Greenply to acquire plywood firms, plans new units
Reuters | 23rd Oct 2007, 03:05 PM (Tuesday)

MUMBAI (Reuters) - Plywood and laminate maker Greenply Industries Ltd will acquire two plywood firms in Gujarat and set up new units as it pushes to boost capacity in a strongly growing market, a senior official said on Tuesday.

The company will spend 200 million rupees to acquire stakes in Rajkot-based Galaxy Decor and Platinum Veneers and invest for new equipment and working capital for these units. The acquisitions will be funded from internal accruals and debt.

It will also set up a laminate unit in Himachal Pradesh and a medium-density-fibre plywood line at its plant in Uttarakhand, but is still to finalise the details.

"We needed to maintain our capacity. We are already at 90 percent capacity utilisation for plywood, and 96 percent for laminates, despite recent expansions," Ashok Sharma, vice president for finance, told Reuters over telephone.

Greenply, which controls a quarter of the country's organised plywood market and a sixth of the laminate market, will boost its plywood capacity to 21 million square metres after the acquisitions, from 18 million now.

Sharma said the plywood and related materials market is growing at nearly 15 percent per annum, with Greenply registering an annual growth of 30 percent, driven by a jump in the housing and commercial real-estate segments.

The company will enjoy excise and tax exemptions at both Uttarakhand and Himachal units, Sharma said.

STRONG QUARTERLY RESULTS

Earlier on Tuesday, Greenply reported a sharp jump in July-September net profit to 111.9 million rupees, on net sales of 1.36 billion rupees. Sharma attributed the rise to added capacities and forex gains.

"New capacity has been added for plywood and laminates in the past year, which has boosted revenue. We also had forex gain of 23 million rupees due to a strengthening rupee," he said.

The company imports timber logs, base paper, ply and veneers, which form the raw material for its products, and has therefore benefited from a rising rupee during the quarter.

The company expects carbon credit revenue to accrue from one of its existing units in the current quarter, Sharma said.

Greenply shares, which extended gains to a new high of 272.30 rupees on news of the strong earnings, were trading at 253.50 rupees, up 1.6 pct in a strong Mumbai market.

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