Plywood and MDF-maker, Greenpanel Industries, is investing ₹600 crore towards expanding capacities at its existing unit in Andhra Pradesh. The unit is expected to be commissioned in the first half of FY25, with an addition of 230,000 cubic metre or 35 per cent over its present capacity of 660,000 cubic metre.

The capex will see the company incur a debt of ₹250 crore on its books, in addition to an existing ₹150 crore. According to Vishwanathan Venkatramani, CFO, Greenpanel Industries, the company will retire ₹150 crore worth of debt over the next three years (FY24-26).

Repayment of the newly added debt — of ₹250 crore — will be retired over a 10-year period. Taken from a German bank, with a two-year moratorium, the debt comes at a lower interest rate of around 4 per cent, as against borrowing from Indian banks that come at interest rates of around 8 per cent and above, he said.

Greenpanel currently has two MDF units — one in Uttarakhand with an annual capacity of 216,000 cubic metre and another in Andhra Pradesh with 444,000 cubic-metre capacity.

“The brownfield expansion at Andhra Pradesh is in the works. We have ordered the machinery and other requirements of the plant from Germany. Around 60 per cent of the capex is from our internal resources. And 40 per cent is debt,” Venkatramani told businessline.

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For FY24, the company is expecting a 12 per cent volume growth in the MDF segment, driven by a push towards premiumisation, while in the plywood segment, volume growth is expected to be in the 8-10 per cent range. The EBITDA margins in MDF is expected to be around 23-25 per cent in FY24, slightly lower than 27 per cent it recorded in the last fiscal. “Additional capacities are there (across competition). So we have taken some moderation into consideration,” he said.

For plywood, margins are expected to be in the 8-10 per cent range, slightly higher than 7 per cent it recorded in FY23. The gross debt to equity ratio stands at 0.16 as of March 31, 2023. In FY23, sales grew over 12 per cent at ₹1,778.55 crore, while the profit after tax (PAT) was up 7 per cent at ₹256.51 crore.

Push for exports

Greenpanel would look to tap into the export markets, for MDF, specially in West Asia and South East Asian regions. “We expect exports to grow in high double digits, of around 20-25 per cent,” Venkatramani said, adding that the company would not invest in overseas assets.

However, Greenpanel was open to acquisitions in India, but “these plans would take one to two years to materialise,” he said.

In the last quarter of FY23, the MDF export volumes rose 89 per cent, which according to the CFO was a “one-time effect”.