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1. Introduction

1.1- Introduction of the Project

The project deals with fundamental analysis of Greenply Industries Ltd. It is the
largest interior infrastructure company. The project includes future valuation of
the stock and interpretation of financial statements. This analysis would help us
to get proper valuation of the company.

1.2- What is Equity Research?

Equity Research has been proved valuable to Investors. It aims at identifying
opportunities for the creation of wealth and arriving at right investment
decisions. The use of research reports prepared by the Analysts has been
increased. Reports are to be prepared carefully as the Investors rely on the
information for the Buy/Sell of Stocks as provided by the research reports.
There should not be any Lack of Information. Equity research can be
complicated, but it involves finding out which stocks are likely to fall or rise,
and the level of risk associated with them.

Reports are been prepared by Analysts. While preparing research report, analyst
should have Good knowledge about the market and proper understanding of the
equities. Under the traditional system, brokerage houses provided research in
order to gain and keep clients. Individual Investors prefer low risk investments.
Their decision to invest is based on advice from sock brokers or friends rather
than going for technical analysis.

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Institutional Investors are major part of Equity Research. As they are not
interested in small investments, they always invest in large volumes. They play
safe and mostly collect primary data before providing the capital. They take
calculated risk as they are custodian of investors in their institutions. They hire
their own analysts in order to gain competitive edge over other investors.
Analysts are been paid brokerage commissions by different institutions if their
research reports are liked and taken into consideration by Institutional Investors.
Investors need to be continuously informed about the market conditions,
whether to trade in a stock or not, etc. in order to maintain reputation and
credibility of the company.

On a day-to-day basis, most stock tends not to have dramatic price movements.
However, research is been carried on the basis of price movements of the stock,
any news/ information pertaining to Industry or Sector which gets released
periodically as this news has the potential to move stock by several percentage
points. For e.g. any expansion in business, repayment of debt, mergers or
acquisitions, etc. Good news can increase the value of the stock, while a bad
news leads to fall in price of stock.

Equity Research Analyst needs to prepare proper financial models i.e. revenue
model, quarterly, half yearly and yearly break up of financial statements, review
of the statements, ratios, valuation scenario, costing techniques used and
statistics in order to derive companys proper valuation. An analyst also has to
take proper Fundamental and Technical analysis methods to analyze and value
the stock.

Analyst have to evaluate Companys Business Model, its Market Capitalization,
Current Market Price, Top line and Bottom line growth, CAPEX of the
company, demand and supply of the product, the position of Industry, Growth
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in Earnings Per Share, Return on Equity and Return on Capital Employed,
Movement in Trade Volumes, etc.

Valuation is been done on the basis of Financial Statements such as Income
Statements, Balance sheet, Cash Flow Statement and Ratio Analysis. Cost
of Equity, Cost of Preference Shares, Cost of Debt, WACC (Weighted Average
Cost of Capital) needs to be taken into consideration.

There are more than 50 Equity Research Firms in India. As there is huge
competition, Analysts should keep proper track records of the different
companies in the sector they are researching into. They should keep a regular
track on movement in price of stock, whether any new rules and regulations are
been laid down by Government, Interest factor, quarterly reports, Analyst
meets, attend conference calls and clear the doubts if any with the management.

There are two types of Equity analysis:
1) Fundamental analysis
2) Technical analysis.

In equity analysis, calculations are based on facts & not on hope. Equity
analysis does not discuss how to buy & sell shares, but does discuss the
methods, which enables the investor to arriving at buying & selling decision.

The Technical Approach to investment is basically determined by the changing
attitude of investors toward a variety of economic, monetary, political and
psychological forces. The art of technical analysis is to identify a trend reversal
at a relatively early stage and ride on that trend until the weight of the evidence
shows or proves the trend has reversed. An equity analyst tries to identify
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undervalued or overvalued stocks through both his/ her expertise and by use of
available research tools.

Generally for taking an investment decision of medium to long term horizon,
fundamental analysis is widely followed. While for short term trading decisions
Technical analysis is widely followed. Although these two are widely followed
and more rational approach for buying and selling decisions they are not
infallible and hence are not full proof.

1.2.1- FUNDAMENTAL ANALYSIS:

It involves evaluation of companies business model, demand and supply of its
product, its relative strengths and weakness in the industry in which it operates,
the position of the industry, the sales and profit growth, return on equity, growth
in earnings per share etc., The realized value is ten compared with ongoing
market price.

If it is found that the market price is significantly lower than that, then it is
advisable to buy the shares of that Company expecting that market will revalue
the shares in future thereby offering capital appreciation in the value of the
shares.

Following segments would be included in Fundamental equity research:

Valuation Techniques: It includes Interpretation of Financial Statements
such as Income Statement, Balance Sheet, Cash flow Statement, and
Ratio Analysis. With the help of financial statements, it becomes easy for
Investors to understand the Forecasting techniques and growth rate
assumptions, the company analysis.
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Valuation Approaches: Dividend Discount Models such as Gordon
Constant Growth Model, Two-Stage growth model, Multi-Stage growth
model, Free Cash Flow Models, Free Cash Flow to Firm, and Free Cash
Flow to Equity holders.

Capital Market Theory: Capital Asset Pricing Model, Cost of Equity, Cost of
Preference Shares, Cost of Debt, WACC (Weighted Average Cost of Capital)

1.2.2- TECHNICAL ANALYSIS:

Technical analysis is based on the movement of market price, graphs and traded
volumes. It is suitable mostly for Short term traders as they try to capture the
price trend for short term money making opportunities. Technical analysis is a
method of evaluating the securities by analyzing the statistics generated by the
market activity, such as past price and volume. In technical analysis, analysts
use charts and other tools to identify patterns that can suggest future activity.

Assumptions in technical analysis:

The Market Discounts Everything: A major criticism of technical analysis is
that it only considers price movement, ignoring the fundamental factors of the
company. Technical analysts believe that the companys fundamentals, along
with broader economic factors and market psychology, are all priced into the
stock, removing the need to actually consider these factors separately.



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Price Moves In Trend: In technical analysis, price movements are believed to
follow trends. This means that once the trend has been established, the future
price movement would follow the same direction as the trend. Most technical
trading strategies are based on this assumption.

History Tends To Repeat Itself: Technical analysis uses charts patterns to
analyze market movements and understand trends. Although many of these
charts have been use for more than 100 years they are still believed to be
relevant because they illustrate patterns in price movements that often repeat
themselves.



















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1.3 Objective


To study in-depth analysis of companys financial statements and to
project its future demand.

To study the expected valuation of Stock Prices for the near future.

To guide Investors in Taking proper Investment Decisions.

To guide the Investors to take out profit from the market easily by using
proper combinations while analyzing Equity.

To know the trend of the company and future prospects of the company.












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1.4 Scope

This Project report has tried to unearth various investment opportunities
in Greenply Industries Ltd.

To help Investor to understand Industry, Company, Business models
through financials and fundamental analysis.

This report would give a brief idea to investor to invest his hard earned
money in the given company.













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1.5 Source of Information

The secondary source is used for collection of the data.

Companys Annual Report.

Companys Presentation.

Other Research Reports.














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1.6 Limitations

Duration of two months werent enough to understand the whole new
Industry, business sector, related companies, their business models and
operations.

It was difficult for beginner to access complete data of companies.















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2. Company Profile Religare Securities Limited

2.1 Introduction:

Name: Religare securities Ltd.

Address: 4
th
floor, Kozzy Complex, Kanchpada
Ramchandra lane, Malad (West),
Mumbai 400 064. India.

Type of Organization: Financial Services Group

Religare Securities limited
Incorporated in 1984, promoted by Ranbaxy group, Religare Enterprises
(REL) is the holding company of 11 business subsidiaries.
Each of its subsidiaries is engaged in a wide spectrum of financial
products and services targeted at retail, high-net worth individuals,
corporate and institutional clients.

The company is one of the fastest growing financial services companies in the
country.

The core purpose of the company is not only to enrich lives of our clients,
employees and shareholders but also contributing to the society at large. Focus
on creating wealth for its clients, respect for professionalism, ethical and
transparent business practices, research based value investing has enabled the
company to grow at rapid pace. Today Religare is a member of both NSE and
BSE and it offers well diversified financial services to its clients.




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2.2 - Services Offered:

1. Share broking,
2. Financing loans against shares,
3. IPO financing,
4. Distribution of mutual funds,
5. Insurance broking,
6. Commodity broking,
7. Wealth management advisory business,
8. Private equity,
9. Merchant banking and
10. Trading in arts and artifacts among others.







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2.3 - Competitors:


ICICI DIRECT

INDIA INFOLOINE SECURITY PVT. LTD.

HDFC SECURITIES

INDIA BULLS

KOTAK SECURITIES


RELIANCE MONEY


SHARE KHAN SECURITIES

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MOTILAL OSWAL


ANAND RATHI SECURITIES


HEM SECURITIES



ANGEL BROKING





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3. Fundamental Analysis

Of

Greenply Industries Limited








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Greenply Industries Ltd.

3.1 Introduction

Greenply Industries Ltd. (GIL) established in 1984, as small unit in Nagaland
by Mr. Shiv Prakash Mittal. It got incorporated in 1990 and has most
comprehensive portfolio of residential and commercial floor products. It is
engaged in manufacturing of plywood, laminates, decorative veneers, particle
boards and prelam particle boards/ medium density fibreboard (MDF). It is the
largest interior infrastructure company. A rich 35-year industry experience
translated into an ability to ride industry crests and troughs.

The company has created a niche for it in the industry by introducing various
brands over the last few years and which has been well established. The
company is not only an urban brand but is also a rural brand. It accounts for
almost 32% of organized plywood and 28% of organized laminate market and
30% MDF market in India. The products of the company are available under the
brand names of Greenply Plywood, Green Club Premium Ply, Greenlam
Laminates, Green Decowood and Ecotec. The plywood segment has penetrated
deeper into rural India. In order to suite the demand and affordability of the
product, a product portfolio is been developed by the company.

GIL has strong retail network with 45 branches across India and presence in
over 300 cities, 4 international marketing offices, including overseas
subsidiaries, resulting into wide marketing reach. It has expanded the rural and
export sales team and has strengthened the organization. One of the flagship
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decorative brand, Greenlam is been exported to more than 65 countries
including Thailand, Indonesia, Canada, Malaysia, Singapore, Dubai, USA,
Australia, China and Europe. The focus of the company is to create a
benchmark in the industry by increasing their productivity. It is the first
company to attract FII investment in its sector.

The company has seven manufacturing units located across India at Tizit
(Nagaland), Kriparampur (West Bengal), Rajkot (Gujarat), Behror (Rajasthan),
Nalagarh (Himachal Pradesh) and Pantnagar (Uttarakhand).

The companys manufacturing activities are subject to environmental laws and
regulations by the Ministry of Environment of Government of India, the State
Forest Policy and State Pollution Control Board among other laws which
regulate cutting of trees, discharge of effluents, polluted emissions, and
hazardous substances and so on.

It is the largest Laminate Company in Asia and 5
th
largest globally in terms of
capacity. The company opened 7 Green Studio a one stop gallery for interior
surfacing needs. The company offers Lifetime guarantee on Green Club
Plywood. In order to minimize waste and enhance product quality, company
uses Taiwan made core composers in Nagaland and Pantnagar plant. As the
companys manufacturing process is dry, less amount of water is used. The
company imports raw material for manufacturing process and the goods
manufactured are sold in both domestic and overseas market. Finished goods
are also imported for trading.

The company has set up Indias largest and advanced MDF plant at Pantnagar,
Uttarakhand with a capacity of 0.18m cu mtrs. The plant is expected to achieve
optimum utilization by FY14, and will generate revenues of Rs. 3.75bn. In the
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year FY11, the company has been chosen as Power Brand by Indian
Consumers. The plywood facility at Nagaland enjoys 100% corporate tax
exemption and certain excise benefits for 10 years commencing from FY06.
The Uttarakhand unit enjoys similar facilities for 10 years commencing from
FY07. The ad-campaigns of the company have enabled it to get strong brand
recall among the customers. Companys product is exported to more than 65
countries. It depends on sea-bourne freight, rail and trucking to deliver its
products from their manufacturing facilities to their customers.

The company has also looked upon internal strengthening and has introduced
discounts for customers making upfront payments; receivables are declined
from 60 days of turnover equivalent in 2008-09 to 56 days. GIL has also
strengthened its inventory management by shifting from the conventional
factory-warehouse-dealer distribution model to a factory-dealer model
accelerating material movement. Working capital, as a proportion of employed
capital, declined from 16.93% in FY13 to 6.91% in FY14.

As a responsible social organization, the company has been creating value for
society. Below are the various projects of the company meeting the social
responsibilities and generating the value for the company.

3.2 - Promoters of the company:

Mr. Shiv Prakash Mittal, Executive Chairman

Mr. Rajesh Mittal, Managing Director

Mr. Saurabh Mittal, Joint Managing Director and CEO

Mr. Shobhan Mittal, Executive Director
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3.3 - Current Running Projects:

Education, accommodation & facilities for Girl children in U.P. and West
Bengal.

Plantation of tress in Tsunami affected areas in Tamil Nadu.

Intervention of health and life skill education in the remote villages of
Rajasthan for children having age group between 10 19yrs.

3.4 - Amalgamation and Acquisition

2005: Company amalgamated with Worthy Plywoods Ltd., due to which
plywood manufacturing unit at Kriparampur, West Bengal was
transferred to Greenply Industries Ltd.

2006: Acquired Greenlam Asia Pacific Pte. Ltd., Singapore, as a wholly
owned subsidiary. Later it established a manufacturing unit in
Uttarakhand for plywood and particle boards.

2007: In order to strengthen the presence in Western India, Company
acquired Galaxy Dcor Private Ltd. and Platinum Veneers Pvt. Ltd. as
wholly owned subsidiaries which owned plywood manufacturing
facilities at Bamanbore, Gujarat.

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2008: Incorporated Greenlam America Inc. as a wholly owned subsidiary
in the US.

2009: Amalgamated Galaxy Decor Private Ltd. and Platinum Veneers
Private Ltd.
2010: Power brand Status Setting up of India's largest and most
technologically advanced MDF plant at Pantnagar, Uttarakhand. FSC
certification for Pantnagar and Kriparampur plants awarded by the
prestigious Rainforest Alliance Smartwood Program. ISO 9001, ISO 14001
and OHSAS 18001 certifications for Pantnagar, and Kriparampur Units.
Social Accountability (SA) Certificate SA8000 for our Kriparampur unit.
ISO 9001 certification for Rajkot Unit.

The Greenlam Asia Pacific Pte. Ltd., continue to explore the south east Asian
market for Laminates and Greenlam America Inc has a foothold in high
pressure laminates in North and South America. The companys product
Greenlam Laminate became the first Non US brand to get Greenguard
certification from Greenguard Environmental Institute (GEI) US for indoor air
quality.

GIL Revenue and Profits in FY14 have grown at an impressive CAGR of
22.09% and 21.80% over the last 4 years. The Cash Profit and Earning per share
also increased CAGR of 23.11% and 15.38%. As of FY14, Plywood and allied
products contributed 58.93% to total revenue and Laminates and allied products
contributed 41.05% to total revenue.



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3.5 - Manufacturing Units




This unit produces plywood and block board.
There is an abundant supply of raw materials from the nearby
timber areas of Nagaland, which enhances smooth functioning
of the unit.
Tizit,
Nagaland
This facility produces plywood and allied products.
The proximity to Kolkata Port enables the company for smooth
international access.
Kriparampur,
West Bengal
It manufactures decorative laminates, decorative veneers and
other allied products.
The unit is close to emerging markets in North and West of
India.
Behror,
Rajasthan
This facility manufactures plywood and block boards,
decorative veneers, flush doors, particle boards and Medium
Density Fibre boards(MDF).
Due to its reach to the region's vast agro-forestry resources, it
helps the company to cater the growing North Indian market.
Pantnagar,
Uttarakhand
This facility produces plywood and allied products.
It helps to serve the markets located in western parts of India.
Rajkot,
Gujarat
This unit manufactures laminates and allied products.
Nalagarh,
Himachal
Pradesh
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Greenply Industries Ltd. is backed by expertise in supplying high quality
products. The growth in real estate sector has enabled the company to gain a
competitive edge in the market. The key raw materials for the manufacture of
products are timber, chemicals and paper. The plywood units are located
strategically close to a rich raw material source in Nagaland and Uttarakhand.
Kraft paper required for laminate manufacture is primarily sourced from the
neighbouring states of Uttar Pradesh and Uttarakhand. With most of the phenol
manufacturers based in western India, the Behror unit at Rajasthan enjoys
uninterrupted availability of phenol. The Kriparampur unit in West Bengal is
close to the Kolkata port and the Bamanbore Unit at Gujarat is close to the
Kandla port thereby facilitating procurement of timber, phenol and other
chemicals at a lower logistic cost

3.6 Types of Products






Greenply
Industries Ltd.
Plywood and
allied products
Laminates and
allied products
Particle boards /
Medium Density
Fibreboard
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3.6.1 - Plywood and allied products

Plywood is a wood-based panel, which has at the same time a very good
mechanical strength, and a light weight. As an industry dependant on natural
resources, there is always shortage of inputs. The principal raw material for
manufacturing plywood is timber. Plywood consists of sheets (plies) of wood
veneer, which are glued together and it is constructed with an odd number of
plies, which are cross-bonded. The grain of each layer is perpendicular to the
plies above and below it. The outer plies usually have the grain direction going
parallel to the long dimension of the panel and through this construction the
strengths and stability of plywood is guaranteed. It gives a high resistance to
shocks and vibration. Different species can be used for making of Plywood.
European exotic natural species are widely used for manufacture of decorative
plywoods.

Plywood and allied products is the largest revenue generator of the company. It
generated revenue of Rs.7.68bn contributing around 55% to total revenue in
FY14. The company has created quality-protecting laboratories to check
incoming raw materials, processes and finished goods. The relevant team
conducted tests, appointed visual inspectors from the Indian Plywood Research
and Training Institute and relevant equipment to reduce plywood layer gaps.

In FY14, Average realization from Plywood was Rs. 189 sq. ft. Due to
commissioning of 3mn sq. mtrs. In FY14, the total production capacity of
plywood increased to 24mn sq. mtrs. The companys Plywood manufacturing
units are at Tizit (Nagaland), Kriparampur (West Bengal), Bamanbore (Gujarat)
and Pantnagar (Uttarakhand). The Uttarakhand and Nagaland plants enjoy
abundant timber resources. The above said units also enjoy corporate tax and
excise exemptions.
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Greenply plywood has high dimensional stability and is 100% wrap free as it is
made from 100% hard wood. It is the first company to provide lifetime
guarantee on its high end products. It has always strengthened its global
presence by participating in International furniture fairs. The company has
planned to open 10 Green Teak World stores in FY14, to offer customers a feel
of value-added products in an uplifting environment.

The Plywood Segment comprises of Green Club Premium Plywood, Green
Club plus Plywood, Green Marine Plywood, Green Flexiply, Green Film Faced
Shuttering Plywood, Green Flush Doors, Green Block Board, Optima Red
Plywood, Greenply Plywood, Green Fire Retardent Plywood and Ecotec
Plywood. With the introduction of open market system, the farmers and
contractors are able to supply their products directly to company. Design papers
are imported by the company for the manufacture of pre-laminated particle
board.

The Exemption of corporate tax would reduce to 30% for a period of 5 years
commencing from FY12, which would affect the profitability of the company.

In 2010, company started exporting FSC certified plywood. It has a great
demand in Europe and other developed markets. In FY2011, Green Teak World
Stores across India to provide feel of value added products to customers.





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3.6.1.1 - Unit wise plywood capacity details as on FY14

Manufacturing Unit Installed Capacity Capacity Utilization
Tizit,( Nagaland) 4.5m 100 %
Kriparampur (West
Bengal)
6m 108 %
Bamanbore (Gujarat) 3m 121 %
Pantnagar (Uttarakhand) 10.5m 112 %

3.6.2 - Laminates and allied products

Laminates are made using either High Pressure Laminates (HPL), or Direct
Pressure Laminates (DPL). With the DPL method, all the layers are bonded
together under extreme heat and pressure at one time. HPL is done in more than
one step. The development of more stylish and more realistic designs is a key
element in the growth of demand for laminate. Decorative laminate fixtures can
be designed in order to meet specific design requirements, such as high-gloss
and metallic surfaces, while offering retailers scratch resistance and ease of
maintenance.

Today modern infrastructure would be nowhere without laminates. Laminate
has the power to transform and bring life to ones interior. It is durable and has
stylish surfacing solution for our entire interior needs. Greenply products New
Pointeight laminate and vastu inspired laminate New Mika have become
popular among the designers of this era. The primary raw material for laminates
is paper and chemicals.

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Laminates and allied products generated revenue of around INR. 5.6bn
contributing 41.05% to total revenue in FY14. The production capacity of
Laminates is 10.02m sheets. The Nalagarh unit in Rajasthan started its operation
with a capacity of 4.68m sheets and it enjoys fiscal benefits. The above unit
contributed Rs. 490m to the total revenue in FY14.

It is expected to open up wide area of international and Indian market. Average
realization from Decorative Veneers increased from Rs. 597 sq. ft. to Rs. 662
sq. ft. in FY15.

The company introduced more than 100 new designs, finishes and dimensions
in laminates and decorative veneers. The companys major brands include
Greenlam, Green Touch, Greenlam Supertuf, Green Gloss, Green Flexilam,
New Mika, New Pointeight and Green Decowood. In order to sustain the
growth of this division, the company has planned to expand its European
foothold and strengthening presence in Indian Tier II and III cities.

3.6.2.1 - Unit wise laminates capacity details as on FY14

Manufacturing Unit Installed Capacity Capacity Utilization
Behror,( Rajasthan) 5.34m 111 %
Behror, (Rajasthan)
Decorative Veneers
4.2m 28 %
Nalagarh (Rajasthan) 4.68m 90 %




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3.6.3 - Medium density fibreboard (MDF)

Fibreboard is a board encompassing sheet materials manufactured from refined
or partially refined wood fibres or other vegetable fibres. In order to increase
strength, resistance to moisture, fire or decay other materials and bonding
agents may be incorporated in the manufacturing process. Medium density
fibreboard is an engineered wood product which is formed by breaking down
softwood into wood fibres and combining it with wax and resin. It is then used
for forming panels with the applications of high temperature and pressure. The
application similar to plywood, but made of separated fibres. The first
Fibreboard (Hardboard) Industry was established in India during late 1950s and
the first Medium Density Fibreboard plant was set up in India about 20 years
back.

To cater Indias growing mid income and rural segments, the company came
out with Indias largest MDF plant located in Uttarakhand (0.18m cu. mtrs p.a.)
for Rs. 2.5bn. The thickness of MDF ranges from 2.5 mm to 35 mm as per
requirements. It is used in furniture, windows, doors, frames, display or
exhibition stands and signs, ceiling, toys, carving, partitions and educational
equipments. In India demand for MDF was previously met by imports.
Globally, MDF accounts for 80% of panel products demand. An ever-expanding
global ready-made furniture market is driving the demand for vital raw
materials like MDF.

The plant is expected to achieve 100% capacity utilization by FY14. Revenue of
Rs. 3.75bn is expected from MDF plant working at full capacity. Due to its
superior properties of edge cutting and moisture resistance it is said to be
substitute for timber. The demand for wood and cheap plywood would be
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replaced by MDF due to its high quality availability at comparable cost. MDF
plant is equipped with German Technology.

3.6.3.1 - Manufacturing process for MDF











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3.7 - GILs sustainable business strategy






Indias largest
interior
infrastructure
company and
growing player in
the global interior
infrastructure
industry
Doubling
laminates
capacity
Introduction
of new
variants across
product
segments
FSC and
Greenguard
certification to
boost
international
acceptance
Focus on rural
and semi-
urban
customers
Initiation of
green strategy
across all the
activities of
the company
Enhancing
global presence
through
establishing
more marketing
offices
Prudent
investments in
strengthening
brand in both
domestic and
global markets
Introduction
of MDF
production to
address
market gap
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3.8 - MDF vs. Plywood
Cost effective: MDF costs less than half of branded plywood.
Quality: MDF possesses uniform surface and homogeneous
construction suitable for machine-made furniture and panels.
Customization: MDF surfaces can be laser etched, moulded and
curved.
Acceptability: MDF shapes well with a router, making it a preferred
option for carpenters.

3.9 - Domestic peers

GIL is the largest manufacturer of plywood products in India and has the widest
product range to offer to its customers. However in profitability terms, the
overall performance was impacted due to a change in product mix towards
lesser profitable MDF. In comparison, diversified operations of Century
plyboards have helped it to be the most profitable company in the sector.

Company
CMP
(Rs)
Market
Cap (Rs)
(in crores)
Revenue
(Rs) (in
crores)
PAT
(Rs) (in
crores)
Operating
Profit
Margin(%)
Greenply
Industries Ltd. 752.60 1816.50 2159.52 114.47 11.96
Century plyboards
India Ltd. 77.35 1721.25 1283.97 52.65 9.97
Archidply
Industries Ltd. 15 33.10 201.89 2.06 6.42
Uniply Industries
Ltd. 6.30 10.91 122.21 -4.10 1.36
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3.10 - Waste/emission management

The company uses waste generated from plywood manufacture, its largest
product segment. This is used as raw material for particle boards or in the
boiler. Boiler generated ash is then supplied to brick manufacturers. The
company increased the use of agro-waste products like mustard husk and rice
husk to reduce its dependence on traditional energy sources like coal and diesel,
which reduced greenhouse gas emissions. The companys clean and green
workplaces across all its manufacturing units are engaged in responsible waste
management and recycling.

3.11 - Yearly Revenue Break-up (INRm)



There is an upward trend in revenue of the company on YOY basis. In FY15e,
we expect the company to post revenues of INRs16.6bn, a growth of 24%.


MDF
Laminate and allied products
Plywood and allied products
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3.12 - Key Financials and Market Data of GIL

Key Financials
INRm 2012a 20113a 2014a 2015e
Revenues 7,732 8,990 11828 14704
EBITDA 799 948 1118 1396
Margin 10.1 10.3 9.2 9.3
EBITDA growth
(%)
-3.9 18.6 18.5 25.5
PAT 356 409 235 415
EPS (INR) 21.0 18.5 9.7 17.2
EPS growth (%) -8.5 -11.6 -47.5 77
P/E 12.9 11.2 19.5 11.0
P/BV 2.6 1.7 1.5 1.3
EV/EBITDA 7.1 8.9 7.9 6.3
RoE (%) 19.8 15.6 7.6 11.9

Market Data
Sector : Forest Products
Market Cap (INR) : 1816.50
O/s shares (m) : 24
Free Float (m) : 8
52-wk HI/LO (INR) : 301/840
Avg 12m Vol ('000) : 4
Bloomberg : MTLM IN
Reuters : GRPL.BO





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3.13 - Shareholding Pattern


The promoters of the company holds 55% of the shares, while Foreign
Institutional Investors and Domestic Institutional Investors holds 15.08% and
6.48% of the total shares of the company. The remaining 23.44% of the shares
are with the individual investors.







Promoters , 55%
FII, 15.08%
DII , 6.48%
Others, 23.44%
Shareholding Pattern
34 | P a g e

3.14 - Industry Overview

Indian Economy:
India has caused a global attention being the fastest growing economies in the
world. In FY13, Indian economy to be grew by 10% and the manufacturing
sector remains static at 8.8% Year on year. In FY13, exports grew by 39.5% and
imports also increased by 25.2%.

Forestry and wood resource: Due to increase in production capacity of the
wood industries, requirement of woody raw material is increasing. But there
seems an imbalance between demand and supply of wood in the country. As
70% of forest have no regeneration and 55% are prone to fire.

The usage of wood for interior design and furniture has been an old tradition in
India. It is noted that more interior wood is used in India than Japan. There is
huge competition in the industry based on competitive pricing, ability to
introduce innovative designs, exclusive product designs, branding, logistic
advances and extent of distribution network.

The size of Indian interior industry is Rs. 130bn, out of which Rs. 52.5bn is
organized. The forest Industry accounts for approximately 25% of total
geographical area. Indian market is dominated by Plywood and block board.
With a growth in Real Estate and Housing Sector, the demand for interior wood
products is increasing. Plywood accounts for around 78% of wood panel market
in India. The industry is growing at a pace of 10% - 20% p.a. Indian plywood
industry is at around Rs. 50bn, whereas laminate industry is at around Rs. 30bn.

The Rs. 360bn, Indian Furniture Industry is well-known for its quality and
design and is exported worldwide. As consumption of Life style product is
35 | P a g e

increasing, the Indian furniture industry is expected to grow by 13% - 15% over
five years. Gurjan and Hollong are few among various Indian timbers used in
plywood. India is said to be one of the largest consumer of wood in South East
Asia.
India imports wood from various countries like Malaysia, Indonesia, Myanmar
and Ivory Coast, etc. The middle class population in India is becoming more
exposed to the western life-style and is showing an interest in western style
doors, windows and kitchen cabinets.
With the execution of new foreign trade policy, annual export growth is
expected to be around 15% over FY15. Direct employment is provided to
around 40-50000 people by Timber processing zone. It consists of about 400
saw mills and 35 plywood units which will help the country to increase its
exports. In India, large portion of Logs are imported among all wood and wood
products, due to lower import tariffs. Logs are imported mostly from Malaysia,
Ghana and New Zealand due to relatively low prices and freight advantage.
Other suppliers of logs to India are Ecuador, Costa Rica, Nigeria, etc.

More of teak wood and other hardwoods are perceived by Indian wood industry
as they are resistant to termites, decay and are able to withstand the tropical
climate. In India, tropical woods such as garjan, mahogany, etc. are majorly
imported wood species. Temperate hardwoods such as ash, oak, cherry, maple
are imported in small quantities but increasingly as compared to lumber or
squared logs.

The imported furniture market is second largest in India after logs and is fast
emerging market for high end products. Imports of fiber and particle board,
veneer and sawn lumber have also increased over the last decade, indicating
positive demand in the housing, construction, household products, furniture and
packaging sectors.
36 | P a g e

Out of total annual consumption of wood in India, ~20% is constituted by
Imports, while plantations contribute 58% and forest contributes 22%. In the
corporate sector, due to high rental cost, more of the ready assembled furniture
is used as it is easy to transfer and reassemble. The structure of Indias wood
market is unorganized and complex. India still lacks high volume quality
controlled production plants that specializes in standard size products for
construction, furniture or furnishings

Globally, the concept of wood waste recycling had been accepted and wood
waste depots have been earmarked by developed countries for making more
usage of wood in manufacturing of particleboards and MDF rather than using
metallic components.
The investment for setting up MDF and particleboard plant is very significant,
which restricts competition from the unorganized sector. The government is
also encouraging this sector by reducing the excise duty. In order to encourage
affordable housing and environment friendly products, some of the state
governments like Delhi, Uttar Pradesh, West Bengal and Madhya Pradesh have
reduced the VAT from 12.5% to 4%.

China is the Worlds largest MDF manufacturer with 24.9m cu. mtrs. Per
annum. China is also worlds largest exporter of furniture and allied products.
By FY15, it is expected that North Asia will be producing 45% of worlds
MDF, and China alone would be producing 41%. Currently, only 1% of MDF is
used by Indian population as plywood is more acceptable in India.

Thus, in long run as the Plywood price keeps going up, MDF would substitute
plywood in low and mid range demand.


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3.14.1 - Growth Pattern of Future demand of wood

Year Demand
(million m3)
Percentage increase
(average per annum)
2000 58.00 -
2005 74.00 5.52
2010 95.00 5.68
2015 123.00 5.89
2020 153.00 4.88
Source: The Ministry of Environment and Forests, Government of India

The above table represents the average annual growth rate of demand for timber
in Round Wood Equivalent from the year 2000 to 2020. The decline in growth
rate in later decade is expected due to fall in infrastructure growth and focus on
maintenance.











38 | P a g e

3.14.2 - Projected demand for panel wood (million m3)

Year Plywood Veneer Particleboard MDF board Total
1998 10.10 0.25 0.13 0.13 10.61
1999 10.50 0.26 0.13 0.14 11.03
2000 11.00 0.27 0.14 0.14 11.55
2005 14.00 0.34 0.18 0.17 14.69
2010 17.96 0.43 0.22 0.21 18.82
2015 22.90 0.54 0.28 0.24 23.96
2020 29.20 0.70 0.35 0.28 30.53
Source: Forest and Wildlife Statistics, India 2004.

India is worlds second largest hardwood log importer and main market for teak
growers throughout the world. Between 2000-2009, India imported around 4.0m
m3 of hardwood logs compared to import of 7.8m m3 by China.














39 | P a g e

3.15 - SWOT ANALYSIS

3.15.1 - Strengths

1. Brand, Scale and Logistics: The Company holds 35% share of Indias
organized plywood market and 21% of Indias organized laminates market. As
abundant raw material resources is available to Nagaland and Uttarakhand units
and West Bengal and Gujarat units proximity to ports results in low
transportation cost.

2. Strong Track Record: It commenced operation of Nalagarh unit in a record
of Nine months.

3. Experienced Management: The management has experience of about 25
years in similar industry. This experience helped the company to become largest
interior infrastructure company in India.

4. Large Distribution Network: Company has Strong retail network with 32
branches across India and presence in over 300 cities, 4 international marketing
offices, including overseas subsidiaries, resulting into wide marketing reach.
One of the flagship decorative brand, Greenlam is been exported to more than
65 countries. The company opened 7 Green Studio a one-stop gallery for
interior surfacing needs. The Company succeeded in rural market by appointing
24 rural sales distributors and they generated revenue of INR 0.3bn in FY10.

5. Entry Barrier: The industry has entry barrier as fresh entries (in wood based
products) are regulated by government.

40 | P a g e

6. Diversified customer base: The Company has wide spectrum in building
and construction industry like OEMs, Government departments, luxury hotels,
corporate, builders, multiplexes and in retail segments carpenters, contractors
and dealers.

3.15.2 - Weaknesses

1. Shortage of Raw materials: Conservation of forest and growing concern
about environment have led to reduction in supply of wood, which will affect
the company for manufacturing of their product.



2. Supply of raw materials: Failure in delivery of raw material by suppliers on
schedule would affect the production process of the company and would result
in increase in liabilities, loss of customers and would affect financial conditions
of the company.






41 | P a g e

3.15.3 - Opportunities

1. Residential, retail and commercial segment: According to 11th five year
plan (2007 2012), low and middle income groups are facing shortage of more
than 25m housing units. Retail sector expected to grow at 10.4% and
Commercial space to grow at CAGR of 20% - 22% over five years. Spaces like
airports, convention centres, higher educational institutions, R&D labels, SEZs
and sport centres, among others, are in the pipeline.

2. Overseas opportunity: Increase in production capacity would help the
company to capture demand of overseas market.

3. Untapped potential for MDF: India presently imports ~70% of its total
MDF requirement from countries like China, Germany, Poland, etc. Post
commissioning of its Nagaland unit, it can capitalize on the growing demand for
the product and substitute the expensive imports.

3.15.4 - Threats

1. Competition: Competition from Organized and Unorganized players, leading
to difficulties in improving market share.

2. Environment Concerns: Stringent regulatory norms regarding concerns
over the environment. The company has to comply with the norms

3. Imports: Cheap Imports of raw materials by competitors can reduce the price
of the products as compared to GIL.

42 | P a g e

4. Exchange Rate: Any increase in rate of US dollar and Euro can increase the
price of raw materials and can reduce the companys profit margins as it
imports ~70% of its total raw material requirement.

5. Real Estate: In the short term period, the growth of real estate has slowed
down due to rise in interest rates.

6. Substitute: In recent years, Plastic has emerged as close substitute for wood
in terms of furniture, shelves, etc.


3.16 - Risk and concerns

Competition: Low quality products or cheap imports can pose a threat to
company.

Market condition: The future operations of the company may get
affected if the operations do not generate required funds and/or if the
market conditions deteriorate.

Environmental Risk: The procurement of primary raw material timber
may get affected if environment norms are not complied.

Raw material Constraints: Shortage in supply of raw material could
hamper the growth potential of the company.

Technology: Any obsolescence in technology can impact business
activities and can affect the quality of the product and increase in waste.

43 | P a g e

Product and Geographical concentration risk: Dependence on a
particular product and particular region can affect the growth resulting in
slowdown of demand.

External Risk:The extent and reliability of Indian infrastructure could
adversely impact our results of operations and financial condition.Indias
physical infrastructure is less developed than that of many developed
nations and the problems with its port, rail and road networks, electricity
grid, communication systems or any other public facility could disrupt
our normal business activity.

















44 | P a g e

3.18 - Valuation and Recommendation

The Indian market consists of diverse preferences, various income levels and
regional spread. Having talented human resource, reliable IT infrastructure and
advanced technology the company has edge over its competitors. Investments in
commercial real estate are likely to increase in three years. Investments in
airports are estimated to increase to USD 9 bn by FY15. GIL has upgraded its
technology which will help the company to stay ahead of competition.

We believe that companys current products are designed to cater to the large
market providing various forms of customization and thereby satisfying its
target market. We expect GIL to post net sales of INR 14.7bn in FY15e with a
growth rate of 24.3%. With a Tax rate of around 33%, Net profit is expected to
grow by 77% in FY15e to INR 415m. The companys debt-equity ratio
expected to remain at 1:1. Cash EPS is expected to be around INR 34m in
FY15e. The Debt/Equity ratio of the company is expected to improve to 1:1 by
FY15e from the present 1:4x.

At the CMP of INR 190, the stock is trading at a P/E of 16.45x and
EV/EBITDA of 6.9x, discounting its FY15e diluted EPS of INR 17.2. It is
trading at EV/Sales and EV/EBITDA of 0.9x and 6.9x its FY15e respectively.

The company will benefit from its Increase in production capacity for plywood,
Laminates and MDF plant that will be utilized 100% for plywood and laminates
and 50% for MDF plant by FY2015e. We initiate coverage with a BUY
recommendation with a price target of INR 752, which represents a 10% upside
from current levels.


45 | P a g e

3.19 - Financials INR (m)
3.19.1 - Balance Sheet
Year ended 31st March 2010a 2011a 2012a 2013a 2014a 2015e

Share Capital

110

85

85

121

121

Reserves & Surplus

2,511

1,399

1,710


2,983

3,356

Networth

2,622

1,484

1,795

3,104

3,477

Minority Interest

-

-

-

-

-

Debt

4,406

1,750

2,636

4,288

3,967

Deferred Tax Liability

189

123

126

218

267

Capital Employed

7,217

3,357

4,557

7,610

7,711

Gross Fixed Assets

6,370

2,395

2,741

6,505

6,655

Accumulated Depreciation

929

588

742

1,320

1,719

Net Assets

5,440

1,807

1,999

5,185

4,936

Capital work in progress

134

50

402

150

150

Capital Expenditure

-

1

115

-

-

46 | P a g e

Investments 1 1 1 1 1

Current Assets, Loans &
Advances


4,532


3,053


3,915


5,518


6,269

Inventory

2,112

1,513

1,740

2,833

3,407

Debtors

1,628

991

1,312


2,037

2,451

Cash & Bank balance

206

103

173

5

(296)

Loans & advances and others

584

447

690

643

707

Current Liabilities &
Provisions

2,895

2897

1,880

3,248

3,649

Creditors

2,807

2,557

1,814

3,160

3,561

Other liabilities & provisions

88

90

66

88

88

Net Current Assets

1,636

1,498

2,035

2,270

2,620

Miscellaneous Expenditure

4

1

5

4

4

Application of Funds

7,217

3,357

4,557

7,610

7,711




47 | P a g e

3.19.2 - Profit and LossA/c
Year ended 31st March 2010a 2011a 2012a 2013a 2014a 2015e
Revenues

4,036

5,884

7,732

8,990

11,828

14,704
Expenses

3,573

5,075

6,954

8,068

10,736

13,333
Operating Profit

463

809

778

922

1,093

1,371
Other income

8

10

22

25

25

25
EBITDA

471

819

799

948

1,118

1,396
Depreciation

87

133

173

224

390

399
Interest expense

118

182

199

240

377

377
Profit before tax

267

504

427

484

350

620
Taxes incl deferred taxation

40

115

71

74

116

205

Profit after tax

226

389

356

409

235

415
Diluted EPS (INR)

9.4 16.1 14.8 17.0 9.7 17.2












48 | P a g e

3.19.3 - Per share data
Year ended 31st March 2010a 2011a 2012a 2013a 2014a 2015e
No. of shares (m)

18

17

17

22

24

24
BVPS (INR)

61.5

87.3

105.6

118.6

128.6

144.0
CEPS (INR)

17.7

30.7

31.1

28.6

25.9

33.8
DPS (INR)

1.4

1.5

1.5

1.5

1.5

1.5

3.19.4 - Margins (%)

Year ended 31st March 2010a 2011a 2012a 2013a 2014a 2015e
EBITDA 11.5% 13.8% 10.1% 10.3% 9.2% 9.3%
EBIT 9.5% 11.7% 8.1% 8.1% 6.2% 6.8%
PAT 5.6% 6.6% 4.6% 4.6% 2.0% 2.8%

3.19.5 - Financial Ratios
Year ended 31st March 2010a 2011a 2012a 2013a 2014a 2015e
RoE (%) 20.8 26.2 19.8 15.6 7.6 11.9
RoCE (%) 14.6 20.4 13.7 10.0 9.6 12.9
Debt/Equity (x) 1.4 1.2 1.5 1.7 1.4 1.1
EBIT/Interest (x)

3.3 3.8 3.1 3.0 1.9 2.6




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3.19.6 Cash flow statement
Year ended 31st March 2010a 2011a 2012a 2013a 2014a 2015e
PBT

267

504

427

484

350

620
Depreciation & amortization

87

133

173

224

390

399
Interest expense

129

196

231

260

377

377
Interest / Dividend Recd

(15)

(20)

(37)

(32)

(25)

(25)
Other Adjustments

14

4

15

20 - -
(Inc)/Dec in working capital

(218)

(298)

(502)

423

(834)

(652)
Tax paid

(38)

(95)

(79)

(102)

(88)

(155)
CF from operating activities

225

425

228

1,277

171

564
Capital expenditure

(546)

(506)

(797)

(3,230)

(150)

(150)
(Purchase) / Sale of Investments

0 - - - - -
Interest/dividend recd.

15

20

37

31

25

25
Other Adjustments

(16)

(3)

(41)

(55) - -
CF from investing activities

(546)

(489)

(801)

(3,254)

(125)

(125)
50 | P a g e

Inc/(Dec) in share capital

350

56 -

448

290 -


Inc/(Dec) in debt


242


270


886


1,770


(118)


(321)
Dividends & Interest paid

(274)

(248)

(261)

(290)

(420)

(419)
CF from financing activities

319

78

625

1,928

(248)

(740)
Net cash flow

(2)

14

52

(50)

(202)

(301)
Opening balance

51

48

62

114

64

(138)
Closing balance

48

61

114

64

(138)

(439)



3.19.6 Growth Indicators
Year ended 31st March 2010a 2011a 2012a 2013a 2014a 2015e
Revenue 56.8 45.8 31.4 16.3 31.6 24.3
EBITDA (82.0) 74.8 (3.9) 18.6 18.5 25.5
PAT #REF! 71.9 (8.5) 14.9 (42.7) 77.0
EPS #REF! 79.0 (8.5) (11.6) (47.5) 77.0






51 | P a g e

3.19.8 - Valuation (x)
Year ended 31st March 2010a 2011a 2012a 2013a 2014a 2015e
PE

20.3

11.8

12.9

11.2

19.5

11.0
P/BV

4.2

3.1

2.6

1.7

1.5

1.3
EV/EBITDA

10.0

6.0

7.1

8.9

7.9

6.3
EV/Sales

1.2

0.8

0.7

0.9

0.7

0.6
Dividend Yield (%) 0.7 0.8 0.8 0.8 0.8 0.8












52 | P a g e






4. TECHNICAL ANALYSIS
53 | P a g e

4.1 LINE CHART

4.2 GRAPICAL CHART

54 | P a g e

4.3 BAR CHART OF GREENPLY INDUSTRIES FOR 3
MONTHS

4.4 BAR CHART OF GREENPLY INDUSTRIES FOR 6
MONTHS


``
55 | P a g e

4.5 BAR CHART OF GREENPLY INDUSTRIES FOR 12
MONTHS

4.6 CANDLE STICK CHART OF GREENPLY INDUSTRIES
FOR 3 MONTHS

56 | P a g e

4.7 CANDLE STICK CHART OF GREENPLY INDUSTRIES
FOR 6 MONTHS

4.8 CANDLE STICK CHART OF GREENPLY INDUSTRIES
FOR 12 MONTHS


57 | P a g e

5. Bibliography
1. Companys Annual Report.
2. Bloomberg Software.
3. www.bseindia.com
4. www.fao.org
5. www.economywatch.com
6. www.greenply.com
7. http://search.proquest.com/business/docview/208901898/fulltextPDF/12F
9AFC86F914F2733A/1?accountid=133428
8. http://search.proquest.com/business/docview/89142387/fulltextPDF/12F9
AFC86F914F2733A/2?accountid=133428
9. http://search.proquest.com/business/docview/305344061/12F9A9E89535
85A1BFD/13?accountid=133428
10. www.investopedia.com







58 | P a g e












6. APPENDIX
















59 | P a g e


5.1Business / Industry Related Terms

Term Description
BWR Boiling Water Resistant.
CBM Cubic Meter.
CEC Central Empowered Committee.
CER Certified Emissions Reductions.
CIF Cost, Insurance and Freight.
HDF High Density Fibreboard.
Interiors Infrastructure Industry The industry comprises companies that
manufacture materials which help in
building of interior infrastructure and are
used for various applications including
enhancing the utilization of space, making
sturdy, safe and secure and includes interior
products (furniture, doors, windows,
flooring, etc.).
The product portfolio consists of plywood
and laminates, marbles and tiles, paints and
varnishes, electricals, ceramics and pottery,
glass, home furnishings, decorative items,
etc.
KL Kilo Litre.
MDF Medium Density Fibreboard.
MR Moisture Resistant.
PB Particle Board.
PLB Pre Laminated Particle Board.

60 | P a g e


5.2Abbreviations

Term Description
CEPS Cash Earnings Per Share.
EPS Earnings Per Share.
FCCB Foreign Currency Convertible Bonds.
FDI Foreign Direct Investment.
FII(s) Foreign Institutional Investors registered with
SEBI under applicable laws.
FIPB Foreign Investment Promotion Board.
GDP Gross Domestic Product.
GOI Government of India
Re./ Rs./ Rupees/ INR Indian Rupees.
SEBI Securities & Exchange Board of India.
Sq m Square Meters.
YOY Year on Year.
INR mn Indian Rupee in Million
INR b Indian Rupee in Billion