In May 2018, Greenply Industries Limited decided to demerge its Medium Density Fibre Boards (MDF) business, and now, the company will be left with only plywood business. What really is happening is that the two products both with almost similar raw material requirements and customer base, can do better as part of the same structure and organisation are getting separated. It will be interesting to see how the demerger will create value for all the stakeholders in the future without creating issues in overlapping in operations and transfer pricing. Through earlier demerger in 2013, Greenply demerged its Decorative Business (comprising of Laminates and Allied Products) into Greenlam Industries Limited.

The Earlier Transaction

To climb to the next level, Greenply demerged its decorative business into a separate entity called Greelam Industries.

Table 1: Greenlam Financial Post Demerger of Decorative Business (INR Crores)

Particulars FY 18 FY 14
Revenue 1,155 769
EBIT % 10.0% 9.6%
Capital Employed 627 456
RoCE 18.3% 16.2%

The equity shares of Greenlam got listed on stock exchanges in March 2015. From the date of the listing, the market capitalisation of the company has got doubled.


The Current Transaction

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