Greenply Industries, a leading manufacturer of plywood, is likely to see the demerged MDF business listing in the fourth quarter of this fiscal.
The company expects a gradual shift towards the use of MDF (medium density fibreboard) in the country.
The company, which closed last financial year with a turnover of ₹1,655 crore, has spun off the MDF business Greenpanel Industries into a separate business unit.
Greenply Industries is primarily into the manufacture of wood-based panels, with two divisions, plywood manufacture and MDF. The company has four manufacturing locations of plywood and one manufacturing location of MDF. The MDF unit is integrated with the plywood manufacturing unit in Rudrapur, Uttarakhand. Apart from these, a new ₹800-crore manufacturing plant for MDF located near Tirupati in Andhra Pradesh has begun commercial production.
Pursuant to the scheme, all shareholders of the demerged company as on the record date will receive equity shares in the resulting company (Greenpanel), Greenply had said in a notice to the stock exchanges in May. “It will give such shareholders of the demerged company (Greenply Industris) the ability to continue to remain invested in both or either of the companies, giving them greater flexibility in managing and/or dealing with their investments,” the notice further added.
Shobhan Mittal, CEO & JMD, Greenply, told BusinessLine , “We have decided to demerge the two business verticals into separate legal entities and the MDF division will demerge into a new listed entity subject to all approvals and statutory regulations and we are hoping that by the end of this (fiscal) year, this will be a separate legal entity and form into Greenpanel Industries.”
Largest wood panel unit
“We launched the Greenpanel brand about two months ago and the entire MDF business will operate under this; this includes the new plant at Srikalahasti. This will be the largest wood panel manufacturing brand in the country in terms of volume and will have close to 2,200 cubic metres of capacity per day,” he said.
MDF is growing at a rapid pace in India and most plants are located in North India. While the demand is high in the South, it is dependent on imports. “Our plant, set up on a 200-acre plot, will be able to capture this market,” he said.
Globally 80 per cent of wood panels consumed are between MDF and particle board; plywood accounts for only 15-20 per cent. In India, it is vice-versa. This is expected to change in favour of MDF, which is cheaper.
“Between the two plants at Uttarakhand and Andhra Pradesh, we are looking at a business of ₹1,500-1,600 crore by FY 2021, when we reach full capacity,” he explained.
“With the MDF plant, we will become a strong contender for supplying to IKEA,” he said.