Greenply to make fibre boards

The segment has been growing at 25% a year

MUMBAI: Kolkata-based Greenply Industries Ltd, the market leader in plywood and laminates, plans to foray into manufacturing medium density fibres (MDF), where it does not have a presence today.

The Rs 500 crore company is banking on new products such as MDF and particle boards to fuel long-term growth and is likely to finalise its strategy for this segment by the calendar-end.

Plywood, MDF and particle boards form the background material and veneers and laminates form the surface in interiors, and demand for these products is interlinked.

Mahabir Agarwal, VP - corporate finance, Greenply Industries told DNA Money, “We have yet to finalise the MDF foray plans as everything is at initial stages. Any timber business needs to be cleared by Supreme Court and we are waiting for the court clearance and licence.”

Thanks to the boom in commercial infrastructure, the MDF segment is witnessing a 25% annual growth, said Agarwal.

Given the high demand, Bajaj Hindusthan and Birla group’s Mangalam Timbers, too, are foraying into the segment, said an industry source. Bajaj Hindusthan is even learnt to have imported machinery for its MDF plant, to be set up by December by its subsidiary, Bajaj Eco-tec Products Ltd. Among others, Nuchem Ltd and Shirdi Industries are also foraying into the segment.

Mehernosh K Panthaki, analyst with HDFC Securities, said in a note to clients on September 22 that the laminate and plywood industry is a direct beneficiary of the boom in demand for office space and housing units. Greenply has a 25% share of the organised plywood market and 15% of the organised laminates market.

It currently has a manufacturing capacity of 18 million square metres of plywood and 5.34 million sheets of laminates per annum. The nearest competitor, Century Plyboards India Ltd, currently has capacity to manufacture approx 6.25 million square metres of plywood and 2.4 milion sheets of laminates per annum. Between them, these two players control around 50% of the organised market in plywood, with smaller players, including Uniply, Novopan Industries and Sarda Plywood splitting the rest.

Greenply reported a 37% growth in sales to Rs 116 crore and 101% growth in PAT to Rs 9.07 crore in Q1FY08. It has predominantly been a domestic player generating revenues of around 91.5% from the domestic market.

Greenply has four manufacturing facilities at Nagaland, Kolkata, Rajasthan and Uttaranchal. The Uttaranchal unit manufactures plywood & particle boards whereas the Nagaland unit manufactures only plywood catering to premium segment. The laminates & decorative veneers are manufactured at the Rajasthan facility.