIZATION- VALUE ADDED MDF COMMERCIAL ADVENT OF E-TAILERS TRANSITION OF PLYWOOD DEMAND FOR RE
Slide 13: 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 14: Table of Contents
TABLE OF CONTENTS • Industry Overview • Company Overview • Recent Developments • Financial Performance • Plywood Segment • MDF Segment • Annexure
Slide 15: Business Segments, Distribution, Brand and 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 180 bi
Slide 16: Capacity Utilization, Raw Material, Returns and Performance
RAW MATERIAL STRONG RETURN FINANCIAL CAPACITY UTILIZATION PRODUCTION MODEL SUSTAINABILITY RATIOS PERFORMANCE • Plywood 108% utilization; • Plantation of fast growing • Pre-tax ROCE of 27.4% and • Plywood – 70% in-house, • Sales, EBIDTA and PBT optimum capacity and improved species of Post-tax ROCE a
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 1ST PLYWOOD UNIT IN TIZIT, NAGALAND 2007 ACQUISITION OF TWO PLYWOOD UNITS IN GUJARAT, NOW BAMANBORE FACTORY 1990 INCORPORATED AS COMPANY UNDER T
Slide 18: 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 19: Well-Entrenched Distribution Network
WELL-ENTRENCHED DISTRIBUTION NETWORK PLYWOOD MDF & FLOORING DISTRIBUTORS / STOCKISTS RETAILERS BRANCHES
Slide 20: Table of Contents
TABLE OF CONTENTS • Industry Overview • Company Overview • Recent Developments • Financial Performance • MDF Segment • Annexure
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 • Successfully completed QIP of Rs. 50 crores which was subscribed to by well regarded Institutional investors • Debt portion of Rs. 490 crore for
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 has setup a face veneer unit in the West Africa region The unit would help in securing future supply of face veneer for our India Plywood operations Unit has commenced commercial pr
Slide 23: GST Overview – Plywood
GST OVERVIEW - PLYWOOD PRE-GST POST-GST • Plywood dealers pay Excise Duty and Value- • Central GST (CGST), which will replace Excise Duty) and State GST (SGST), Added Tax (VAT). Excise Duty is charged @ will replace VAT as well as some other State levies) will both be cenvatable 12.5% and VAT @ 12.5
Slide 24: GST Overview – MDF
GST OVERVIEW - MDF PRE-GST • At present a 6-8% 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: Table of Contents
TABLE OF CONTENTS • Industry Overview • Company Overview • Recent Developments • Financial Performance • Plywood Segment • MDF Segment • Annexure
Slide 26: Strong Performance Track Record
STRONG PERFORMANCE TRACK RECORD Net Sales Gross Profit 1,645 1,654 1,561 1,314 1,390 725 775 651 538 560 FY13 FY14 FY15 FY16 FY17 FY13 FY14 FY15 FY16 FY17 EBIDTA PBT 300.0 251 258 250.0 250.0 191 DUE TO DE-MERGER OF 200.0 201 173 200.0 180 183 DECORATIVE BUSINESS, SEPARATE PAT NUMBERS 150.0 139 150.
Slide 27: Key Financials
KEY FINANCIALS GREENPLY’S 29% REVENUES COME FROM MDF SEGMENT MDF CONTRIBUTES 50% OF TOTAL EBITDA 120% CAGR FY13 to FY17 120% Plywood 5.6 % MDF 6.2 % 100% 5.6% 25% 26% 100% 80% 28% 29% 29% 80% 44% 42% 45% 50% 60% 54% 60% 40% 72% 75% 74% 71% 71% 40% 20% 56% 58% 55% 46% 50% 0% FY15 20% FY13 FY14 FY16 F
Slide 28: Financial Highlights – H1 FY 2018
FINANCIAL HIGHLIGHTS – H1 FY 2018 H1 FY H1 FY Key ratios (%) H1 FY18 H1 FY17 18 17 (1.9 %) Gross Margin 47.3% 45.8% 833.7 NET SALES 849.5 EBITDA Margin 14.6% 15.5% EBIT Margin 11.8% 12.6% 1.2% Net Margin 8.0% 8.1% 394.3 GROSS PROFIT 389.5 Ad and promotions / Net Sales 3.9% 3.4% (7.6%) Staff Cost/ Ne
Slide 29: Financial Highlights – FY 2017
FINANCIAL HIGHLIGHTS – FY 2017 FY 17 FY 16 Key ratios (%) FY17 FY16 0.6% Gross Margin 46.8% 44.1% 1654.9 NET SALES 1645.7 EBITDA Margin 15.6% 15.2% EBIT Margin 12.6% 12.2% 6.9% Net Margin (*) 8.2% 8.0% 775.1 GROSS PROFIT 725.2 Ad and promotions / Net Sales 3.8% 3.0% 2.8% Staff Cost/ Net Sales 10.3%
Slide 30: Financial Highlights – B/S Perspective
FINANCIAL HIGHLIGHTS – B/S PERSPECTIVE Balance Sheet Snapshot Sept 30, Sept 30, March 31, March 31, (Rs. crore) 2017 2016 2017 2016 Net worth 847.88 722.82 787.02 604.49 Total debt 554.25 294.33 426.25 258.81 Long Term Debt (Including 422.15 132.40 307.85 161.51 Current Maturity) Short Term Debt
Slide 31: Financial Highlights – B/S Perspective
FINANCIAL HIGHLIGHTS – B/S PERSPECTIVE Sept 30, Sept 30, March 31, March 31, Key Ratios 2017 2016 2017 2016 Inventory (days) 37 34 35 31 Debtor (days) 77 76 66 74 Creditor (days) 52 48 50 55 Working Capital Turnover (days) 62 62 51 49 RoE (%) 15.8% 19.1% 17.2% 21.4% RoCE – Pre-Tax 14.0% 22.0% 17.7%
Slide 32: Our Brands
OUR BRANDS GREEN» Naturale, 00% BURMA TEAK VENEERS etlex Ly jaturemax zee = FLOORMAX’ ECOTEC FUVWOOD B ELOCKBOARD
Slide 33: Shareholding 30th September 2017
SHAREHOLDING 30th September 2017 Sr. % of Non- Name No. Of Shares Institutional No. Holding 16.06% 1 JWALAMUKHI INVESTMENT HOLDINGS 9.69% 11,884,420 2 SBI FMCG FUND 9.33% 11,442,700 3 HDFC TRUSTEE COMPANY LTD 8.93% 10,954,455 Promoter 4 WESTBRIDGE CROSSOVER FUND, LLC 2.97% 3,639,875 51.03% Instituti
Slide 34: Board of Directors
BOARD OF DIRECTORS SHIV PRAKASH MITTAL VINOD KUMAR KOTHARI SUSIL KUMAR PAL EXECUTIVE CHAIRMAN, PROMOTER DIRECTOR NON-EXECUTIVE – INDEPENDENT NON EXECUTIVE - INDEPENDENT Veteran in the plywood industry with over Erstwhile GM, Allahabad bank Qualified Chartered Accountant 40 years experience And Compa
Slide 35: Key Management Personnel
KEY MANAGEMENT PERSONNEL SUBHASH KUMAR AGARWAL – VISHWANATHAN VENKATRAMANI – CFO ANDHRA PLANT HEAD B com (hons.); CA; over 3 decades of experience in A.M.I.E in chemical engineering; over 36 years experience finance, accounting and taxation functions YOGESH ARORA – COUNTRY HEAD – SUBIR KUMAR PALIT –
Slide 36: Table of Contents
TABLE OF CONTENTS • Industry Overview • Company Overview • Recent Developments • Financial Performance • Plywood Segment • MDF Segment • Annexure
Slide 37: 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 38: 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 39: 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 at trade and end-consumers through o To continue investing ~3% of net sales going various ATL / BTL act
Slide 40: 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 • Mid-segment variants will be outsourced, freeing existing capacities for premium • Gabon has very sustaina
Slide 41: Financial & Operational Highlights – Plywood
FINANCIAL & OPERATIONAL HIGHLIGHTS PLYWOOD PARTICULARS FY13 FY14 FY15 FY16 FY17 CAGR NET SALES (RS CRORES) 940.17 1037.30 1152.07 1165.36 1167.99 5.6% EBITDA MARGIN (%) 10.6% 10.3% 9.1% 9.4% 11.2% EBIT MARGIN (%) 8.9% 7.9% 6.8% 7.3% 8.9% ANNUAL CAPACITY (MILLION SQM) 32.4 32.4 32.4 32.4 32.4 PRODUCT
Slide 42: Table of Contents
TABLE OF CONTENTS • Industry Overview • Company Overview • Recent Developments • Financial Performance • MDF Segment • Annexure
Slide 43: 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 Andhra Pradesh (Expansion) 3,60,000 Largest facility in India 10% 5% PRODUCTION MODEL • 100% IN-HOUSE • TO UNDERTAKE GREENFIELD EXPANSION IN ANDHRA PRADESH – ABU
Slide 44: 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 45: 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 46: Growth Plans
GROWTH PLANS EXPANDING PREMIUM PORTFOLIO CAPACITY EXPANSION • Expansion of pre-laminated capacity • Entry into Laminated Flooring / Veneer Flooring • Tripling capacity to cater to • Forayed into UV Coated rising acceptance and demand boards • Proposed new facility in Andhra Pradesh o Large plantatio
Slide 47: Financial & Operational Highlights – MDF
FINANCIAL & OPERATIONAL HIGHLIGHTS MDF PARTICULARS FY13 FY14 FY15 FY16 FY17 CAGR NET SALES (RS CRORES) 6.2% 374.18 352.72 408.51 476.08 476.74 EBITDA MARGIN (%) 21.6% 21.6% 23.3% 28.5% 27.1% EBIT MARGIN (%) 17.5% 17.0% 18.5% 24.6% 22.7% 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 • 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 51: 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
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