GREENLAM INDUSTRIES

Intro
Greenlam Industries Ltd falls under the category of the top 3 manufacturers of laminates in the world. Greenlam
commenced its business operations in 1993 with a manufacturing facility for laminate sheets at Behror, Rajasthan. The
company is led by Mr. Saurabh Mittal (Managing Director & CEO), possessing more than 25 years of experience in the
laminates business.

Product Portfolio
The company is majorly in the manufacturing and distribution of decorative laminates which range from premium to
commodity and could be categorized into compact laminates and high-pressure laminates. The Major application of these
laminates is for doors, wall paneling, Column cladding, furniture, Worktops, and lockers. The company is also into
decorative veneers (Natural veneer, Engineered veneer, and teak veneer). Compact Panels, Mikasa floors, MFC, and Mikasa
doors are some other products of the company.

Value Chain

Raw material: Chemicals Manufacturing of Laminates,

(35%), paper and base play decorative veneers, MPC, and Doors

Sourced mainly from US,

China and South east
Asia. 80% of the RM is
Domestic – 52% of Exports – 48% of
imported.
the revenue. the revenue.

Regional distribution centers: 9 Reach more than 100 countries.

14,000 + distributors, dealers and

retailers
8 Operational Global subsidiaries
for centralised focus on export.

Revenue

FY19 FY20 FY21 FY22

Total Revenue 1281 1321 1200 1703

Growth 3% -9% 42%

Laminates and allied products 1028 1050 1022 1480

Growth 2% -3% 45%

Export proportion 48% 52% 56% 52%

Decorative and allied products 201 209 140 155

Growth 4% -33% 11%

Export proportion 9% 10% 15% 11%

Other operating income 52 61 38 69

Return Matrix
FY19 FY20 FY21 FY22
ROIC 13% 13% 13% 11%
ROCE 12% 12% 11% 9%
ROE 18% 19% 14% 15%
PAT M 6% 7% 6% 5%
Total Asset Turnover 1.4 1.3 1.0 1.3
Financial Leverage 2.2 2.2 2.1 2.1

FY19 FY20 FY21 FY22

Gross Profit Margins 46% 49% 50% 45%
EBITDA Margins 12% 13% 14% 11%
EBIT Margins 10% 10% 10% 8%
NOPAT Margins 7% 7% 8% 6%
Interest as a % of Revenue 1% 2% 1% 1%
Tax expense as a % of Revenue 2% 2% 2% 2%

FY19 FY20 FY21 FY22

Working Capital Turnover 4 4 4 5
Receivables Turnover 7 8 9 13
Inventory Turnover 4 4 3 4
Trade Payables Turnover 8 8 6 7

FY19 FY20 FY21 FY22

Working Capital Cycle 92 92 96 71
Receivables Days 50 43 42 28
Inventory Days 88 94 114 94
Trade Payables Days 46 45 59 51

FY19 FY20 FY21 FY22

Gross Block Turnover 3.5 3.4 2.9 4.0
Total Asset Turnover 1.4 1.3 1.0 1.3

Gross Margins: On a Quarterly, the company had gross profit in the range of 46% - 47% till Q2 FY20 which saw a sharp
decline in Q4 FY19 to 43% due to changes in product mix and pressure from the raw material side. In the following quarters
i.e., from Q2 FY20, the gross profit margin improved to 50% - 52% due to changes in product mix, operational efficiency,
and softening on the raw material front. However, in Q1 FY22, the company saw huge pressure on the raw material front
where every cost including methanol, phenol, melamine, paper, and base ply saw a price increase. The company took the
price which was reflected in the improvement in gross profit margin to 45% in Q4 FY22. The lead time in the decorative
paper went up from 3-4 months to 9-10 months.

PAT Margins: The PAT Margins were majorly in line with the Gross Margin. However, the company had an exceptional loss
in FY20 of 12.4 cr. due to the amount paid for settling outstanding entry tax disputes with Rajasthan and Himachal Pradesh
commercial tax departments. Hence, PAT Margin was 6% and 5% in FY21 and FY22.

The company created raw material buffer by stocking raw materials in H1 FY21 which helped them in FY22.

Working capital turnover: Inventory turnover decreased due to logistic issues where the company faced higher lead time
on the decorative paper side which increased from 3-4 months to 9-10 months also container availability challenges.
Inventory days increased to 119 days in FY21. The company became efficient in debtor’s days by reducing it to 28 days from
50 days.
Total asset turnover: Total asset turnover decreased in FY21 due to debottlenecking initiatives taken by the company. They
increased their floor area by adding warehousing, storage, and new machinery. The new machinery enhanced laminate
production at the Nalagarh facility.

ROCE is declining because free cash flow is being invested into a business segment that is currently under development
leading to lower turnover however the major movement is due to a decrease in NOPAT margin whose reason has been
explained above.

Laminates Segment:
Laminates and Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
allied products FY19 FY19 FY19 FY19 FY20 FY20 FY20 FY20 FY21 FY21 FY21 FY21 FY22 FY22 FY22 FY22 FY23

1,01 1,00
Realisations 746 778 761 770 818 803 799 774 810 772 736 780 782 833 984 2 2
Volume (millions) 3.3 3.5 3.4 3.9 3.0 3.7 3.7 3.7 1.8 3.3 4.0 4.7 4.0 5.0 4.1 4.2 4.3
GPM 48% 46% 49% 44% 50% 47% 53% 50% 51% 50% 54% 50% 46% 44% 45% 45% 46%

Gross profit 118 126 128 133 124 140 156 142 74 129 159 183 144 182 183 192 197
Gross Profit per
sheet 355 359 372 339 411 379 419 389 409 385 395 391 363 365 442 459 458
EBITDA margin 13% 14% 14% 14% 13% 15% 18% 16% 9% 16% 20% 18% 13% 12% 13% 13% 12%

EBITDA 32.4 37.1 35.4 43.3 30.9 45.6 54.7 44.8 12.4 41.9 58.5 65.4 41.2 47.7 54.3 54.7 53.4

EBITDA Per Sheet 98 106 103 110 103 124 147 122 69 125 146 140 104 96 131 131 124

Opex Per Sheet 648 672 658 660 715 679 652 652 741 647 590 640 678 737 853 881 878

The decorative veneer Segment has lower utilization due to it being used in the premium residential market and
hospitality Industry. The company is facing issues in this segment due to competition intensity, RM cost, and availability of
base ply and veneer. Along with that, the plant was closed for 10 days due to CAQM which mandated the plants in the
Behror region be shut due to air pollution which impacted the sales and inventory.

Fund Flow

Standalone Inflow Standalone Outflow

4% 2% 5% 10%
11% 7%
2% 12%

18%

39% 23%

67%

WC taxes Capex
Investment Loan to Subsidiary Interest
Operation Equity Net debt Other income Lease Dividend tax

Equity: The company did a private placement preferential issue to Smiti Holding and Trading Company Private Limited
where 36.1 lakhs shares were allotted at the price of 309 per share raising 195 cr. in total. Total dilution 4.97% of post-
issued capital.

Net Debt: The company raised 99 cr. from non-convertible debentures.

Investments: The company has created a subsidiary named Greenlam South ltd. For the purpose of Andhra Pradesh
expansion which led to 39% outflow from a standalone perspective. In total 413 cr. has been used for investments from
which 253 cr. were invested in mutual funds. Out of the remaining 160 cr., 49 cr. were invested in Greenlam as optionally
convertible preference shares at the price of 75 per share which was used by the subsidiary for the purpose of advance
against land purchase. In FY21, the OCPS were converted into equity shares. In FY22, a further 56 cr. were invested out of
which 35cr. were in the form of redeemable preference shares at the price of 270 per share and 10 cr. in the form of equity
shares at the price of 57 per share of Greenlam South ltd. and 14 cr. in HG Industries. Greenlam South ltd. Used this to
make payments against plant & machinery. Further 57 cr. have been invested in H1 FY23.

The company did an acquisition of HG Industries (Gujarat). The cost of acquisition was 36 cr. and the company did further
upgradation to install a laminate manufacturing which amounted to 15 cr.

Capex: The company did this for maintenance capex and debottlenecking as mentioned above.