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00:00You know Greenply is a stock in focus for multiple reasons actually, ahead of the numbers of course
00:07it's widely anticipated that some of the plywood companies and building material companies will
00:13have a good session or a good year going ahead as demand picks up. In Greenply's case there are a
00:20couple of newer plants or at least one large plant that they seem to have commenced operations
00:26in and that might only aid the numbers going ahead in FY25. Mr. Manoj Tulsian,
00:33he's joint managing director and CEO of Greenply, joins us right now on the show.
00:37Mr. Tulsian, good having you, thanks so much for taking the time out. Can you tell us a bit about
00:42the overall demand scenario first before we get down to the beginning of the commercial operations
00:48in the furniture hardware store. How is demand looking because hitherto the conversation was
00:53that at some point of time real estate ancillary demand will come but it is not quite coming
00:58through. Thank you Neeraj and thank you very much for having me on the show. When you look at the
01:05real estate demand, the levers are all very positive. If you really see the real estate
01:11growth, I was looking at the data, the growth is almost around more than 30% in the last financial
01:17year. The good part is also that what I have seen in the last four years, the ultra luxury and the
01:26luxury segment has almost become twice. So the share of in the total pie which was around 11%
01:34is now around 22% over a period of four years. So these are very good signs for any premium brand
01:42and we being in that space, I think the overall demand going forward looks to be very, very good,
01:49very buoyant. Coming back to this LUL at this point of time, I won't say that the demand
01:56is very tapered but one has to work hard to get the numbers.
02:04And if you really see post the pandemic, there was a period when there was a pent-up
02:09demand because a lot of housing, which real estate, which has not got completed, most of the
02:15developers, the way I look at it, they worked on completing those units and selling them.
02:21And then there was a LUL in terms of having new introduction into the market.
02:25And so once the introduction is there, you will always have a time lag for the interior
02:31infrastructure business because the first of all, the demand cycle will come for
02:37the iron, steel and the cement, and then followed by the interior infrastructure.
02:42So I think starting H2 of this year, we will again see demand coming back big way.
02:50Okay. Mr. Tulsi, the recent announcement about you commencing commercial operations of the
03:00furniture hardware, can you tell us a bit about it? How large is this operation? And
03:06is this a way of broadening the quantum of products that you have on offer for the end consumer?
03:16So Neeraj, let me just add to this. Actually, this year, we have started two new plans.
03:23We started the MDF commissioning also we did during the last financial year,
03:30which actually kick-started actively on a commercialised production basis from the month of
03:37May. And that was a large investment where we invested almost around 600 crores.
03:43And the business has ramped up very well during the year. We had an estimation of doing around
03:49100,000 CVM in year one. And possibly we have surpassed that number in the first nine months
03:57itself. So that's a good diversification within the same product basket. And the next one,
04:04which we launched was in the month of March, which is this hardware business, which you're
04:08talking about. This is a JV between us and a Turkish player, Samit. Samit are excellent in
04:17their engineering domain. And they are also an international player based out of Turkey.
04:25And this is a 50-50 JV. The reason we felt that in India, when we look at this segment,
04:33this market is also close to around $2 billion. But we were not seeing too many sizeable players
04:40with make in India story and with high precision engineering products. So I think it's a good
04:46space, one where we feel we have entered. Second, coming back to your other point,
04:51I think for sure, today this business in India is growing through OEM segment in a big way.
05:00And if you see today, everyone wants to reduce their transaction cost. So we also want to create
05:07a basket of products so that when we walk into any of the OEMs, we are able to help them reduce
05:13their transactions. At the same time, we are able to help them by giving them more and more products
05:19what they need. So you are very right on that. Mr. Tulsi and good morning, Tamanna here.
05:25Just want to understand the scope of this space. Are you looking at B2B? Are you looking at
05:32retailing furniture? And how do you expect this joint venture to move forward? What kind of
05:40contribution to your revenues are you expecting? Okay, too many things. I hope I will be able to
05:47cover all those answers to your queries. We will revisit the ones you leave out.
05:52So let me explain you. Let me give you a full overview. I think I'll be able to cover all your
05:57queries. This JV is a 50-50 JV, as I said, between us and a Turkish partner. The board will be equally
06:05managed. The total investment over a period of next three years, we are presuming right now,
06:10as per our business plan, would be close to around 250 crores, out of which there will be
06:15an equity component of around one third. So 80 crores and between two partners, we'll invest
06:21around 40 crores each. The rest will come as debt. So that is on the investment side.
06:27In terms of the capacity, this investment, once we complete this investment,
06:33we will be prepared for a peak turnover of close to around 750 to 800 crores.
06:39Now, there will definitely be a ramp up in this because it's not just going to be easy that
06:45we set up the capacity and we reach to that level of 750-800 crores. The ramp up will purely depend
06:51on our penetration into the market. And of course, the large advantage of we being green play
06:57and having great trade relations with channel partners. In terms of selling strategy,
07:03it will be both. It will be OEM as well as through the trade partners. Now,
07:11it can be a distributor model or it can be a mix of distributor and dealer model.
07:17And I hope I've been able to answer most of your questions.
07:20Very, I think most of them definitely. This 750 to 800 crores
07:25sort of outlook that you have is over what timeline, Mr. Tulsiya?
07:28I think it will take around five to six years for us to reach to that number. Because,
07:33see, again, on the industry side, our working says that the industry size is close to around
07:39$2 billion. This will grow at a healthy pace. And especially, as I said, as I mentioned earlier,
07:45that we definitely see a lot of space in the premium category to grow. And that is where we
07:51will be present. Today, in the $2 billion industry, the organized share is closer on 20-25%
08:01only. The rest is unorganized. And the type of steps which we are taking as a country,
08:06and second, when I look at data point, whether you look at the sale of luxury housing,
08:12or whether you even look at the sale of luxury cars, the country is getting into premium mode.
08:18You know, so it will cater well with our strategy of getting into this product line.
08:24And yes, you know, I mean, we have taken a target that in the next four to five years,
08:29five years, we'll be able to reach to those numbers. But time will only say.
08:35Space as well. But since you're focusing on premiumization in the premium segment,
08:42what are the kind of margins that you've sort of penciled in for this particular JV and this
08:47segment? So, you know, like any other business, when you sell high engineering products,
08:54the margin profile has to be good. In this business, we expect that once we have a particular
09:00size of ramp up, let's say we are at around 35 to 40% utilization, we will be in excess of 20%
09:06of margin. For sure, I see that in the longer run, this business can throw a margin in upward of 25%.
09:14Okay, very quickly, Mr. Tulsian, you're trailing 12 months, numbers have looked okay,
09:20margins have come off a little bit. Is there a growth guidance that you're giving for FY25-26,
09:25you will grow at least 10-15% or more? In the last three years, if you see,
09:31and I would say, starting FY21, FY22, okay, because FY21 was a pandemic year.
09:39On a FY22 base, our CAGR has been more than 20%. And for the next two years,
09:44for sure, I look at a CAGR to continue to grow at 20% plus.
09:5020% plus, okay. Okay, we will leave it at that. All the best and we look forward to talking to
09:57you post your quarterly numbers as well. Thanks for taking the time out.