DEAR SHAREHOLDERS,
It gives me pleasure to share with you Greenpanel's performance of
the year, amid a macro environment that continues to hold immense promise and positivity
despite some challenges. The MDF prospects remain bright, with strong growth in
India's furniture market continuing to push demand for this versatile, affordable and
flexible product in the domestic market. E-commerce has emerged as a major driver of this
growth, along with rising disposable incomes, increasing urbanisation, and growing
awareness of the environmental benefits of MDF compared to solid wood. The Indian MDF
market is estimated to be worth over Rs 6,000 crore, and is expected to grow at a
CAGR of 15-20% in the coming years.
These developments augur well for Greenpanel, which remained on track
with its growth and expansion plans during the year despite the challenges faced.
Increased imports, and rise in domestic competition due to the proliferation of the
unorganised sector in the MDF business have been the key challenges to industry growth.
The spike in raw material prices, along with muted availability of timber, were also a
cause of concern during the year. However, targeted and timely responses from our agile
teams helped in offsetting the impact to a significant extent. Price reduction and special
schemes were offered to customers to boost sales. We also remained on track with our MDF
Line 3 project, involving the establishment of a new plant in Andhra Pradesh to boost the
production capacity. The project underlines our deep-rooted optimism about the MDF market.
Rooted in outstanding quality and driven by a futuristic vision, Greenpanel is ideally
positioned to tap the burgeoning opportunity in this segment. The new plant will have the
capacity to produce the thinnest MDF in the Indian market, underlining our strong
innovation capabilities. The launch of a commercial grade product to cater to the OEM
segment, which we resumed serving during FY24, further underlines our unwavering focus on
our MDF business, which is contributing 90% of the Company's revenues.
Before I take you through some of our notable initiatives of the year,
I would like to share with you that Greenpanel has paid an interim dividend of Rs 18
crores to its shareholders. This is the third year in a row that we have paid dividend of
Rs 1.50 per share annually, underscoring the financial robustness of our business.
Driving brand visibility
Being bigger, better and best-in-class in the MDF segment is the core
of our growth strategy. Having emerged as a brand synonymous with MDF, our thrust now is
on embracing new-age modes and tools to create an even more engaging brand proposition for
our customers and stakeholders.
In our quest to be the preferred MDF player for a growing customer base
pan India, we embarked on a new branding and marketing approach during the year. This
strategy was marked by our shift towards Above the Line (ATL) campaigns from pure Below
the Line (BTL) activities. Our new TVCs have proved to be game-changers in terms of brand
enhancement. At the same time, the extension of our association with IPL games through
principal sponsorship of Delhi Capitals has lent a top-of-the-mind recall for Brand
Greenpanel. We also continued to strengthen our on-ground activations to enhance our
connect with our dealers and influencers, who remain vital to our marketing approach.
Building efficiencies
We are cognisant of the importance of operational and cost optimisation
to ensure a more profitable and sustainable organisation. Our efforts during the year were
geared towards process and system improvements. We also aggressively adopted digital and
technological upgradations to create bigger value for our stakeholders throughout the
business value chain. I am happy to share that our continued investments in promoting
fiscal discipline have enabled the Company to continue remain net debt free for its
existing business operations, with gross cash and investments of Rs 234 crore against ECB
debt of Rs 84 crore, resulting in net cash surplus of Rs 150 crore. Led by a positive
outlook, we have invested the surplus funds into fixed income bonds for Rs 97 crore with
YTM of 8% in order to generate positive arbitrage over return from fixed deposits.
During FY24, Greenpanel redesigned its working capital facilities from
under Consortium Banking to Multiple Banking with a view to realign debt limits, optimise
cost of bank charges, and improve operational efficiency. The
Company has created a new overseas branch at Dubai with a view to tap
into the export demand in the Middle East and Africa. We have also successfully
disinvested our wholly-owned subsidiary in Singapore and liquidated the net fund
investment of Rs 23 crore.
During FY24, Greenpanel redesigned its working capital facilitiesfrom
under Consortium Banking to Multiple Banking with a view to realign debt limits, optimise
cost of bank charges, and improve operational efficiency.
I am also thrilled to announce that we officially moved our corporate
office into our new space at DLF Downtown during the year! From state-of-the-art
facilities to a vibrant atmosphere, our new workspace is designed to inspire
collaboration, creativity, and innovation among our team members.
Optimised procurement further aided our efforts to create a more
efficient and streamlined value chain. For the first time this year, we participated in a
bidding process initiated by the Andhra Pradesh Forest Development Corporation, to procure
wood from their reserved forest locations. The move helped us effectively counter the
timber scarcity.
Focussed on sustainability & people
On the ESG front, we continued to engage in sustainable sourcing of
timber, and the Harit Bharat Award for Awareness in the Manufacturing Category'
reaffirmed our commitment to sustainability and a more ecologically responsible future.
We further augmented our farmer engagement to boost their livelihood
and income potential by supporting them with free / subsidised plantation and providing
them with the latest technical knowhow. In addition, we undertook several CSR initiatives
to expand our community outreach. Besides medical treatment camps, we partnered with
Akshaya Patra to provide food and nutrition support to school children.
Our people remain a key enabler of our business strategy and we
continued with our efforts to become a more people-friendly organisation, through further
liberalisation of our HR policies. We launched an internal project to better align the top
personnel across departments with the organisational goals. For the first time in the
Company's history, we have created a Gratuity Trust in pursuance of HR Best Practices
and employee satisfaction, and have contributed Rs 4 crore against the liability of Rs 12
crore.
Outlook
Going forward, though the delay in the implementation of mandatory
Bureau of Indian Standards (BIS) quality norms for MDF sold in India will aggravate the
near-term industry challenges, the long-term prospects remain robust. The implementation
of the norms from February next year is expected to reduce imports, benefiting domestic
manufacturers. Greenpanel, with its core strengths, expertise and first-mover advantage,
is ideally positioned to maximise the potential for growth in the MDF segment.
We shall continue to widen our distribution reach, expand our portfolio
of value-added products, and focus on increasing the domestic volumes to become bigger,
better and a more sustainable organisation. Enhancement of the Greenpanel brand value and
addition of plantations will continue to be our major focus areas, going forward.
In conclusion
I would like to thank all our stakeholders, including employees,
customers, suppliers, and shareholders, for their confidence and support to the
organisation. We are confident that their continued trust and commitment will help us
drive greater inclusive growth and value creation.
| Sincerely, |
| Shiv Prakash Mittal |