Greenpanel Industries, one of the largest MDF and plywood-makers in India, is expecting to maintain its EBITDA margin guidance of around 23–25 per cent for the MDF segment and 8–10 per cent in plywood for FY24. It is targeting a double digit volume growth of 12-15 per cent in MDF; and 8–10 per cent in plywood.

The company’s Q1 was impacted by increased brand spends, loss of production and sales volume due to the maintenance shutdown at Rudrapur (Uttarakhand) — which hit the bottomline and increased maintenance costs. This apart, there was a steep fall in export realisations and a drop in raw material costs, which saw the profit-after-tax halve on a y-o-y basis to ₹37 crore.

For the April–June period, the EBITDA margin (earnings before interest, tax, depreciation and amortisation) was 18.7 per cent. In terms of volumes, the MDF sales (accounting for 88 per cent of turnover) fell by 13 per cent at ₹340 crore; while plywood sales volumes dropped by 37 per cent.

New offerings

According to V Venkatramani, CFO, Greenpanel, there was some pressure on the demand side and an added one because of additional supplies; apart from a fall in raw material costs. But, these are unlikely to have a long-lasting impact. The company has come out with new offerings — lower priced ones competing with cheaper imports — across certain segments where “realisations would be lower but would in turn get compensated by the additional volume (sales) generated”. Greater volume sales are targeted across domestic markets too; which means there will be some curtailing in exports.

Higher shipments in the plywood & MDF sector are reportedly coming in from countries like Vietnam, Thailand, Malaysia and Indonesia. “We are targeting better volumes from domestic markets and also in segments which traditionally have contributed a lower realisation. So, there could be changes in the realisation in the succeeding quarters. But what we are targeting is having volume with lower realisation,” he told businessline. “Our guidance continues to be double digit volume growth and 8 to 10 operating margin in plywood and 23 to 25 per cent margin in MDF,” Venkatramani explained.

The new offerings, which come at 7-8 per cent lower cost, are expected to have a 15–20 per cent contribution towards volumes (on a full year basis).

Mix of value-added products was around 54 per cent in Q1 (higher than Q4FY23). “So, we will be targeting growth in the mix of value-added products over the current year and the next year,” he said. The target is to take value-added products to be in the 65 per cent range in the medium term.