Till some years ago all the three businesses were under Greenply Industries, similar to how Centuryply operates today.
Greenlam demerged from Greenply first, leaving behind Plywood and MDF with Greenply Industries.
Next came the Greenpanel demerger, leaving behind a small part of the plywood business and entire MDF piece with Greenpanel.
The assets were divided based on family interests and few other considerations which may not make sense to investors, but made perfect sense to the promoters. The understanding is that each of the businesses will focus on it’s area of specialization - Greenply on Plywood, Greenlam on laminates and Greenpanel on MDF. Each business has a small segment into other areas like veneer, wood floor, decorative coatings etc but this was because they could not precisely divide the portfolio since the production was distributed across locations and some plants were doing a bit of all products.
One can always evaluate whether the demerger was required but the long term track record has been that these corporate actions haven’t diluted value. Hence, not a red flag in my qualitative opinion. Context and sequence of events become very important in such stories. In terms of operations they have invested into the best technology, that is the reason Greenpanel makes the highest gross margin though Century Ply and Action Tesa have large investments into MDF too.
The one thing I would watch out for is the balance sheet quality in the case of Greenpanel, they did bite off much more than should have when they took on 500 Cr of unhedged non INR debt to put up large MDF capacity. This hit them hard during the 2018 and 2019 MDF supply glut, which still continues to be an overhang. Since utilization has improved drastically in Q2 and Q3 of FY2021, both P&L and balance sheet quality have improved significantly. That said the balance sheet will be vulnerable to INR depreciation till they bring down debt to a level of 250 Cr and below (expected to happen by March 2022 as per the latest investor presentation).
Disclosure: Invested for self and customers, part sell transactions in the last 30 days