Greenply Industries Ltd, the Rs 2,000-crore interior infrastructure company that makes plywood and allied products, is looking to focus on rural markets to offset a slowdown in urban centres.

Currently, 98 per cent of its sales are from urban and semi-urban areas. For the quarter ended December 31, 2013, it reported a marginal growth of 3 per cent in sales to ₹525 crore over the comparable quarter last year.

Net profit remained unchanged at ₹29 crore.

According to V Venkatramani, Chief Financial Officer, top-line growth was hit because of a decline in home sales. This led to poor demand for plywood and allied products.

“There has been a slowdown in sales because demand from the real estate sector has been hit. The focus will now be on rural markets where we foresee future growth,” he told Business Line .

Little progress An entry into the rural markets began earlier this fiscal, but little progress was made. Market sources indicate that the price-conscious rural market in India is dominated primarily by the unorganised sector.

This could be a reason for the brand’s limited success in its latest venture.

“We are trying to make headway in the rural markets. Teams have been organised and we are looking at improving the distribution network,” Venkatramani said.

Tapping rural markets will primarily be through mid-segment brand Ecotech. Focus will also be on pushing premium brands for value sales, wherever possible. Meanwhile, buoyed by an improvement in margins (in plywood), Greenply is looking to expand outsourced offerings for the mid-segment.

For the quarter ended December 31, operating margins in plywood stood at 11.76 per cent, against 9.81 per cent a year back, Venkatramani said.

“By December 2014, margins should improve to 12.5 per cent for the plywood division. Realisations for outsourced plywood offerings have also increased and it’s a good sign,” he said.

Currently, Greenply has a combined annual production of 32.4 million sq m (of plyboard) across its Nagaland, West Bengal, Gujarat and Uttarakhand facilities. About half of its output is in the mid-segment.

Allied products, apart from plywood, include laminates and medium-density fibre-board manufacturing, used in furniture making.

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