Greenpanel Industries Ltd

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.