MDF is more economical than plywood and its usage is gaining traction as India’s population is slowly shifting towards readymade furniture due to rising disposable incomes, rapid urbanisation and replacement demand. MDF is now a threat to the unorganised, cheap plywood market. The culture of ready to move in offices, retail outlets, with low-cost modular furniture and interior decoration is also gaining popularity. The other significant players in the segment are Rushil Decor, Pioneer Panel Products, Centuryply and Action TESA. 

De-risking strategy

“The MDF industry is expected to grow rapidly due to its versatile application and this trend is here to stay,” joint managing director & CEO Manoj Tulsian says. “This investment is also a de-risking strategy so that the company is not dependent only on the plywood business, which currently generates 85 per cent of the revenue. MDF will help us to capitalise on this long-term opportunity and establish our leadership in the western untapped market.” Post pandemic the Rs4,000 crore MDF industry is growing. Also, the zero-import due to high logistic costs from China has helped the domestic industry. Once in full capacity, the plant will add Rs600 crore to our topline, adds Tulsian.

The seed of Greenply was sown in 1984 by Rajesh Mittal and his elder brother Shiv Prasad Mittal who set up a saw-mill. Later, it started peeling for core veneers and supplied to plywood manufacturers like Kitply, Sarda Ply and National Ply in Assam. The duo’s experience in the business gave them the confidence to set up a plywood manufacturing plant in Tizit at Nagaland and later they started the second unit in Calcutta. The equity shares of the company were listed in 1995. Greenply Group gradually established multiple product portfolios in the wood panel segment. 

As the family started growing and next generation was ready to take responsibility, in 2014, the Mittal-owned Greenply group in a quiet split separated its decorative division into a new company – Greenlam Industries. Under the terms of the amicable split, Greenply retained the plywood and MDF business, while the new company, Greenlam, got laminates, decorative and allied businesses based in Delhi. Greenlam, a listed company, is the market leader in the laminate segment managed by SP Mittal’s elder son Saurabh.

Finally in 2018, the two brothers separated the business. The elder brother, SP Mittal, got the wood panel unit at Pantnagar consisting of MDF and plywood and has demerged into an independent company called Greenpanel Industries which is listed on the stock exchange. Greenply Industries came to Rajesh with three plywood-manufacturing units.

Rajesh Mittal, 59, is the chairman cum managing director of the company and his son Sanidhya, 30, now in the cusp of emerging from his father’s shadow is the joint managing director. “It was an eventful journey. We have seen many ups and downs in the industry but our innovative operational efficiency and cost optimisation have kept us ahead in the segment,” recalls Rajesh Mittal sitting in his sprawling office near Alipur in Kolkata. 

Talking about business separation Rajesh Mittal says: “Amicable and timely separation is always good for business. The decision-making is much faster now and that helps all stakeholders. Greenply is today growing from strength to strength.” Greenply is now known to be a good employer. It has high-calibre team of professionals. For the first time, the company has appointed a CEO from outside the family. Tulsian, the 50-year-old CEO, brings multifaceted experience as he worked in large corporates like Kalpataru, VIP Industries and Gabriel India. He was roped in to take the business to a new dimension. 

Greenply is one of the largest interior infrastructure brands in India. It has three manufacturing facilities located in West Bengal, Nagaland and Gujarat with a total production capacity of 24.9 million sq mtrs annually and one manufacturing unit of face veneer through a wholly owned subsidiary in Gabon in West Africa to meet its own need of raw material and serving the markets in India, Europe, Middle East and Southeast Asia. All the manufacturing units are compliant with the highest environmental standards, and are equipped with waste water recycling facilities and ESP to check emissions. No petroleum products or coal are used in the boilers.

Quality parameters

The plant at GIDC in Bamanbore is the company’s largest integrated plant. It produces 3,800 sheets of plywood and blackboard, 700 sheets of specialty plywood and 700 units of doors per day with 4-press technology. Speciality plywood is for various usages in automobiles, railways to construction specific for building structures. From timber ponding to the final product, quality parameters are strictly followed in the manufacturing process. 

The company sources part of its agroforestry eucalyptus timber from local farmers. It had set up a 10-acre nursery eight years ago, close to the plant. “We grow several species of eucalyptus saplings suitable for local conditions and give them to farmers to grow in their land. We buy them back once the tree is fully mature and can be cut. This generates a source of livelihood for them,” explains Bhola Trivedi, vice president-operations.

Tulsian claims the company follows all ethical practices and sustainable processes in manufacturing. Plywood furniture, which emits harmful formaldehyde which, can cause serious health issues. Greenply is India’s first plywood company that conforms to E-0 grade emission standards. Two years ago, it received a CARB certification from the USA, issued by the Environment Protection Agency. “The zero emission products aimed at safeguarding the indoor air quality reflect our aim to innovate and upgrade in line with the increasing consumer preference for healthy living,” says Tulsian.

Catering to all consumer segments Greenply’s presence in the luxury segment is marked by brands like Green Club 5 Hundred and Green Club Plus Seven Hundred. In the premium segment, the company offers brands like Green Defender, Green Gold and Green Gold Platinum. “We have a strong presence in the luxury or premium segment that helps our growth prospect. Green Gold and Green 710 are our highest selling brands and contribute to approximately 45 per cent of our total plywood business,” says Subir Palit, country head, marketing and sales.

Greenply has the Ecotec brand in the economy plywood segment and Bharosa Ply and the Jansathi brand in the mass plywood segment. “We need to improve our dealership strength from 1,650 at present to over 3,500. We are working aggressively towards that and this will include more penetration in the Tier I and Tier II cities,” Palit explains. 

Decorative veneers started to be manufactured in Bamanbore in 2018 with a production capacity of one-lakh sheets per month. Decorative veneer is mostly used for aesthetics and has a total market size of Rs1,200 crore. The company offers a wide range of decorative veneers under the brand names of Wood Crrests, Royal Crown, Kohl Forest, Burma Teak and Engineered Veneers. “Our products are made of exotic species sourced from across the globe. The customer can choose from 1,300 distinctive designs,” says Shyam Shekhawat, business head, Decorative Panel.

NB Plywood has been the largest dealer of Greenply for the last 12 years. Nagesh Shenoy, who owns the dealership, says: “Greenply is a strong brand and has a large product basket to cater to all segments of customers. The management is very transparent and allows the dealers to grow with the company.” 

Greenply has tightened the credit lines to its dealers. It replaced the earlier soft policy of giving an extended credit line to existing channel partners with a new, more disciplined payment cycle spread. This led to greater efficiencies and Return on Investment in the dealer system. Also, for new dealers, appointed mostly in the rural and Tier II/III markets, it has adopted an advance payment strategy. “All these exercises have helped us to improve the balance sheet. We have reduced our net debt significantly from Rs257 crore in FY19 to Rs119 crore in 9 months FY22. On standalone basis we are cash positive,” says Gautam Jain, assistant vice president Strategy & Investor Relations. 

The pandemic badly hit the unorganised plywood sector. Dealers who were buying from unorganised players started feeling the pinch as their supply line got choked. So, they felt it was better to stay with branded players and get seamless supply and services. Mittal believes the demand for plywood will always remain. “The challenge is to shift the volumes from unorganised to brand.”

Strong balance sheet

As the shift being witnessed towards the organised sector owing to brand and quality awareness continues, the company is increasing its capacity by setting up a new unit in Sandila Industrial Area, Hardoi, Uttar Pradesh, for manufacturing plywood and its allied products. This wholly owned subsidiary unit is in the proximity of principal raw material-agro forestry timber.

This will serve the growing demand in northern and central markets of India. The company is investing Rs114 crore for an annual capacity of 13.5 million sq mt and this figure is likely to be reached by Q4 FY22. 

“Greenply is a joint leader in India’s organised plywood market. Revival in housing demand and the ongoing shift towards organised players are set to drive growth in the plywood division. The foray into MDF will add further to earnings from FY24. Sustained cost control and a tight leash on working capital are keeping the company’s balance sheet strong,” says Sneha Rungta, Assistant vice president, Edelweiss Securities.

Greenply is the first company engaged in an asset light or outsourcing mode. The company invested in two Bareilly units – Nemani Panels Pvt Ltd and Panchjanya Ply & Boards Pvt Ltd via equity participation to manufacture plywood, doors, film face plywood and allied products. The plant was set up according to Greenply’s specifications and produces for the Greenply brand with its technical guidance. This has enabled the company to increase its revenue without incurring any additional capital expenditure.

“We generate 10 per cent of our revenue from this JV. We are exploring some more JVs. In the future, we will have a mix of both our own manufacturing and outsourcing,” explains Mittal.

“Greenply is a good company going places under the leadership of Rajesh Mittal and his team. We are the only two large companies in the organised market and enjoy healthy competition. Entering into the MDF space is the natural choice for Greenply,” says Sanjay Agarwal managing director, Centuryply. “Unorganised players holding a large chunk of share in the industry. We organised players should now aggressively focus on to educate customers and bring them to the mainstream,” he adds.

Greenply has reported net sales of Rs1,165.30 crore in March 2021 as against Rs1,420 crore in March 2020. The net profit rose to Rs60.09 crore in March 2021 from Rs47.3 crore in March 2019. “At the start of the fiscal, lockdown and various curbs imposed impacted growth,” says Mittal. The market cap of the company is Rs2,465 crore while the current stock price is Rs200 a share on NSE. The promoter owns 52.25 per cent of the company, 28.99 per cent is with mutual funds, non-institutions hold 15.30 per cent and the remaining 3.46 per cent is with FPI & insurance companies.

The management is expecting better results in FY22. The company has achieved a gross turnover of Rs1114.30 crore for the nine months ended December 2021 as against Rs768.60 crore during the corresponding previous period. The net profit for the nine months till December 2021 increased to Rs65.80 crore against Rs32.30 crore in December 2020 – an increase of 103.7 per cent. 

In the next five years, Mittal expects plywood and MDF will run by independent CEOs. The company is also exploring the development of a third vertical, but are being tight-lipped about it.

Greenply has demonstrated its ability to move with the time. With immense brand value and established markets, the company will continue to retain its leadership position.