Abhishek Law
Laminates and veneer-maker Greenlam Industries is expecting business to return to pre-Covid levels by December this year. Growth is being driven by the core business of laminates across both international and domestic markets, with sales being at pre-Covid levels.
Export of laminates to the 100-odd international markets that include South East, Middle East, the USA and European nations are back at pre-Covid levels; while in the domestic market sales are at 90 per cent. In India, the non-metro markets are driving laminate sales; while metro and large cities like Delhi-NCR, Mumbai and Kolkata are witnessing a rebound September onwards.
In the veneer and allied products category like flooring and doors, sales are at 60-65 per cent of pre-Covid levels. Volume pick-up is expected at pre-Covid levels by the end of FY21.
Nearly 85 per cent of Greenlam Industries’ top-line comes from laminates and the remaining 15 per cent from veneer, flooring and doors. Exports account for 45-50 per cent of its turnover last fiscal.
“We are witnessing a sequential improvement in sales with faster pick-up happening in the laminates category and in international markets. By Q3 (December-end), business should be back at pre-Covid levels.” Ashok Sharma, Chief Financial Officer, Greenlam Industries told BusinessLine .
For the quarter ending September 30, the company reported a revenue of ₹289 crore and a profit after tax of ₹19 crore.
Marginal rise
According to Sharma, the company saw its EBDITA margins at 14 per cent in Q2 FY21 as against 13.9 per cent in the same period last year. The company intends to hold on to the margins for the fiscal.
The laminate business was aided by the softening of crude prices and a reduction in fixed costs.
On the other hand, in the veneer business margins are under pressure because of increased competition in the category. While the business is improving, it is yet to reach pre-Covid levels.
“Margins in the veneer business turned positive in Q2 FY21,” Sharma said adding that in the flooring and doors business, the immediate priority is to generate volumes and sales.
Capex plans
Meanwhile, Greenlam Industries will go ahead with its scheduled capex plans to the tune of ₹50 crore which were pushed back into H2 FY21 because of the pandemic.
This apart, the company is awaiting clearances from the Andhra Pradesh government for setting up its ₹175-crore greenfield laminate manufacturing unit at Nellore. Around ₹50 crore has already been invested towards land. Funding will be from internal accruals. The upcoming facility will be the company’s third unit after one each at Rajasthan and Himachal Pradesh.