Good day, ladies and gentlemen. Welcome to Century Plyboards Limited's Q4 FY 2025 and FY 2025 Result Conference Call. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the management's opening remarks. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Navin Agrawal, Head of Institutional Equities. Thank you, and over to you, sir.
Good afternoon, ladies and gentlemen. I'm pleased to welcome you to this Financial Results Conference Call on behalf of Century Plyboards and SKP Securities. We have with us Mr. Sanjay Agrawal, MD and CEO, along with Mr. Keshav Bajanka, Executive Director; Mrs. Nikita Bansal, Executive Director; Mr. Arun Julasarya, Chief Financial Officer; Mr. Sumant Wattas, CEO, MDF Business; and Mr. Vishu Goel, CEO, Decorative Business. We'll have the opening remarks from Mr. Sanjay Agrawal, followed by a Q&A session. Thank you, and over to you, Sanjay ji.
Thank you, Navin. Good afternoon, ladies and gentlemen. Welcome to Century Plyboards' FY 2025 Q4 Earnings Call. Before we begin, please note a standard disclaimer. Today's discussion will cover the company's past performance and future outlook, and is not intended as a solicitation to invest. The earnings result and analytical presentation have been shared with you and are also available on the stock exchange website. The Q4 result for FY25 are better on both year-on-year and quarter-on-quarter basis. On a year-on-year standalone basis, revenue rose from INR 1,026 crores to INR 1,049 crores, while consolidated revenue increases from INR 1,061 crore to INR 1,198 crores, representing a growth of 2.3% on standalone basis and 13% on consolidated basis. The plywood segment is performing quite well and stands out as one of the fastest-growing areas in the whole building material industry.
Revenue increased by 9.8% year-on-year for Q4, with an EBITDA margin of 15.4% for the quarter, primarily driven by higher volumes. Revenue for the full year 2024-2025 has grown by 16%. The revenue from the laminate segment at the consolidated level increased by 1.9%. The standalone EBITDA margin stood at 5.6%, with margin pressure resulting from higher schemes and increased sales overhead on account of employee cost. Our facility in Andhra Pradesh is scaling up and is expected to support sales growth in this segment in the coming quarters. MDF revenue at the consolidated level grew by 37.5%, with an EBITDA margin of 13.2%. Our facility in Andhra Pradesh turned EBITDA positive in Q4. I am also happy to report that both the segments, laminate and MDF, at our Budni plant have achieved nearly 60% of capacity utilization in Q4.
The particle board segment continues to be under pressure, and revenue declined by 23.2% in Q4, with an EBITDA margin of 5.6%. The new plant at Tamil Nadu is expected to be operational from this quarter and will help in improving the EBITDA margin on account of lower cost of production. With this, I conclude my opening remarks. Thank you. I now welcome your questions.
Thank you very much, sir. We will now begin with the question-and-answer session. Anyone who wishes to ask questions may press star and one on the touchstone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Bhavin Rupani from Investech. Please go ahead.
Hi, sir. Thank you so much for the opportunity. First question is related to MDF plant. Sir, I wanted to understand on the EPCG scheme benefits from the MDF plant. Last time, we specified that we have some obligations of exports going ahead. Can you please specify the quantum of exports and the timelines under which we have to export from this plant?
Normally, EPCG benefits can be availed over the course of six years. The quantum of exports, the obligation will depend on whether we take GST into account or not. The obligation can be between INR 150 crores to INR 400 crores. This detail we'll be figuring out because, as you know, the export scenario has changed, but this is something that takes place sporadically. A couple of years, exports may not be viable, and a couple of years, they may be extremely viable. We are figuring that out.
Sir, have we started exports from our new plant?
Yes, we have. Right now, the quantums are limited because, as you know, in the international market, there has been substantial pressure on the prices of MDF. Alongside that, raw material prices in India have increased drastically. Because of this phenomenon, exports aren't as viable as they used to be, but we are already starting export. We have already started exports. Currently, predominantly, we export to the Middle East.
Okay. Is it possible for you to specify what are the margins in our exports business?
We never share numbers between, even in laminates and even in other products, between domestic and exports, unfortunately.
Got it. Sir, any price hikes, price cuts that we expect or we have taken during the quarter or we expect going ahead in MDF?
I think going forward, we are all expecting price hikes in MDF, but it is a little too early for that to play out. I think over the course of the next couple of quarters, there'll be a wait-and-watch scenario. The expectation is towards the end of the year, there should be certain price rises in MDF.
Got it, sir. Sir, second question is related to plywood. What we have heard is some associations in the southern part of the country have taken some price hike of 7%. Does it give us more leeway to increase the prices going ahead in the plywood segment as well?
The thing is, with respect to these association news that come, they are flyers that go out every quarter. It is not something new. When you actually see at ground what is effective, it is never effective at 7%. Usually, it is not even effective at 1%. Associations say that they want to take it to just create a pressure. Ultimately, right now, I can tell you that in Yamuna Nagar, there is no increase. I do not think there is any price increase that we can take. We ourselves have taken a price increase in April of 2% in our Century brand.
Very much clear, ma'am. Last question is related to working capital spent specifically on inventory days. We have seen a significant jump in March. Any specific reason behind it, and when do we expect this to normalize? Thank you.
I think raw material prices have moved up substantially over the course of the past quite a few quarters now. In line with the same, we have built up an inventory so that we do not face the constant pressure of increasing prices from the market. Having said that, I think now there has been a bit of stability. Because of the same, over the course of this and the next quarter, we will be able to liquidate some amount of raw material inventory. This benefit we will get over the course of, say, H1. Alongside that, one structural change that is taking place is that we have definitely increased raw material inventory of core in particular because we have started importing it. As you know, earlier, it was predominantly domestic sourcing. Now, since it is imported, that change is likely to continue for the near future.
Overall, inventory will start to reduce from this quarter onwards.
All right. Thank you.
Thank you. The next question is from the line of Rudraksh Raheja from ithoughtpms . Please go ahead.
Thanks for the opportunity. Am I audible?
Yeah. Yeah. Hi, Rudraksh. Hi.
Yes, sir.
Yes. My question pertains to the laminate segment. If I look at the industry, one of the organized players in this market has recently secured a white labeling business from Wilson Art, which is a global player from the US. Do you see this as a normal course of business, or is this a strategic shift where other global players might look towards India as a destination to outsource their manufacturing needs?
I think you're absolutely right. India is likely to remain one of the best destinations for export of laminates for the foreseeable future. Companies like ourselves have also been white labeling for a number of international brands over the course of the last two decades. The opportunity now, particularly in compact laminates, is proving to be substantial. I think going forward, you will see many more such agreements coming from organized players within the country as I've included.
What exactly changed that triggered this huge opportunity opening for Indian players?
I think the number of changes that have taken place, firstly, in the case of compact laminates, the cost of labor is a major deterrent. Compact laminates, as you know, cannot be manufactured in any meaningful way through mechanization. It requires a labor-intensive process. As such, I think a structural benefit for India is likely to persist for the foreseeable future. Secondly, I think overall, the efficiency of Indian manufacturers to manufacture thin HPL has also helped us substantially. This, again, is likely to continue going forward.
Sir, are we looking forward to any such opportunities?
A few.
A few. Okay. Could you quantify the production cost differential, like you mentioned, in India versus, let's say, a market like the U.S.?
Sorry. Could you repeat the question one?
I wanted to ask about production cost differential.
The production cost differential between India and, say, Europe or U.S. is going to only keep widening. You see, labor cost there has increased substantially, and environmental norms there are also getting more and more stringent. India will continue to have this advantage for the foreseeable future.
At this stage, what's the amount, a ballpark figure? How much differential does exist?
I would put it this way that a number of U.S. companies have stopped their manufacturing operations in the U.S. A number of European companies have stopped manufacturing operations for laminate and compact, for HPL and compact in Europe. That should give you a sense.
Good to hear that. Thank you so much, sir.
Thank you.
Thank you. The next question is from the line of Praveen Sahay from PL Capital. Please go ahead.
Thank you for the opportunity. My first question is related to the plywood. If you can share what's the capacity of the plywood currently? Also, as per the presentation, you are going to CapEx in all of your facilities, especially in the plywood. What increase in the capacity are you expecting by end of FY2026?
Yeah. Excuse me. Hello?
Yes, ma'am. You're available. Please continue.
Yeah. The capacity utilization currently is about 90% for this entire year. We have already announced the Hoshiarpur plant, which will come about in the next 15 months, which will help us with our futuristic growth. We are expecting that to be about 48,000 CBM more.
Forty-eight thousand from the Hoshiarpur and other facility also, if I look at whether it's in the Joka or Gandhidham, etc., there also you had done a CapEx and during like 2026 also you had a plan.
Yeah. That will continue, yeah. That will be another 50,000 CBM for this year. We are fortunate for this year. Even at the end of this year, with the growth numbers we have in mind, we will still be at a decent capacity utilization. Still not at 100%, but yes, we will need another plant next year.
Okay. Okay. Got it, ma'am. Second question related to the laminate, because the laminate this quarter, if I look at, that's because of higher scheme discount or a sales overhead, the margin were on the lower side on the consolidated basis. Can you give some indicative the way forward? Because already you had given in the presentation for the guidance. How to achieve the improvement in the margin the way forward? Also, if you could talk about the export sales numbers for this year or the coming years, how that's going to play out?
Normally, we do not give guidance, particularly in export. Like you have said, our Andhra unit is predominantly designed towards exports, and that will lead to a substantial increase in our overall export base. If you look at the margins for the current quarter, they have been impacted because we have invested substantially, whether it is in terms of plant, whether it is in terms of manpower, and the growth has not come. Because the growth has not come, the cost base has increased. This year, we are very confident of a 20% growth. In line with that, we have seen a good April and a good May. I am confident that with increasing economies, with increasing operational utility, with increasing volumes, we shall see a recovery to higher margins.
For the current year, we are looking at 8-10% EBITDA margins towards the end of H2. I think we will be on line to achieve the same.
Okay. Okay, sir. Also, if you can share the timber pricing for a quarter, how has been north and south?
Sumant, would you like to take that up?
Yes, I will, Sumant sir. For the MDF business, our timber pricing is 54. Consumption prices in north is about INR 6.7 per kg, and south is about INR 6.3 per kg. That is quarter four. In quarter one, we have seen some decline in both north and south in the range of 5%-10% in both.
In both the places, south and north, both the places, you had seen decline?
Yes. Yes. There's been a gradual decline of 5%-10%. Hopefully, it continues. Monsoons are also coming centrally too. I think when the winds stabilize, there will be a minor correction.
Okay. Okay. Thank you, sir, and all the best for the future.
Thank you.
Thank you. We'll take the next question from the line of Keshav Lahoti from HDFC Securities. Please go ahead.
Thank you for the opportunity. One thing, we can see your particle board, hi, sir. We can see your particle board CapEx has increased by INR 57 crore. Secondly, your particle board margin, which is just 5% when a small plant is operating at an optimum utilization. How do you see the particle board margin to be in this year and possibly FY 2027? What are the ramp-up plans?
I think if you look at the current capacity versus the upcoming capacity, there is a structural difference. The current capacity is a multi-daylight press, which has inherent disadvantages. Of course, the capacity has served us very well, and we have had a very good return on it. Given today's competitive landscape, we had to go for continuous line where you have close to 7% saving in terms of sanding and trimming, where you have 2-3% saving in terms of overhead, a further 2% saving in terms of resin. On a steady-state basis, this plant should definitely give us a 15% plus EBITDA margin. This year and the first half of next year will depend on capacity ramp-up. I think that going forward, the new unit is likely to lead to a good EBITDA for particle board.
Got it. So 15% is a normalized margin, you are saying, or earlier we are expecting 20%?
Yes. I have a decent capacity utilization. Steady state. Given prices, yes. That is a good EBITDA number. Of course, it does have a fluctuation. There is volatility in terms of margin in this industry. If prices rise going forward for particle board, you will see an increase in our margins as well.
Got it.
Tell me one thing. Particle board earlier, the small press, we used to make 20-25% margin, which is down to 5-6%. It's purely because of timber cost or there are other reasons also attached to it?
There are two reasons. Firstly, timber cost increase has impacted cost. At the same time, realizations have not moved up. Now, there are a number of reasons that have put pressure on realizations, both over capacity in domestic as well as imports. Imports, even though not very high in terms of quantum, do act as a limitation for the domestic industry to take correct pricing positions. With BIS coming in, we should see a benefit there. It is still early days. Let us wait for that to play out.
Got it. What about the MDF line rebalancing we wanted to do, the expansion plan? When should that happen?
Between September and December of this year, we should go for the expansion. However, we have not taken a concrete date yet. It will depend on how utilizations take place and when we can build up sufficient inventory. It is going to be a shutdown that is in excess of 30-40 days. We will have to plan it out. I think in quarter three, latest maybe by quarter four, we will have to go for the expansion.
Normally, the demand is heavily in Q4. So whether Q4 it will be possible because people ideally then target the monsoon time.
There are a number of factors that go into it. I think our ability to build up inventory, to build up the correct inventory, get a sense of what we will require, and availability from the OEM who is going to also lead to that expansion, who's also going to work towards the expansion. All of these factors need to be taken into account. Whenever we go for it, we are going to ensure continuous servicing of the market. The advantage we have, of course, is that we have multiple units. Even if one goes under shutdown, there is always the likelihood to feed it from the other, the loss of maybe slight amount of margin. I do not think it will be a very big challenge for us. You're absolutely correct. The planning needs to be impeccable, and that is what we are working on.
Understood. Got it. That is helpful.
Welcome back. Thank you. Thank you.
Thank you. We'll take the next question from the line of Tanmaiy Mohta from Locus Investment Group. Please go ahead.
Yeah. Hi, Tanmaiy.
Hi. Am I audible?
Yes.
Yeah, yeah. You're audible.
Yeah. Actually, I have two questions. The first was on the line of the MDF business. Broadly, if you look at your margins, margins have declined substantially. I just wanted to understand, is this only because of the good prices? What do you see margins going ahead? Secondly, on the demand side, given there is significant overcapacity in the industry, what is your sense on sort of demand growth at the industry level? The second question is on the plywood side. I just wanted to understand, I mean, if you just look at your sort of sales volume based off your commercial business, I think the volumes have fallen substantially. Within your plywood business, what do you expect is going to drive your 20% growth going forward?
For MDF, there are two things that have played out. There has been overcapacity in the market, a lot of new capacity that has come. Because of that, you see the pricing in the market has also changed. Over the course of the past year, there has been close to 8% reduction in realization for us and far higher for competition. I think this is definitely a factor that together with the increase in raw material has led to lower margins. Having said that, last quarter on a standalone basis, we have already clocked close to 20% EBITDA margin. I think margins will look on the way up going forward.
Second question is regarding commercial veneer or decorative veneers?
Commercial vineyard.
Basically understanding your sales needs of what you.
We are practically not in commercial veneer anymore. We have a unit in Gabon which serves as a raw material supplier to us. Whatever high-grade material is consumed by us and the lower-grade material we sell in the market. It is not much. It is very little. We are no more in the business of commercial veneer practically.
Just to follow up this on the demand side, what do you think on the demand side in the industry level going forward? Do you think the industry could grow at about 10%-15%?
Demand for plywood.
MDF. MDF.
MDF.
MDF demand is likely to continue to grow at 20% plus. The market has been growing at close to 20%, and I believe that the market is likely to continue growing at 20%.
Thank you. I will come back in line.
Thank you.
Thank you. We'll take the next question from the line of Amit Purohit from Elara Capital. Please go ahead.
Yes. Hi. For the aperture. Hi, sir. Sir, just on the MDF part, on a standalone basis, we saw a volume decline of almost 13%. What would you attribute this to? I mean.
You see, there's a catchment that we are serving from our north plant where it is more profitable to serve from our south plant. Obviously, that rebalancing has taken place, and that has led to higher EBITDA. When you are catering to the south from the north and you have a plant in the south, of course that change will take place.
Okay. So you think that the outlook for the next year, this should keep on happening for some time, or you think this was just a one-quarter thing and now things should?
Like I said, for the year, our target will be 20% growth. We are very well aligned to achieve that. Depending on two or three factors such as relative price of timber, depending on the logistic costs, we will keep balancing between the plants to come to optimum EBITDA levels.
Sure. Okay. On the plywood side, while you highlighted two things, one, that the timber prices have come down and it looks to be a bit more stable and may have probably come down.
Sorry. The timber prices have come down for MDF. That was indicated for MDF by Sumant, who's CEO for MDF, not for plywood.
Okay. Okay. Okay. Not for plywood. So plywood, the number is probably similar, right? On a sequential basis or on a YOY basis? What is it doing?
You are talking about raw material prices?
Yes. Timber. Yeah.
Yeah. Currently, because we are very dependent on import, and even the quality is far better, currently, there's not been much change in the import prices.
Okay. The reason I'm asking this is that we have guided for 12-14% plywood margins. If I look at our FY2025 margins, it's close to about 14.5%. Generally, I mean, there's always an outlook that timber prices have probably peaked out and things should improve from here on. In that context, do you think that we are a bit more conservative in our guidance, or how do you think about it?
No, I think, see, we are not conservative. We always aim for a 12-14%. When the volume is phenomenal in a year, it always gives you some EBITDA advantage because your fixed overheads are already the same. This year has been very good for us in plywood because of which we have delivered this type of EBITDA. Going forward also, I will still maintain we will try to deliver at 12-14%.
Okay. Sir, lastly, on laminate, when I look at other players also, the listed ones who have declared, almost all of them have reported a decline in volumes. Just curious, I mean, from an industry perspective, I mean, we have, I know it is not rightly correlated, but we have plywood which is doing well, but laminate somehow, we thought there is some bit of lower penetration, and hence laminate demand should also kind of pick up. Why would it be so?
For plywood, I would not say that the industry has done particularly well. For plywood, I'd say that Century Plyboards has done well. If you look at overall, the demand scenario in building materials is not great. You look right across the building material segment. In plywood, our gain has been on the basis of market share and substantial market share of that. In laminate, the demand scenario is muted. Hopefully, it will recover as the building material cycle recovers, new launches come into the market, and so on and so forth. Currently, I do not think, domestic at least, there is a very healthy demand scenario for laminates.
Okay. Lastly, on the BIS norm implementation, anything that you've seen on the ground? I know these are too early days, but I mean, you think that when is the time that you think maybe the imported inventory gets utilized and things? If you could share some insights on what is the state of the industry in terms of giving the licenses to international companies and all, if you could.
I think BIS, it is too early to reply, very frankly. Yes, even for smaller guys, they have permitted till, I think, August, and they are not permitting anybody abroad till now. In Nepal, yes, they have allowed one or two companies. They have given BIS permission. I really see that, yes, there is a positive notion as far as plywood or MDF, both are concerned. Yes, it will take some more time to really affect the market in India.
Sure.
I really believe that this time, BIS and even the Commerce Ministry is very strong, and they are very decisive about protecting Indian industry as a whole. I believe that, yes, they will certainly see to it that Indian industry benefits out of it.
Sure. Best wishes, sir. Thank you.
Thank you. Participants, you may please press star and one to ask questions. The next question is from the line of Ritesh Shah from Investec. Please go ahead.
Hi, Ritesh.
Hi, sir. Thank you so much for the opportunity. Sir, my first question is on the distribution side. Can you highlight where our distributor leader count is, how it has improved over the last one year? A related question over here is, are we looking to rejig or have we already rejigged our CDC RDC network to improve supply chain optimization? That is the first question.
Okay. As far as supply chain is concerned, you see, from the day GST came in, we were very quick to assess what changes are required. Accordingly, though not much, not very big, but yes, some changes have been done. As far as you asked, only for supply chain, isn't it?
Yes, sir. My question was basically, we have, I think, a CDC at Joka, and we had some RDC. Have there been any changes over the last year or two?
Okay. Let's talk about laminate. I will ask Keshav Bajanka to reply. Yeah.
Yeah. With regard to laminate, I think you're absolutely correct. We have a CDC at our Joka facility, and we have RDCs located in India. We have opened two new RDCs, and we are constantly looking to improve our service time to the market. Although there are no significant changes that are taking place at this current point in time, the objective is always to provide the best possible service to the customer. We are always exploring the same.
Right. Keshav, would you like to highlight any other initiatives specifically on laminates? I was just looking at the Century EU Shop Expansion Solutions Initiative. Anything on the distribution basically which can actually help on laminates going forward or other things?
Expansion, number of initiatives. If you look at in laminates, we have greater GTM. We have increased our sales team to include a number of team members who will focus exclusively on specifications. I think that these, coupled with new digital tools that we are adding to our portfolio, coupled with a new catalog and a far better and expanded range, should help us in improving our position in laminates and domestic in particular. For exports, like I've already said, with the larger sizes, we have come up with a number of product categories for markets where we were never present. All of these put together should help with laminates.
Specifically for exports, do we have any firm order book right now?
Yes. We have a substantial order book. In fact, I'm very happy to share that last month was the highest turnover that the Budni plant has ever done for laminate. I think we are on the right trajectory. We will see improvements in laminates exports on account of the new capacities over the course of the current year.
That's great. How confident are we on laminates for the local sales?
I think laminates, a number of things that we have tried out have not panned out as we had expected. There are a number of initiatives that are showing some traction on the ground. With a change in leadership and with a very senior and experienced sales professional coming in as the CEO of laminates, I think that there will be further growth impetus that comes out in the domestic laminate space.
Right. Sorry, just to stretch this a bit, but is there anything specific that we are trying different locally into laminates?
Yes. Like I said, we have already increased our sales footprint substantially. We have improved our range and our catalog. There are a number of GTM changes that we have brought about. Once the go-to-market changes, it brings inherent advantages alongside the same, provided it is implemented well. I think all of these are going to lead to a higher share for us in the domestic market. We should recover the position that we have lost over the course of the past couple of years.
Sure. This is very helpful. Just last question.
Thank you.
Thank you. Again, a question for Keshav. You indicated in a couple of prior questions that we are hopeful for MDF pricing to move up, but we have not given any timeline to it. You did indicate that the growth is at around 20%. Would you like to put some numbers on what is the demand and supply at the country level right now? Any capacity additions that you foresee at the industry level that you are aware of? If you could just flag that, that would be quite useful. Thank you so much.
The reason that I try not to give guidance is the same as every time I've given guidance in the past, I've been wrong. Having said that, I think that there is overcapacity in the market. As you know, a substantial amount of capacity has been added by ourselves, by Green, by Action, by all of the organized tiers. Even some of the unorganized tiers have come in with continuous line presses. Because of that, there is still a capacity position. However, like you said, the demand growth has been sustained and it has been strong. BIS has been implemented. It should lead to a greater share of domestic production as a part of the overall domestic demand. It should play out. Again, it is difficult for me to give you a time span or give you a percentage increase.
It is very easy to say that it will increase, but I cannot say that it will increase by 5% in Q3 and 6% in Q4 and so on and so forth. Because to be honest, we have no clarity on that.
Fantastic. Thank you so much for the answers. All the very best. Thank you.
Thank you.
Thank you. We'll take the next question from the line of Rahul Agarwal from IKIGAI Asset. Please go ahead.
Hi. Very good afternoon, sir.
Hi. Hi, Rahul.
Hi, sir.
Sir, two questions. I think both of them have been discussed. Just wanted to understand a different perspective. More from a longer term, I understand you've given the guidance in the presentation. Just let's say, if we think about three to four years, right, the company is essentially now peaking out on CapEx, peaking out on debt as well. Most of the CapEx should now be complete, let's say, by March 2026. If we take a three to four-year view, would you like to share and make us understand, maybe on a consol basis or segment-wise, whatever is comfortable, in terms of where should the company stand in terms of peak revenues, peak EBITDA, steady state? What are you looking at internally if there is a plan? That is the first question.
Second was, on the net working capital, I think the cycle has expanded, as Keshav explained, because of some inventory things. Just wanted to know if you could quantify how much of the inventory reduction we should expect, let's say, by March of 2026, if that's the balance sheet, should we expect it to completely come back? If you could quantify that. That's all, sir. Thank you.
I think that, hi Rahul, I think that going forward, like you rightly put it, the peak of the current CapEx is likely to be over by FY 2026. There will be some additions that we will plan in various units and so on and so forth going forward. However, post that, I think that the balance sheet will strengthen substantially. We will be retaining debt and so on and so forth unless we go for new projects, which will depend, of course, on capacity utilization. Having said that, we have given a guidance of INR 12,000 crore turnover by FY 2031. I think we are very well on line for the same. Today, all our units put together, I think peak turnover would not exceed INR 7,000-7,500 crore. I think that we will need to invest over the course of the next few years to reach that INR 12,000 crore target.
That we will have to plan, play by the year and plan as and when capacity utilization keeps increasing and we keep gaining market share. For the working capital cycle, you're absolutely correct. Our working capital cycle has expanded due to certain calls that we have taken in inventory, particularly for MDF. I think going forward, like Sumanth has already hinted, that raw deal price increases in MDF have, I would say, peaked out, and they are starting to normalize again. Going forward, I'm hopeful that over the course of the current year, we will reduce inventory days by close to 10 days.
Perfect, Keshav. Thank you so much, and all the best for the year.
Thank you so much.
Thank you. The next question is from Souvik Mohanty from Nuvama Wealth Management Limited. Please go ahead.
Hello, sir.
Hi. Yeah.
Hi, sir. Same here. You're from Nuwama. Just a couple of questions from my end. We've been seeing a lot of times on the raw material collection taking place. Just wanted to take a view in terms of what % of raw material prices can ease in FY2026 and FY2027. Some sense there could be helpful.
Hi. I think that, again, it's very difficult to say. I think that the peak of raw material prices, particularly in terms of timber for MDF and particle board, is behind us, but predicting this is difficult. I think that as new supply hits because it's simple and logical. When the price was INR 2-INR 2.5, at that point, farmers stopped doing agroforestry. Prices went up to INR 7. The quantum of agroforestry taking place increased substantially. It will play out at equilibrium, and I think prices should go down, but giving a timeframe on that is extremely difficult.
Understood. Secondly, on the MDF front, although you said that there is currently an oversupply situation, and while we may agree FY 2026, we may not see a lot of capacity additions, we are hearing of some new players entering in FY 2027. Would you be able to suggest to us what sort of a capacity addition is taking place in FY 2027, and how much is the oversupply situation currently according to you? In % terms would also be helpful.
I think there are one or two new capacities that have been announced. As of now, I don't have a clear sense of what is the total quantum of addition. However, like I said, demand is increasing by 20% year on year. The current inventory levels, the current capacity levels, I think that towards the end of the year, the industry should be at a far higher capacity utilization than what it was as of last year. Going forward, I don't think that the quantum of capacity that is coming in is going to lead to a further oversupply situation. That is based on current data that we have.
So still, we would be at around 15-20% oversupply at this point of time?
Yes.
On the particle board front, in case I may, you have given margin guidance on the particle board side. How is your utilization likely to go up? Any sense there that what could be the first-year operating rate at, and what level do we plan to break even?
You see, in particle board, once the new capacity starts, we will have to shut down the old capacity. Like I've already explained, the new capacity gives us far more economies of scale, gives us far lower cost of production, and so on and so forth. I think in H2, we should be at 50% capacity utilization of the capacity of the new plant. I think that gives us a bit of a sense. Next year, the objective will be to increase capacity utilization to substantially higher.
Break-even would be at?
I think break-even would be achieved at 60% plus.
Understood. Thanks. Thanks, Rahul team, and all the best, Keshav. Thanks.
Thank you.
Thank you. The next question is from Shivkumar Prajapati from Ambit Investment Advisors. Please go ahead.
Hi, sir. Thanks for having my question.
Hi, Shivkumar Prajapati. Yeah. Hi.
[Audio Distortion] My question is on the furniture and fitting segment that we have planned to enter.
Your voice is not clear. I'm sorry, but I can't hear you clearly.
Sir, there is a lot of background noise from your line. Please use your handset to ask questions.
[Audio Distortion] Am I audible now? Is it clear now?
No, not clear.
It is still not clear.
It's not clear.
Just allow me a second. Hello?
Yes. Yes.
Yeah. Thanks. [Audio over lappinng]
Please continue.
Sorry for the inconvenience. My question was on the furniture and fitting segment that we have planned to enter. Could you please share some more details regarding the same, like what are our strategies and what products we are trying to enter, and what are the market segments that we'll try to target, and some more insight?
I think if you look at the history of Century Plyboards, we are a very prudent company. Such decisions take a long time for us. Currently, we are in the process of exploring. We do not have concrete plans for exactly how we will enter, exactly which space we are going to enter, which products, and the manner of entry. We will keep you updated as time progresses. For the time being, we are in exploration mode, but we will take some time. Our process is quite intense, and we will deep dive on the same, and then we will come to a conclusion.
Sure, sir. Thank you.
Thank you. The next question is from the line of Utkarsh Nopany from BOB Capital Markets Limited. Please go ahead.
Yeah. Hi.
Hi, Utkarsh.
Yeah. Hi, sir. My first question is for the MDF segment. Two listed players have recently indicated that they have taken a price cut of 4-5% in April month. I just wanted to know whether we have also taken any price cut in the current June quarter.
We have taken no price cuts. There are schemes that we give into the market periodically. Typically, if you look at it, Q1 is not a great quarter for MDF. It might be that certain schemes have been given out in the market, but there are no rate cuts whatsoever.
Okay. Sir, second question is for your particle board segment. We have seen a sharp decline in the volume in the past two-quarter period, and your margin has also come under significant pressure. Can you please help us understand what is the reason for that?
You see, cost has increased substantially. Timber prices have increased, which you very well know. Because of that, servicing a number of accounts does not make sense to us anymore. The number of accounts we are servicing currently, or we have the capability to service with the multiplex press, has reduced. Going forward with the new capacity, like I have mentioned again, and with the different economics as far as cost of production goes, we will be increasing our market share. In the new capacity, we are also going to be catering to the 8x4 market. As you know, 8x4 is the predominant size in India as far as MDF, plywood, and laminates. That size, we were never in for particle board because our press was a 9x6 press. With the quantity line, we can manufacture 8x4.
It will be a different segment where we are absent from today. Considering all of these factors, going forward, I think there is ample scope for volume growth in particle board.
Okay. Sir, lastly, on the CapEx side, can you please help us understand the reason for upward revision in our MDF and particle board project costs?
I think when the projects were envisioned, the cost structures were quite different. As you know, in the interim, prices of pretty much all commodities and all raw materials, whether it's steel, cement, whether it's anything else, have gone up substantially. For us, the increase has not been so much in, I think, the two, three aspects that led to it are higher cost of basic building materials. Secondly, there has been an upward revision in the dollar and the euro, and most of our machinery has been bought in these currencies. Thirdly, normally, we expect that we complete our plants well within guidance. This time, we have completed it just above guidance. That means that any savings that come due to a lower time, due to a lower setup time, that hasn't been there.
Okay. Sir, for MDF, cost has gone up from INR 600 crore to INR 730 crore. We already commissioned this project in the last March quarter. Is this increase in cost related to the brownfield expansion, or is it related to our earlier project only?
No, no. It is only the brownfield. Sorry, it is only related to the greenfield in Andhra Pradesh.
Okay. It is not covering the brownfield expansion cost?
The brownfield expansion was done earlier. That is the separate line item.
No, sir. What I wanted to understand is that we were looking to do some line dimension work for our MDF project in Andhra Pradesh to increase our capacity. So it does not include that cost from INR 600 crore to INR 730 crore?
No, it doesn't. The machinery has already been ordered. The cost of setting it up, I mean, there will be some cost in terms of manpower and so on and so forth. Other than that, the machinery cost is very well included in the setup.
Okay. Thanks a lot, sir.
Thank you.
Thank you. A reminder to all the participants that you may please press star and one to ask questions. We'll take the next question from the line of Tanmaiy Mohta from Locus Investment Group. Please go ahead.
Hi, Tanmaiy.
Hi. Actually, there was some confusion. I just wanted to ask you if you could mention your capacities amongst your four divisions so it helps give us a clear idea of what capacity is on board and what is yet to come. The second thing is regarding your debt levels. You said that they are peaked out. If you quantify any debt repayment you will have, say, over 2026 and 2027, that will help us.
You are looking for capacity on each item. Plywood level is pending?
Yeah. Yeah. The existing capacity and what's coming up, and your debt repayment schedule.
Okay. So in plywood, we have a capacity of 340,000 cubic meters, and we will be adding about 48,000 or 50,000 cubic meters in the year. Next year, we'll be again adding up about 48,000-50,000 cubic meters next year also. In two years, maybe about 100,000 cubic meters will be added in plywood. In laminate, Joka, we have capacity of 87,000, 70,000 sheets. Okay. Budni, you can ask. Budni capacity is 880,000 sheets. 880,000 sheets, yeah. MDF, Hoshiarpur, is 313,500 cubic meters. Budni is 214,500 cubic meters. You want to know the capacity utilization also?
No, utilization is fine. We can derive that from the production price.
Okay.
Thank you. Participants, you may please press star and one to ask questions. The next question is from the line of Keshav Lahoti from HDFC Securities. Please go ahead.
Hi.
Hi.
Thank you for the follow-up. This year, you said 48,000-50,000 addition in ply. It is through de-bottlenecking entirely?
Yeah. Through some extra capacity within the existing plants and some de-bottlenecking, yeah.
Understood.
This is a continuous process. You have seen it in Century Plyboards from the very beginning. In the existing plants, we have been creating capacities, and we have gone even doubled the capacity within the plant, actually, in two years.
Yes, sir. I agree.
In FY27, you're not factoring in de-bottlenecking because Hoshiarpur will be coming that year also? Yeah. In that year, internal capacity planning we have not done as yet, but we can be sure that, yes, there will be some capacity addition in next year also, in FY27 also, in the existing plant also. Yes, it will be there. That planning we have not done because that actually happens. It's a continuous rolling thing, kind of a thing.
Very good.
You do not require much of a planning for that. Wherever we see a possibility, we just go ahead and do it.
Understood. Got it. Laminates, earlier, we were expecting the AP plant to break even in Q2 FY2027. Is that on track, or possibly that is delayed?
No. I think it is pretty much on track.
Okay. That is good.
Regarding laminates, I think everybody seems to be a little bit this thing. I must tell you that in the last about two years' time, we have changed a lot of things, and all the experiments, etc., have now finished. As you have seen in panel plywood also, earlier, we were doing so many experiments, and all those experiments ceased in the beginning of this year. This year, we have done a good job, I think. In laminate also, I personally believe that all the experiments have ceased. The management also internally, manpower also, everything has now really settled down well. I really expect this year to be much, much better than all other years. Yeah.
That is good. Normally, in laminates, earlier, we used to do a 15% kind of a margin also. Are these days should we expect in the next two or three years, or possibly how should we expect?
No. This year, I think we are looking at 10%. I'm sure by next year, we will be confident enough to tell you. Yes, I cannot and I should not tell you what we will be able to do next year. Yeah.
No. You're correct. Going forward, MDF side, we will strive to achieve higher and higher EBITDA margins. This year, we have given guidance. Next year, of course, the endeavor will be to do even better.
Got it. What will be the consolidated margin for this year? Standalone is 8-10%. Console would be how much? What sort of utilization are you expecting for the new laminates plant in this year?
Like we have said, we are going to look at high, similarly console margins toward H2O this year. In capacity utilization, we will have to get back to you.
Got it. That is helpful. Okay. Thank you so much. That's it.
Thank you. The next question is from Rishab Bothra from Anand Rathi Shares and Stock Brokers Institutional Equities. Please go ahead.
Hi, Rishabh.
Hi. Hi, sir. Just wanted to understand the guidance which you mentioned, sales growth percentage. Is it for volume or value?
It's for value.
It's for value. Okay. Thanks a lot, sir.
Yes. Thank you.
Thank you. Participants, you may press star and one to ask questions. The next question is from Tanmaiy Mohta from Locus Investment Group. Please go ahead.
Yeah. So this is.
Hi, Tanmay. Welcome back.
Yeah. Just two bookkeeping questions. One was you mentioned that you're hiring more people in your sales team, etc. Just wanted to understand your employee cost going forward. Do you think it's going to be at a similar level? The second was regarding my previous question. It's sort of been answered regarding the debt repayment schedule.
Employee cost definitely will go down now because we have done the bulk of hiring. Going forward, with increasing scale, we will see a lower percentage of employee cost. With regards to debt, I think we are at peak debt, like I had already mentioned. Over the course of the next two years, we will be repaying the majority of debt. I think we will be at very, very low long-term debt by the end of fiscal year 2027.
Thank you. Thank you so much.
Thanks.
Thank you. Participants, you may please press star and one to ask questions. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Mr. Sanjay Agrawal for closing comments. Thank you, and over to you, sir.
Thank you. Thank you, ladies and gentlemen. It was great talking to you, connecting to you. Looking forward to a great Q1, sorry, Q2. We will be back with great results. Q1, huh? Q1. I'm getting confused. But yes, looking forward to a great Q1 and getting back to you with better results as expected by you. Thank you.
Thank you, members of the management. On behalf of SKP Securities, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.