The history of plywood industry in India is old.

It is more than 75 years that this

industry was started here on a very modest scale.

It was in the year 1906-07 that plywood was imported in India for the first time-
valued at Rs.32 lacs. Imports rose steadily and by 1924-25 it was worth Rs.90 lacs.
Tea Industry in Assam, West Bengal and Kerala was steadily developing and it was
thought that plywood industry in the form of Tea Chests production mainly for export
should be developed. Accordingly two plywood factories were started in Assam in
1923-24 but their development was steady and slow and not phenomenal. These were
the pioneers and the resourcefulness and courage shown by them in the early stages of
growth of Plywood Industry was remarkable and the industry owes gratitude to these
courageous entrepreneurs.

With the outbreak of Second World War, necessity of manufacturing tea chests
locally was very much felt and Plywood Industry in form of Tea Chests Industry
started on a large scale. It will not be exaggerated that Plywood Industry in India is a
gift of Second World War. Now that tea chests must be produced, Forest Departments
in different States started thinking in terms of finding suitable timber for
manufacturing tea chests. Experiments were made at Forest Research Institute, Dehra
Dun and it was found that plywood made from Indian timbers were as good as
imported products and therefore advised forest entrepreneurs to set up modern
factories in different States. Accordingly well equipped factories were started in
different places viz. Sitapur, Bangalore, Baliapatam, Dandeli and Coochbehar. Some
of these factories suffered setbacks in the post war years, as after cessation of war the
vested interests tried to sabotage this industry by trying to restart imports of tea chest.
Tariff Board enquiry was held and the Government imposed a lien on the importers to
purchase Indian products equivalent to the quantity allowed to be imported. Slowly
and slowly, the Government imposed total ban on imports and this thoughtful action
of the Government encouraged the Indian entrepreneurs to modernize their plants and
invest substantial capital in this industry.

After 1947-48, the industry resorted to diversification of its products and block
boards, flush doors, commercial plywood, decorative plywood, marine and aircraft
plywoods, produced in Indian factories came into the market which were second to
none in the world in quality and diversity of its products.

Industrial Licensing is governed by the Industries (Developmental and Regulation)

Act, 1951 under which the woodbased industry was covered.

There was no restriction of putting up plywood Mill upto 1970. The only criteria was
that the applicant was required to obtain an Industrial License which was being
considered by Ministry of Industry after consulting various Ministries including
Ministry of Environment & Forests. Forest Ministry was being consulted for
ascertaining sustainable raw material of Timber for a particular project; the
Woodbased Industry was more or less in Medium and Large scale.

The Woodbased Industry was under Compulsory Industrial Licensing from 1988
whether a small scale unit or a Large/Medium unit, new undertaking or substantial
expansion would require Industrial Licence.
During 1970 there was clear cut definition of Small Scale Sector and units having an
investment of less than 7.5 lakhs in Plant and Equipment were covered under the
definition of Small Scale Sector which would be registered with the respective State
Director of Industries. At that particular stage some of the units with such investment
got themselves transferred to small scale sectors.

Meanwhile there were modern technology and machinery equipped plywood units
coming up in different places in India like North Eastern Zone.

In 1997 the Government of India totally delicensed woodbased industry as a result

more than 2000 small-scale units coming up.

The potentialities of the industry can be judged from the many uses to which plywood
can be put. Apart from tea chests plywood marine and aircraft plywood there are
specific demand for the following articles from the consumers:-

1. Shuttering Plywood
2. Packaging Plywood
3. Plywood drums
4. Flush doors
5. Commercial & Decorative Plywood
6. Block Boards
7. Moulded Plywood furnitures and chair seats
8. Laminated picking sticks for cotton and jute textile industry
9. Sliced decorative veneers of walnut, teak, rosewood etc.
10. Compregnated wood veneers required for heavy chemical industry and
electrified railways.

To assess the overall status of plywood industry in the country the production of
plywood in India given herebelow for 50 years from 1951 to 2001 on 10 years basis.

Production of more than 2000 small scale units was not properly recorded only
estimated every year. Due to Hon’ble Supreme Court Order on 12/12/1996 the
production activities was totally suspended in Medium/Large scale unit particularly in
North Eastern Region as a result the production reduced drastically from 1997 and
still there is no improvement.

Particle Board

Particleboard is a reconstituted constructional panel particularly developed as a

substitute for natural constructional wood and is made from low grade waste woods or
from certain agricultural ligneous wastes. In that respect particleboard assumes one of
the greatest importance in the wood panel products industry from the point of view of
conservation of scarce forest resources in a country.

In India the first Particleboard plant was set up in late 1950’s at Sitapur in Uttar
Pradesh. There are presently about 12 Woodbased and agriculture ligneous waste
based Particleboard units in India.

The production of particleboard are given herebelow for last 5 years from 1997 to
2001 in M Tonnes.

Hardboard and Medium Density Fibreboard (MDF)

Fibreboard is a board encompassing sheet materials of widely varying diversities

manufactured from refined or partially refined wood fibres or other vegetable fibres.
Bonding agents and other materials may be incorporated in the manufacture to
increase strength, resistance to moisture, fire or decay.

The first Fibreboard (Hardboard) Industry was established in India during late 1950’s
and the first Medium Density Fibreboard plant was set up in India about 20 years
back.

The production of Hardboard and MDF for last 5 years from 1997 to 2001 are given
below:-
.[5]

[edit]
Archidply has introduced low formaldehyde emissions standard products in
BWR Plywoods and block boards and decorative laminates, which is being
produced to reduce hazardous effects on health due to gas emission. The
premium brand “Pureply” is the only plywood in India giving all the features of
fire retardant, fifteen ply constructions, low formaldehyde emission and marine
grade in one plywood. We believe the unique and useful features will drive the
demand for the products in the future.
Wide dealer network
Currently, the Company has a network of 586 authorized dealers who, in turn,
supply to more than 2,000 sub-dealers/retailers. The wide distribution network
will help Archidply to market its products across the nation and deeply
penetrate into the market.
Experienced management
Archidply has an efficient management in the wood panel products and
decorative surface product industry. This can be demonstrated by the fact that
in 1995, the management acquired an abandoned manufacturing unit of
particle board and plywood at Mysore, and successfully turned it around.
Further in 2005-06, the Company set up green-field plywood, pre-laminated
particle board, and decorative laminates project at Rudrapur, Uttarakhand.
The commercial production of the first phase i.e. the plywood division was
commenced within six months from the date of its land acquisition. The
management’s vast experience and background in production, finance and
marketing in similar industry gives us the strength about the Company’s
success in this project.
Please see the end of the report for disclaimer and disclosures
-3-
ARCHIDPLY INDUSTRIES .LIMITED
Diversified customer base
Archidply is not dependent on the single sector for the sales of its products. It
caters to wide spectrum in the building and construction industry like OEM’s
making modular furniture using pre laminated particle board and post form
laminates, Government departments like CPWD and MES using Exterior
grade pre laminated particle boards, luxury hotels and corporate using
decorative plywood, residential projects using durable water proof plywood,
builders using shuttering and densified film face plywood, multiplexes using
fire retardant plywood, boat building using marine plywood to the retail
segment comprising of carpenters, contractors and dealers
Outlook
The plywood industry is expected to witness a strong growth driven by the
construction and real estate sectors. Moreover, the competition in the sector is
expected to ease out due to the difficulties (on deforestation concerns) in
obtaining fresh licence from CEC for new plywood capacities. The higher
disposable income and buying power are expected to drive the demand of
branded products of Archidply.
Archidply has grown at a remarkable rate by registering revenue and net profit
at a CAGR of 79.2% and 319.6%, respectively, over the period FY06-08. The
Company’s strong positioning in the sector and the demand of its products are
expected to yield the growth of 30% yoy to Rs. 2004 mn in revenues by
FY09E. Assuming 10.4% net profit margin, we expect that net profit would be
Rs. 208 mn and EPS would stood at Rs. 9.5. Further, we believe that the
production capacity expansion and sector’s growth prospect will stimulate the
Company’s profitability.
At a price band of Rs. 70-80, Archidply is valued at a P/E of 7.2x and 8.2x at
the lower and upper price band, respectively. Based on our analysis, we
recommend the investors to Subscribe to the issue with a long-term
perspective.
Please see the end of the report for disclaimer and disclosures
-4-
ARCHIDPLY INDUSTRIES .LIMITED
Company Background
Archidply Industries’ history dates back to September 05, 1995 when it was
incorporated as ATP Silvi Products. The Company got its present name on
March 30, 2007. The Company is headquartered at Bangalore and is a part of
the Archidply group, which has been associated with plywood manufacturing
for more than 30 years under the bran Archidply.
Being an ISO 9001:2000 certified company, it offers comprehensive
engineered interior products including marine, fire retardant, shuttering,
densified film faced, BWR and MR, lamyply and lamyboard range of plywood;
block board and flush doors; plain, veneered and pre laminated particle boards
both in interior and exterior grades; decorative laminates; teak, natural exotic
veneers, reconstituted veneers and dyed veneers. The two modern state-of-
the-art manufacturing units are located at Rudrapur, Uttarakhand and Mysore
in Karnataka.
The company has a large distribution network and operates through
16 marketing offices and 61 distributors and stockists. As on March 31, 2008, it
had a network of 586 authorized dealers, supplying to more than 2,000
sub-dealers and retailers across the country. Some of the high-end consumers
include Apollo Hospital, Hotel Leela Venture, and ABN AMRO.