Greenpanel says Omicron impacted demand in the first few days of January, but recovery is now underway

MDF and plywood-maker Greenpanel Industries saw Omciron-related disruptions impact volumes during the first 12 to 13 days of January. However, subsequently, numbers have started to pick up.

According to V Venkatramani, CFO, Greenpanel Industries, MDF volumes are up at around Q2 levels, which were disturbed in Q3 due to the closure of the Uttarakhand plant for 43 days (first due to de-bottlenecking and then because of a breakdown of refiner components).

“We are on track to maintain margins for Q4 as well as the next financial year,” he said during the investor call. The company is also finalising capex plans in the March quarter, which could “probably be in the MDF segment”.

For the quarter ended December 31, domestic volumes in MDF were 100,275 cubic meters of which Rudrapur plant (in Uttarakhand) contributed 29,677 cubic meters at an average realisation of ₹31,854 per cubic meter. The Andhra Pradesh plant contributed 70,598 cubic meters with realisations being in the range of ₹30,145 per cubic meter.

Export realisations on volumes of 20,449 cubic meters stood at ₹21,051 per cubic meter. Blended MDF realisations were up by 44.1 per cent at ₹29,025 per cubic meter.

While the Uttarakhand MDF units – operating at 56 per cent capacity because of closure – had an EBITDA margin of 19.72 per cent, the Andhra Pradesh plant had an EBITDA margin of 34.53 per cent and operated at 101 per cent.

Plywood numbers

Interestingly, while plywood sales grew by 8.1 per cent y-o-y in Q3 FY22, volumes were down 2 per cent at 2.47 million square meters and the unit operated at 89 per cent capacity utilisation during the quarter.

“Regarding the drop in the volumes, normally we do see a drop in the festive months of October and November. And I think the fact that we also had a 4 per cent increase in this quarter… also had an impact on plywood volumes,” Venkatramani said during the investor call.

A price increase of 4 per cent from November 1 in plywood was implemented from December. So, the company got the benefit of that for only one month in Q3 FY22.

“Further, in the current quarter, we’ll be getting the full benefit of that 4 per cent hike, and we have taken a further price increase of 3 per cent from January which will be implemented from February. We will also get the benefit of that for about two months. So, I think, that should help improve both realisations and margins in Q4,” he said.

 Plywood volumes too were impacted in the first few days of January because of Omicron.

“So, I think probably we’ll do slightly better than Q3 in terms of plywood volumes,” he said, adding, “We are close to the peak margin (in plywood)”.

On the raw material front, from April to December 2021, there has been a 10 per cent hike in wood prices in the North, and about 5 per cent in the South. Chemicals have seen a hike of 25 – 100 per cent across different categories.

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