NEW DELHI: Greenply Industries’ new Rs 800 crore medium-density fibreboard (MDF) plant in Andhra Pradesh will help the company bridge supply gap in southern part of India and give them certain competitive advantage, said Shobhan Mittal, CEO and JMD of the firm.
“South India is our biggest market with nearly 40 per cent of India’s MDF being sold there. The new plant will help us to save as much as 15 per cent in freight charges and provide us easy access to ports for exporting our products,” Mittal told TNIE. The new plant is expected to create over 3,000 direct and indirect jobs, he said.
Mittal said that the two plants together will help the company to significantly increase its revenue, which is expected to show muted growth this year. In the last fiscal, the company had clocked a revenue of Rs 1,675 crore.
“Our business was impacted first by demonetisation, which slowed down demand in unorganised markets, and then by GST, which put our product in the 28 per cent tax slab. We expect a flat growth in FY18,” Mittal said.
Import products that are 20 per cent cheaper than domestic MDF also impacted earnings. However, Mittal is confident that as the demand is shifting from plywood to MDF, they will be in a better position to capture the market. “MDF has higher EDITA margin of 28 per cent as against 13 per cent in plywood, besides being significantly cheaper. At present, our market share in the segment is 20 per cent, which we aim to take to 50 per cent,” he said.
Mittal, who also announced rebranding of its many products under the brand name of Green panel, said the company is in talks with Swedish furniture giant IKEA for supplying it raw material when the latter starts selling furniture in India. The two plants will also take company’s combined annual capacity to 5,40,000 cubic metres, making them the largest manufacturer of wood panels in India.