GREENPLY IN INDUSTRIES LTD Corporate Presentation – FY2016
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 suggested by the forward-looking statements. Important developments that could affect the Company’s operations include changes in the industry structure, significant changes in political and economic environment in India and overseas, tax laws, import duties, litigation and labour relations. All industry data has been collated from various industry sources and market reports. The said data is believed to have a reasonable level of accuracy. Greenply Industries Limited (GIL) will not be in any way responsible for any action taken based on such statements and undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances. 2
TABLE OF CONTENTS • Industry Overview • Company Overview • Plywood Segment • MDF Segment • Annexure 3
Industry Overview 4
PLYWOOD & MDF BRIEF Mar arket t Size (Rs Rs. Crore) and nd Breakup Industry CAGR 5- Unorganized vs Organized (Rs. Crore) MDF, 6% Industry 1,600 CAGR 12- 15% Greenply Greenply 13,500 30% 26% No market market un-organised share segment share - Plywood, 4,500 1,600 18,000 Plywood MDF Organized Unorganized • Enormous industry potential with market size of Rs. 19,600 crore split between Plywood and MDF • Organized players gaining market share with clear preference shift for branded products – trend to Strong continue going forward • Growth Rising residential and commercial construction activity throughout the country • Increasing urbanization and higher disposable incomes Drivers • GST Implementation to boost the growth of organised/branded products • Government thrust on construction of 100 smart cities 5
PLYWOOD Plywood industry value chain - Price-wise (taking 19mm thickness as base) • Market size: Rs35bn Luxury / • Market share: 20% FY10-15 Premium • Market leadership: Largely organised plywood CAGR of 15% • Organised to unorganised mix: 70:30 (Rs 100-140 psf) • Key brands: Luxury – Green Club • Market size: Rs105bn • Medium/Mass Market share: 58% FY10-15 • plywood Market leadership: Largely unorganised CAGR of 5-7% • (Rs70-90 psf) Organised to unorganised mix: 15:85 • Key brands: Ecotec and Sainik • Market size: Rs40bn • Low-end Market share: 22% FY10-15 Flat / • plywood Market leadership: Unorganised sector Negative growth • (Rs.40-60 psf) Organised to unorganised mix: 0:100 • Key brands: None 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 Tier I brands going forward: • • • • Premium brands, Greenply & GST Implementation Sustained slowdown in metros Gaining market share from Tier Centuryply are estimated to and Tier I cities have led to II brands as well as unorganised • Creation of smart cities account for ~51% of the steep growth deceleration over sector • Increasing discretionary organised market the last two years • Creating markets for niche spends/aspirations resulting in • Tier II brands account for the value add categories through upgrading remainder of the market constant innovation • Higher A&P spends by • Luxury and Premium segment corporate creating mind recall plywood have grown at 20% • Increasing quality and 15% CAGR respectively consciousness • Luxury segment is largely dominated by Tier I brands in 6 particular
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 forward: • • • Tier II brands account for 10% Policy reform – Housing for Tier I brands have slowed down Gaining market share from Tier while the unorganised sector All/focus on affordable housing over the last two years due to II brands and unorganised controls 86% of the market increasing inventories in the sector is expected to be a huge • Consistent shift from premium and luxury segments of opportunity for Tier I brands • This category has grown at a 5- unbranded to branded the residential category in real • 7% CAGR over the last five products playing out with Tapping huge outsourcing estate. years increasing quality opportunity in the category; consciousness which would be RoCE accretive • Tier I brands have been growing much faster than rest of the market over the last five years Low-end plywood market – Key highlights and challenges Unorganised sector Market size: Rs15 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 growing or declining over the last five years • The category will continue to face growth challenges due to: o Increasing shift happening from cheap plywood to MDF due to better durability and declining price differential between the two o Constraints in face veneer availability particularly post the ban on export of timber logs from Myanmar o Increase in face veneer prices post the Myanmar ban o Higher working capital requirements 7
MDF Global MDF capacity has reached 100mn cbm Regional Capacity – China has 44% of world’s total MDF capacity AU/NZ ROW 102 99 97 3% 1% 94 North 90 China 85 America 77 43% 71 6% 60 58 East Asia 10% South America 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E EU 12% 25% India’s MDF capacity (‘000 cbm) set to surge in anticipation of India’s MDF market is under -penetrated with a consumption of strong demand just 0.6 million cbm vs China’s 30 million cbm annually 15% 1,057 Plywood MDF 6% 6% 64% 517 374 94% 35% Global India 2009 2015 2020E 8
MDF MDF Regional Demand- South India demand for MDF is highest MDF is potential substitute for Cheap quality Plywood- Total followed by North current market size for cheap quality plywood is ~40bn North 30% Others 10% Cheap Organised 25% Category 30% West Premium / 15% Mid Category Unorganised 75% 70% South 45% Total Plywood market Cheap Plywood market size Rs 180 ban size Rs40 Unorganised Imports as % of total MDF demand to trend down to 20% by South and West region get the highest % of imports due to 2020E proximity to Ports 65% Domestic Imports 20% 50% 30% 70% 20% 80% 50% 30% North South West FY10 FY16 FY20E 9
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 10
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 product Manufacturing Thin sheets of veneer are glued residuals in to wood fibers. Wood fibres are made by heat pressing sawdust and Process together combined using wax and resin and heat press resin. Strength Highest strength Medium strength. Stronger than Particle Board Lower strength Pricing Costlier material 50% cheaper than plywood 20% cheaper than MDF Weight Heavier than MDF/Particle Board Weighs 10-15% more than particle board Lighter than MDF and plywood Moisture resistant Less susceptible to water damage Laminated MDF resistant to moisture Swells in contact of moisture Piercing Can handle nails/screws Can handle only screws Can handle only screws Difficult to cut. Cannot be Molding capacity Can be moulded easily. Easily machined and painted Can be moulded easily moulded easily Preferred choice of carpenters. Preferred choice for ready made furniture Preferred Uses Can be used in all furniture manufacturers. Suitable for wardrobe doors, shutters Used for making ready made furniture. applications of kitchen cabinets. 11
Company Overview
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