Kolkata-headquartered Greenply Industries, the second-largest interior infrastructure player that manufactures plywood and engineered wood among others, is on an aggressive expansion spree, investing nearly Rs550 crore in setting up two green-field plants. Sanidhya Mittal, joint managing director of the company, tells Benn Kochuveedan that with the commissioning of these units the company should nearly double revenue to Rs4,500 crore by FY28 from Rs2,400 crore grossed in FY26. Edited excerpts:
You are among the pioneers of the plywood industry. What are the trends in this industry and how is the business looking like given the boom in the real estate? How big is this industry?
The plywood and MDF (medium-density fiberboard) industry is around Rs 60,000 crore now. But only around 20% is in the organized sector. The overall wood panel industry should be Rs 60,000 crore.
So we’ve given a guidance this year to grow at double digits in volume for the plywood business and for MDF, I think it should be in the 25-30% range. In our business price rises are led by supply side and so are not in our hands. Those are windfall gains. We expect 16-17% operating margin for the full year.
Given the higher growth guidance you have, what are expansion plans and what is the capex allocation?
We have four plywood units and one each for MDF and (wood plastic components (WPC) in Vadodra. Our fifth plywood unit is under construction in the Koraput district of Odisha, and the second MDF unit under construction in Vadodara. While the Odisha unit will be ready in the fourth quarter of this fiscal, the MDF unit will be running by the second quarter of next fiscal. The installed annual capacity for plywood currently is 53 million square meters and this will go up by 13.5 square meters with new Odisha plant. On the other hand the existing MDF capacity at Vadodara is 3 lakh cubic meters per annum and this will go up by 2.1 lakh CBM when the second line Vadodara plant is ready by the end of this fiscal.
The MDF plant would need around Rs 425 crore of investment and the plywood unit needs around Rs 130 crore, taking the total to Rs 535 crore. Then there is the annual working capital needs.
How are you funding the expansion?
So typically 35% is internal accruals and the rest is debt-funded. Our debt gear is only 0.57x of equity, which is about Rs 520 crore that includes both long-term and short-term loans.
Even going forward with these investments, our debt may peak at about 0.7x in the short term but will come down to 0.65x within six months of commissioning. All I am saying is that our debt levels are very comfortable.
What are your hiring plans for these two new units? Is this business highly people intensive or mechanized?
Both plywood plant will employee around 750 as it is fully manual. For plywood, the supply side is very, very labour intensive. It's not at all mechanised. And the whole process is manual. Even the production entries are manual. But the MDF industry is almost fully mechanized. I would say our new MDF unit will be 100% AI-based as we will be running it on self-learning software.
What will be the capacity of the WPC plant and given the crude price volatility due to the supply side issues from the Gulf, how the demand looking like...
Yes raw material prices have been very volatile since the Iran war. So when the PVC price move up and down, our selling prices also follow and keep moving. Currently we produce about 1,000 cubic meters per day and the expansion will add 700 cubic meters and we will become 1,700 cubic meters a day. This plant should be up and running by the second quarter of next year.
Where do you source your lumber from since the traditional market that the Northeast is no longer available after the Supreme Court verdict? How much of the demand is sourced from outside? At least 25% of the demand on average is sourced from outside. Mostly it’s from Perumbavoor in Kerala where we get the best lumber or from Sriganganar. But Kerala lumber is far better. This is seasonal and keeps varying.
If Kerala gives you the best timber why don’t you set up a plant there at least that can serve your southern supplies then?
Without hurting the political and cultural sentiments of the state, I have to tell you I can’t just do it. The business environment and labour climate is not at all conducive for running a business that state. It’s not just about higher labour cost which is directly passed to the end customer but the labour behaviour is the problem.