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Greenply Industries Ltd.

BSE: 526797 Sector: Others
NSE: GREENPLY ISIN Code: INE461C01038
BSE LIVE 09:39 | 24 Aug 283.50 11.10
(4.07%)
OPEN

292.00

HIGH

295.00

LOW

282.75

NSE 09:24 | 24 Aug 284.05 10.05
(3.67%)
OPEN

294.00

HIGH

294.00

LOW

283.05

OPEN 292.00
PREVIOUS CLOSE 272.40
VOLUME 12310
52-Week high 309.00
52-Week low 236.50
P/E 26.42
Mkt Cap.(Rs cr) 3,476
Buy Price 283.55
Buy Qty 36.00
Sell Price 284.20
Sell Qty 40.00
OPEN 292.00
CLOSE 272.40
VOLUME 12310
52-Week high 309.00
52-Week low 236.50
P/E 26.42
Mkt Cap.(Rs cr) 3,476
Buy Price 283.55
Buy Qty 36.00
Sell Price 284.20
Sell Qty 40.00

Greenply Industries Ltd. (GREENPLY) - Chairman Speech

Company chairman speech

Dear Shareholders

LAST YEAR IN MY LETTER TO YOU I HAD EXPLAINED IN DETAIL THAT OUR DEMERGER WILL USHERIN GREATER SIMPLICITY AND DYNAMISM IN OUR OPERATIONS; AND ENABLE US TO LEVERAGE EMERGINGOPPORTUNITIES BOTH IN THE PLYWOOD AND MDF SPACE. LET ME TAKE THE NARRATIVE FORWARD THISYEAR BY EMPHASISING ON THE OPPORTUNITY LANDSCAPE.

It hardly needs to be stated that India remains one of the most attractive economies ina slow-growth world. The government’s focus on creating more infrastructureattracting foreign direct investment (FDI) encouraging domestic entrepreneurship anddriving rural income will augur well for the economy going forward. Inflation fiscaldeficit and the current account deficit has also declined rendering macro-stability forIndia at a time of global turbulence.

Goods and Services Tax (GST) benefit

For Greenply the implementation of GST will address complexities and inefficiencies ofthe current indirect tax framework and result in greater market share. Currently plywooddealers pay excise (12.5%) and VAT (12.5% in most states and 5% in the other states).However they are not eligible to get any credit for excise duty paid which in case ofGST (one point tax) would be cenvatable (both central and state GST). Hence it wouldresult in reducing the tax burden eventually in the hands of the end consumer.

Within the building material space GST is likely to benefit the plywood sector themost with over 75% of the industry being dominated by the unorganised industry. Atpresent the price differential between the organised and unorganised plywood variesbetween 15% and 20% in the premium plywood space.

This in turn would improve the competitiveness of organised players and help it gainfurther market share. We have assumed that the unorganised player would continue to evadetaxes post GST implementation which may not be the case since the threshold for GST islikely to be much lower than the current threshold limit of Rs. 1.50 crore for ExciseDuty.

In all probabilities the cost for the unorganised player is also expected to move updue to likely non-avoidance of taxes which is further likely to bring down thedifferential between a branded and an unbranded product. Besides small manufacturers whocurrently escape the excise net by maintaining a turnover below Rs. 15 million areexpected to fall into the GST ambit.

Encouraging performance

We have delivered a stable performance during the year; and we expect to do evenbetter going forward. Both plywood and MDF segments have seen stronger growth and havecontributed significantly to the top-line. Our continuing endeavour has been towardsenriching our product mix; and this has enabled us to improve our gross margins. We willcontinue to invest in building our brand and maintaining a strong market share.

Strategy for sustainability

We are promoting large-scale clonal plantations of fast growing short-rotation plywoodspecies on marginal and degraded farm lands (that can be replenished) to meet our rawmaterial requirements for the long-term.

Such a strategy will not only reduce our dependence on overseas timber but also bringdown the logistics costs incurred in the procurement of local timber. In addition we havecommenced the clonal propagation of Melia Dubia in collaboration with Rain ForestResearch Institute. It serves as an excellent raw material for plywood production onaccount of its higher yield; it takes only six to seven years for it to get ready forharvest. It benefits the Company as well as the farm owners as they get better financialreturns in a short gestation period.

Shareholder value

Our strong fiscal position and efficient cost structure enable us to become asustainable value creator for shareholders. We delivered a competitive total return to ourshareholders both in the short and long-term. We completed a stock split of one equityshare of a face value of Rs. 5 into 5 equity shares of a face value of Rs. 1 each. We aremaking our shares more affordable to small investors; and enabling greater marketabilityand liquidity in the market. We also proposed a dividend of Rs. 0.60 per share for2015-16.

Over the last three decades we have built a robust business model; and maintained astrong leadership position across product categories and markets. Going forward risingdisposable income growing urbanisation and focus on aesthetics and urbane lifestyles willdrive the offtake of our products.

We have had a fabulous journey so far. Since the very beginning we have consistentlyset and met the highest standards in corporate governance and brand management. This hasbeen possible owing to the dedication and commitment of our people. However I must assureyou that our best days are still ahead of us.

I am grateful to all of you - our shareholders employees partners customers bankersand other associates - for your good wishes in all these years. I am confident that youwill continue to support our vision going forward.

Warm regards

S. P. Mittal

Executive Chairman

(DIN: 00237242)