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Decorative laminates and veneers maker, Greenlam Industries, is expecting its new businesses engineered wooden flooring and door sets to break-even soon.
Pressure on margins
The loss-making new business segments — which were introduced two to three years back — have cut down Greenlam’s margins. While, the core business of laminates and veneers reported a near 16 per cent margin, overall EBITDA stood at 13 per cent as on December 2018.
Greenlam, formed post the demerger from Greenply Industries in 2014, has been focusing on improving margins and reducing debt.
“We have reduced debt by nearly ₹200 crore since then. We have grown but with focus on capital allocation, balance sheet, capital returns and debt management. That will be the way forward for us,” Saurabh Mittal, Managing Director and CEO, Greenlam told BusinessLine .
According to him, overall margins are expected to improve this fiscal driven by profitability of new businesses and scale-up of its core laminate vertical. The company’s UK subsidiary is “just about to break-even”.
The company’s total revenue stood at around ₹1,072 crore in FY-18. While close to 85 per cent of its business came from laminates, the remaining 15 per cent came from veneer, floors and doors businesses.
Its operating profit margin stood at 11.46 per cent; while its net profit margin improved to 5.52 per cent as on March 2018.
Scaling up capacity
Domestic market accounts for nearly 50 per cent of its core laminates business; the remaining coming from exports. Major overseas markets include North America, UK, parts of Europe, West Asia, parts of Africa and South East Asia, among others.
Greenlam, currently, manufactures close to 14.4 million laminate sheets annually. It has two manufacturing units located at Behror in Rajasthan and Nalagarh in Himachal Pradesh. The Behror plant capacity is 5.34 million laminate sheets and manufactures melamine faced chip boards, decorative veneers, engineered wooden flooring and engineered wooden door. The Nalagarh unit has a capacity of 8.68 million laminate sheets.
Both the plants are operating at nearly 100 per cent capacity. Greenlam can explore the possibility of scaling it up, once optimum capacity is achieved.
“We are currently slightly shy of 100 per cent capacity utilisation. But, we can take it up to 115-120 per cent,” he said refusing to divulge details of the expansion plans.
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