In an interview with CNBC-TV18's Mangalam Maloo and Reema Tendulkar, Shobhan Mittal - Joint Managing Director of Greenply Industries , said the company will launch a natural veneer, which should help the company earn total revenues of about Rs 35 crore in the next fiscal.
The company is also planning an additional 400 dealer appointments in the next two years, he said. "The idea is to reduce dependency on very large dealers and spread the sales through more numbers of dealers which would result in lesser discounts being passed on to big dealers and lesser under cutting."
Below is the transcript of the interview on CNBC-TV18.
Reema: You are planning to launch a natural veneer very soon perhaps in the next two months. What kind of an opportunity will it throw up? What are the expected revenues from this?
A: In the coming financial year we expect revenue of Rs 30-35 crore. Going forward in the next two financial years we should be touching revenues upto Rs 50-55 crore.
Mangalam: As far as I understand about this industry, about 75 percent comes from unbranded sector and which is where you will get your next growth phase from. So once you try to get the unbranded guys to shift to the branded ones your advertising cost will also increase so what are the targets for your advertising cost?
A: We are playing in a segment which only represents 15 percent of the total plywood market which is the top end. So it cannot be expected that the entire unbranded segment would shift into our product segment because the price variation is very high. So the lower segment we would target hitting with our medium density fiberboards (MDF) products. The upper-middle segment is what will get converted into the branded segment.
Reema: Your MDF business did quite well in Q3 what is the outlook looking over there? What can we expect in FY16?
A: We expect a topline growth in MDF business of 12-15 percent and margins to remain a pretty constant may be a 100 basis points increase in that.
Mangalam: Ecotec is one of the brands that the manufacturing of which you all outsource and the share in revenues of that brand is increasing. So how are the margins going to look post that because they have a lesser margin than all the other products?
A: If I combine the increased sales of Ecotec which is outsourced and increase of volumes of our own production facility and a better value mix we should look at an overall 100 basis point again improvement in the overall margins in the coming financial year.
Reema: I was reading somewhere where the company's performance lagged peers something like a Century Ply Board perhaps in the year gone by could you give us some numbers about what the market share stands at in the ply board business for Green Ply industries as well as for Century Ply and how is it changed?
A: In the organised segment which is the top 15 percent of the whole plywood market we have about 25 percent market share on that segment. Century's growth has been good but that is also considering the fact that their Myanmar operation which is primarily a commercial veneer operation started a lot before ours did and they are also a very active player in the commercial veneer segment whereas our focus in that segment is primarily for captive consumption.
Mangalam: As far as your growth is concerned you all want to grow by expanding your dealer networks. But there are some problems in lot of cities as well as far as under cutting is concerned so how are you all planning to mitigate that?
A: We plan on an addition of close to 400-500 new dealer appointments in the next 2 financial years. In the current year we did 35 percent of our sales from coming from new dealers. The idea is to reduce dependency on very large dealers and spread the sales through more numbers of dealers which would result in lesser discounts being passed on to big dealers and lesser under cutting therefore happening in the market.
Greenply Ind stock price
On March 18, 2015, Greenply Industries closed at Rs 972.00, down Rs 19.5, or 1.97 percent. The 52-week high of the share was Rs 1276.80 and the 52-week low was Rs 344.25.
The company's trailing 12-month (TTM) EPS was at Rs 53.96 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 18.01. The latest book value of the company is Rs 241.60 per share. At current value, the price-to-book value of the company is 4.02.
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