Our experience and expertise, powered by the support and guidance of all our stakeholders have enabled us to reach the stature that we have attained today. While over twenty-five years of experience in the interior infrastructure industry have enriched our market insight and sharpened our capabilities, a lot more needs to be achieved, going forward. I believe, it is an opportunity for us to be operating at a time when the economic and business landscape of India is radically changing; and policymakers are creating enablers for strong and sustainable growth. India is evolving fast. In its seventh decade of Independence, over US$1 trillion has been added to the national GDP, lifting tens of millions to the middle class. Our objective is to make the most of this opportunity with speed and precision, using our brand respect and recall.
Against the backdrop of either sluggish or fragile economic growth across large parts of the world, India shines as an outpost of opportunity and a harbour of hope. The country''s GDP for FY 2016-17 touched 7.1%, and is expected to touch 8% with the implementation of GST. Another seminal reform during the year was the demonetization initiative of the government. This was done with the avowed purpose of formalization and digitization of the economy.
As India turns digital, we must also enhance our digital presence, going forward. We will be able to reach more markets and customers through digital channels. Following the implementation of GST and more focus on formalization of the economy, established brands like Greenply will get a level playing field vis-a-vis unorganized players.
GOODS AND SERVICES TAX (GST)
If we look at the plywood industry now, it is heavily taxed with overall taxes in the range of 25-30%, including taxes such as excise, VAT and Octroi. Most unorganized players evade taxes and sell their products through under-pricing vis-a-vis organized counterparts. The price differential can range up to 30-50%.
Many unorganized players also avail of the Small Scale Industry (SSI) benefit by keeping their turnover artificially below the prescribed limit. Under the new GST regime, the exemption limit is expected to be Rs, 2 million, which would bring all unorganized players within the tax ambit, forcing them to increase prices and narrow the price differential.
Moreover, currently there is no credit that a dealer can avail of for the excise duty paid, but under GST this will be allowed, reducing the price for both dealers and consumers by around 10%. Thus, the overall price differential between branded and unbranded plywood players is expected to fall by 10-20% under GST, thereby accelerating the shift from the unorganized to the organized segment.
During 2016-17, the Government imposed antidumping duty of up to US$ 64.35/cbm on the import of MDF board on thick boards (with thickness of over 6 mm) from Vietnam and Indonesia. Today, around 70% of our capacity is based on the thick MDF board. The government decision will create a level playing field for us vis-a-vis foreign producers. Going forward, we hope to enhance our volumes further.
GROWING RELEVANCE OF MDF
MDF is the preferred choice of ready-made furniture manufacturers and the transition of the Indian wood furniture industry towards ready-made furniture will propel MDF''s demand. Commercial property is another key demand driver as around 80% of MDF is used in this segment. The shift from cheap plywood to MDF will gain momentum once low-end/cheap plywood becomes costlier following the implementation of GST.
INVESTING IN THE FUTURE
We remain bullish on our core businesses. Hence, we are constantly focusing on growing our capacities across both our businesses. We are setting up our new state-of-the-art MDF plant in Chittoor, Andhra Pradesh. We are likely to commence operations in FY 2019. A significant part of the production from this plant will cater to export markets.
We also planning to set up a Decorative Veneer/ Decorative Plywood unit in Bamanbore, Gujarat (2.25 mn. sq. mts.) and a Plywood unit in Sandila, Uttar Pradesh (13.5 mn. sq. mts.).
QUALIFIED INSTITUTIONAL PLACEMENT (QIP)
During 2016-17, we raised Rs, 49.99 crore through issuance of equity shares under qualified institutional placement (QIP). The amount raised has been utilized for part funding of our new MDF unit in Andhra Pradesh.
ACHIEVERS AT GREENPLY
Greenply is geared for greater success and our teams are inspired to build a brand that New India can rely on. We will continue to invest in enhancing the skills of our people, so that we can continue to deliver products that are in line with international standards. We offer various employee engagement and coaching programmes to inform and motivate our people.
As responsible corporate citizens, we promote various community well-being programmes through the Greenply Foundation. The Foundation works in the realms of healthcare, education, vocational skill development among others.
We are committed to build a great company, which consistently grows in step with inspirational India, and I seekthe support of all our stakeholders in this Endeavour.
S. P. MITTAL Executive Chairman (DIN: 00237242)