Greenlam Industries is India's largest Laminate exporter: Ashok Kumar Sharma, CFO
We have a target to grow by 10-12% in the financial year 2020 (FY20), says Ashok Kumar Sharma, Chief Financial Officer, Greenlam Industries. During an interview with Swati Khandelwal, Sharma said, " We export laminate and we have been India's largest laminate exporter for the last 10 years.
We have a target to grow by 10-12% in the financial year 2020 (FY20), says Ashok Kumar Sharma, Chief Financial Officer, Greenlam Industries. During an interview with Swati Khandelwal, Sharma said, " We export laminate and we have been India's largest laminate exporter for the last 10 years. Close to 50% of our laminates are exported and around 40-45% revenue of the company comes through export". Edited Excerpts:
Q: You've had a good quarter and the main laminates business has done well in the quarter. Take us through the key highlights?
A: The first-quarter results were not in the line of expectations because the IT system update, which was undertaken in the quarter had an impact on the results. While, the second-quarter results stood firm on our annual target, thus there is nothing special in the results.
Q: Margins have also shown an improvement. Will you be able to sustain them at these levels? What is the ideal product mix you are targeting?
A: Margins will continue to be at the same levels. It has improved due to better mix and raw material price, which was under control and may not go up in the recent future.
Q: Decorative veneer revenue has shown de-growth in Q2 even as volumes for the segment were up by 2.3%? What was the reason behind that? Are you seeing any pricing or cost-related concerns? Also, are you at the break-even level in this segment now?
A: We have three products under decorative veneer namely, decorative veneer panel, engineered flooring and engineered doors. Decorative veneer panel is a 15 year old product for us and has de-grown in the last quarter due to the market competition. Engineered flooring and engineered doors are progressing and we have increased their sales. The engineered floor hasn't reached its break-even levels but we are hopeful that the break-even levels will be reached by the end of the year. While door business was near break-even levels and we hope that we will reach the break-even levels in the coming quarter.
Q: What about the prices of other products. Are you planning any price hikes in the future? How are the raw material price trends currently?
A: Raw material price trend is similar to the trend that existed in the previous quarter and we are not seeing any price hike in the third quarter and beginning of the fourth quarter. That's why we don't have any plan to hike our prices as the material price is under control. Price hikes are normally done to offset the raw material prices.
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Q: What is the current capacity utilisation? Any CapEx lined up for the future?
A: 95-100% capacity is being utilisation at present. There was a capacity addition which became functional towards the end of mid-September and will benefit us in the third and fourth quarter.
Q: How are the demand trends so far in Q3?
A: The demand trend hasn't improved a lot when it comes to the residential segment. However, little improvement can be seen in certain pockets and areas in the commercial segment but it will not have a huge impact on the total revenue of the company. Having an eye on these things, we believe that our annual target will continue to be within the same range.
Q. How are the export markets doing currently? How much of your revenue is expected from it?
A: We export laminate and we have been India's largest laminate exporter for the last 10 years. Close to 50% of our laminates are exported and around 40-45% revenue of the company comes through export. The export market seems to be a good one at present. We export our products across the world. Our export market has been a good one in the last financial year (FY19) and hopefully, it will be a good one in FY20, as well.
Q: Growth outlook for rest of FY20
A: We have a growth target of 10-12% in FY20 and the second quarter performance suggests that we will be able to maintain it.
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