Ladies and gentlemen, good day and welcome to the Greenlam Industries Limited Q4 and FY25 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company as of the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Saurabh Mittal, Managing Director and CEO. Thank you, and over to you, sir.
Thank you. Good afternoon, everyone. On behalf of Greenlam Industries, I would like to extend a very warm welcome to all of you joining us today. We are pleased to have you on this call to discuss the performance and business update of Q4, FY2025, and FY2025. I'm joined today by our CFO, Ashok Sharma, Samarth Agarwal from our Finance Team, and the SGA team, our Investor Relations Advisor. I hope you've had the opportunity to go through our financial results and investor presentations, which are available on the stock exchanges as well as our Company's website. I'll give you a slight update on our business performance for this year and for the quarter. At FY2025, we closed with a profit of INR 2,569 crore, showing a growth of about 11% on a year-on-year basis.
We had projected the growth to be about 18% to 20%, but growth really slowed down for us in the second half of the year. This was largely driven by steady performance from the Laminate s business and complemented by the addition of new products in our portfolio. I must also say the growth here was done with complete discipline on pricing. We managed to maintain pricing and improve value mix also. The Net Working Capital cycle also reduced by seven days in FY 2025. Letters were also down by one or two days. The profitability was impacted in FY 2025 and Q4 FY 2025, largely on account of increased costs, primarily which was stemming from our initiatives on the expansion.
As many of you know, we commissioned three new plants in two locations: a Plywood Factory in Tamil Nadu, a Laminate Plant in Andhra Pradesh, and a Particle Board Plant in Andhra Pradesh over the last two financial years. With this, we've nearly capitalized about INR 1,300 crore of capital, and this has increased our depreciation costs, our interest costs. We've also seen an increase in costs on salaries and marketing and sales as we've had to build teams for Plywood and for Particle Board. That said, this is a strategic investment built for long term. As we ramp up utilization across these units over the next three years, we see a significant improvement in revenues and profitability. With the investments we've already made, we can generate a revenue of about INR 4,000-5,500 crore over the next three years.
We do not need more capacities to bring up these revenues, which we hope we can achieve over the next three to four years. On the segment-wise updates, in Laminate s, we have done well despite the demand challenges. Domestic showed a slight growth. Exports grew reasonably okay. Our sense is we have won market share on the domestic front as well as the export front, considering the feedback we have from the markets. On the international front, last year, despite our growth, we also had significant expansions in new geographies, and we opened offices and companies in Spain and Germany. We expanded our warehouse in Italy. We also added a warehouse in Malaysia. We also added a few team members in various parts of Africa. Significant development efforts have been made to build more market size and more market share, which I think will reflect over the next two years.
The Veneer business, we had a small degrowth last year. In flooring, we turned EBITDA positive in H1, but H2 was a bit slow on the Flooring business. In the Door business, H2 we did well. We became EBITDA positive in the door business. For the full year, although on a small base, the business grew 40% plus. Plywood too, we nearly doubled our revenues. So we hit INR 120 crore in FY2025, which is our second year of operation, actually one and a half years of operation. We have got good feedback from the market in terms of our product quality and secondary working. We are looking at adding a few more states in FY2026. On the Chipboard front, the plant was commissioned successfully in January 2025. The plain board production has stabilized, and most of the machines have been tested to near full capacity.
The demand environment and dealer response has also been quite encouraging. We're hoping to achieve about 30-40% utilization in FY2026. On the way forward, on the CapEx front, as you are aware, most of the CapEx we had announced have been completed. We have some balancing CapEx , some pending civil works, finishing CapEx , which still remains, which will be done over FY2026. Really, from a Company and from a Team perspective, with major expansions behind us, all factories up and running, product quality is established in the market. Our focus is on execution and building revenues now. Clearly, I think FY2026 will be a Year of Execution for our Company. With improved revenues and profitability, we also hope that our Balance Sheet will get strengthened over a period of time.
Our debt has peaked in FY 2025, and going forward, we hope to gradually reduce it with improved cash flows. That is it from my side, and I'll be happy to take your questions, post Ashok's feedback or announcements on the financial performance. I'll hand over the call to Ashok now. Ashok, over to you.
Thank you, sir. Good afternoon, friends. I'll take you through the financial performance. For the quarter four, on a consolidated basis, net revenue grew by 9.2% on year-on-year basis and grew by 13.2% on sequential basis to INR 6,820,000,000 in Q4 FY2025 as compared to INR 6,240,000,000 in Q4 last year. Gross margin degrew by 230 basis points to 50.7% in Q4 from 53% in Q4 last year. On a sequential basis, Gross Margin degrew by 430 basis points. Gross margin in absolute term grew by 4.5% to INR 3,460,000,000 as compared to INR 3,310,000,000 quarter four last year. EBITDA Margin was down by 400 basis points at 9.4% in quarter four as compared to 13.4% in quarter four last year. On a sequential basis, EBITDA Margin degrew by 120 basis points.
EBITDA in absolute term degrew by 23% to INR 640 million as compared to INR 835 million in Q4 last year. This is due to lower Gross Profits and higher operating cost of Phipboard, which we have started towards the end of June this year. Sorry, towards the end of January this year. Net Profit for the quarter stood at INR 15 million as against INR 408 million in Q4 last year, mainly on account of interest and depreciation of chipboard and lower EBITDA margin. I'll move on to the FY2025. Consolidated net revenue for the FY2025 grew by 11.4% and stood at INR 2,569 crore in comparison to INR 2,306 crore in FY2024. Gross margin was down by 50 basis points to 52.3% in FY2025 from 52.8% in FY2024. Gross margin in absolute term grew by 10.2% and stood at INR 13,430 crore as compared to INR 12,190 million in FY2024.
EBITDA margin was down by 210 basis points at 10.7% in FY 2025 from 12.8% in FY 2024. EBITDA in absolute term also degrew by 6.8% to INR 275 crore as compared to INR 295 crore in FY 2024. Net profit was down by 50% to INR 68.3 crore as against INR 138 crore last year. Moving on to Segmental Performance, Laminate Revenue grew by 7.2% on year-on-year basis and grew by 10.7% sequentially to INR 575 crore in Q4 from INR 537 crore in Q4 last year. Domestic Laminate revenue grew by 2.6% on year-on-year basis and grew by 7% on sequentially basis in value term. International Laminate Revenue grew by 11.7% on year-on-year basis and by 13.9% on a sequential basis in value term. EBITDA margin stood at 13.7%, a degrowth of 290 basis points on year-on-year basis, and growth of 50 basis points on quarter-on-quarter basis.
Production volume for Laminate was at 4.43 million sheets, with a utilization level of 72% in this quarter. Sales volume for the quarter was 4.93 million sheets, a degrowth of 5.7% on each. Our average realization for the quarter was INR 1,113 per sheet, up by 13% on year-on-year basis and 6% sequentially. Move on to the annual performance of Laminate . Revenue grew by 9.2% to INR 2,226 crore in FY2025 from INR 2,040 crore in FY2024. Domestic Laminate Revenue grew by 4% in value terms. International Laminate Revenue grew by 14.2% in value terms. EBITDA Margin stood at 13.9%, a degrowth of 210 basis points from last year. Production volume was at 19.99 million sheets, with a utilization level of 82%. Sales volume for this year stood at 19.74 million sheets, with volume growth of 4.1%. Our average realization for this year was INR 1,085 per sheet.
Now I'll move on to another segment, Veneer and Allied Segment, which comprises Decorative Veneer, Engineered Doors, and Engineered Goods. First, in the Decorative Veneer business, we grew by 4.4% on year-on-year basis, and however, it grew by 33.8% on sequential basis to INR 35.2 crore in this quarter from INR 36.8 crore in Q4 last year. Revenue on an annual basis grew by 9.6% to INR 114 crore from INR 126 crore in FY 2024. Sales volume for this quarter stood at 0.4 million sq m and 1.22 million sq m for the full year. Capacity utilization for the quarter four stood at 40%, and for the FY 2025 stood at 31%. Average realization for quarter four was INR 869 per sq m, and for the full year was INR 919 per sq m.
Moving on to Engineered Flooring, Revenue for the Q4 degrew by 9.5% on year-on-year basis and degrew by 14.6% on sequential basis to INR 12.9 crore as against INR 14.3 crore in Q4 last year. Revenue for the full year grew by 8.6%, stood at INR 55.6 crore as against INR 51.2 crore in FY2024. Capacity utilization stood at 12% in this quarter and 13% for the year as before. Moving on to Engineered Doors, Revenue for the quarter four grew by 46.5% on year-on-year basis and grew by 39.1% on a sequential basis and stood at INR 14.2 crore as against INR 9.9 crore in quarter four last year. Revenue for the year grew by 44% to INR 46.1 crore as against INR 32 crore last year. Capacity utilization for the quarter four was at 27%, and for the year, it was 25%.
Moving on to another segment, Plywood and Allied Segment, revenue of Plywood business grew by 46.9% on quarter on quarter and grew by 26.8% on a sequential basis to INR 38.6 crore as against INR 26.3 crore in quarter four last year. Revenue of Plywood for the full year was INR 123 crore, grew by 112% as against INR 57.9 crore in FY 2024. Sales volume for the quarter stood at 1.51 million sq m and 4.83 million sq m for the full year. Capacity utilization for the quarter stood at 31%, and for the whole year was at 26%. Revenue realization for this quarter was INR 250 per sq m, and for the full year, it was INR 249 per sq m. Moving on to the nearest segment, Chipboard and Allied Segment, which was started towards the end of January 2025. Revenue in this quarter stood at INR 5.1 crore.
Sales volume for the quarter stood at 2,395 cubic meters. Production volume was higher, 12,979 cubic meters, with a capacity utilization of 24% on an annualized basis. Average realization for the quarter stood at INR 21,151 per cubic meter. In the current quarter, working capital cycle improved by 12 days to 55 days as compared to 57 days in quarter three this year. Net debt as on March 31 stood at INR 989 crore as against INR 1,012 crore in Q3 this year. Board has declared a final dividend of 40%, that is INR 0.40 per share for a face value of INR 1. That's all from my side. Now I would like to open the floor for the question and answer. Thank you.
Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the line of Keshav Lahoti from HDFC Securities. Please go ahead.
Thank you for the opportunity. Firstly, what is the reason for 450 basis points dipping gross margin for Laminate segment? Is it change in mix or is it a cost increase? How should we read it?
Keshav, it is a mix of price in some segment, and if you see in this quarter, there is a lot of, I will say the stock has been, a lot of sales was more than the production. A lot of material was consumed from the stock. That is also one of the reasons in terms of which the gross margin was slightly lower.
Can you give us a sense about the raw material cost, kraft paper and deco paper? How is it in the market in Q4 and in April and May?
We will share with you. It is mostly stable, but as of now, I'll share with you.
Understood. Got it. Now coming on the particle board business side, we have anticipated INR 875 crore CapEx for this business. Is the CapEx amount increased or decreased, and how much have we already incurred?
It will be in that same range as Saurabh has also mentioned that it's still some of the work is going on. We have incurred close to around INR 775 crore in the last year, and some of the work is going on, but it will be within the INR 875 crore.
Got it. What part of ramp up are you planning and margins in FY2026 and FY 2027?
Ramp up, since this will be the first year, even though our intention is to do a maximum and do the breakeven in this year. Seeing the current scenario and the large capacity which we have created, we presume this year the breakeven may not happen in the Particle Board, and next year the Particle Board breakeven should happen. Around 35%-40% we may reach the capacity utilization in this year, which will be slowly ramped up into the next year and after that. We have earlier also told that after the completion of three years or in the fourth year, we should reach the optimum level of the capacity utilization.
Okay. Normally the company used to guide optimum utilization, the margin would be 24%. Looking at how the particle board industry has changed in the last few quarters, where in fact your peer who has a small particle board business is making a 5% margin, and he is guiding 15% kind of a margin in a steady state of business level. Do you think 24% now looks sort of unachievable? Which amounts to read at the number?
It really depends, Keshav, on the raw material cost and the product mix and the kind of equipment you have, which determines your cost of production, your consumption of power, your waste of materials. I think if you talk about a three-year time frame, traditionally this has happened in the industry. If RM costs are extremely high, then obviously in that year and that quarter, we probably will have pressure. I'm not so sure how this will pan out, but clearly as far as we are concerned, the product quality feedback is very good for the market. Our plane board production has stabilized very well, and we are moving in a certain direction. Hard to give a figure at this moment. I think it will probably be some more time before we can kind of recalibrate this and come back with a figure.
Okay. Got it. And Laminate margin guidance for this year?
Margin guidance, yes. So Laminate , last year also we achieved around 13.9%-14% of the margin in terms of that. We believe that it should be in the range of close to around 14%-15%.
Got it. One last question from my side. Particle board, sorry, ply, we are expecting breakeven in which quarter of this year?
Ply, my sense is for the full year basis, we probably will be very close to breakeven.
Got it. That is helpful. Thank you so much, sir.
Thank you.
Before we move to the next question, a reminder to the participants to ask a question. You may press star and one. Next question is from the line of Sneha Talreja from Nuvama. Please go ahead.
Hi sir, good afternoon. Thanks a lot for the opportunity. Sir, I just wanted to understand the last time we had breakeven in the floors business, and this time we are seeing that in the doors business while floors has gone back to loss-making business. What is happening with these new segments like veneer, floors, doors? What's the progress are we seeing in these businesses, and is there any strategy of turnaround that we have come up with?
We are a strategy we are already working on. Floor, like I said earlier, in the second half of the year, the market kind of slowed down, and we had less business. Door, we have a good backlog of orders as we talk. I think we look pretty okay on the door business. From a strategy point, I think it's just execution, and we are at it. Obviously, on an annualized basis, the losses in this vertical have reduced, and nothing specific actually. We're on a routine business here.
The second part is on the particle board side. What are the reasons for delay in the breakeven side? If I heard it correctly, you have said that this year, of course, there's going to be a breakeven. Our utilization rate is about 35%-40%. This next year now, we'll be looking at a closer breakeven, which I believe is a slightly delayed breakeven versus our initial commentary. What are the reasons here, and is there any DMS on particle board as well which has come up?
We said, I'm not sure if we didn't speak clearly or you misunderstood. We said this year, breakeven seems hard. We are looking at a 30%-40% kind of utilization for this year. The way we see things now, I think next year, FY 2027, we should be able to breakeven. Obviously, profitability will come on a full capacity, which probably will happen over a three to four-year period. I think this is what we said. I hope we are clear on that. Unless I should be wrong, I apologize. On the BIS part, yes. QCO has got implemented in the Particle Board business also.
Despite that, we expected slow ramp up of this year at about 30% to 40% utilization and breakeven going up to next year is what I wanted to understand. Because our initial thought was that.
No, we're not saying slow ramp up. On a full capacity, the chipboard plant can be like a 720-750 kind of run rate. And even at a 30% to 40% utilization means you're talking of what, 240-250 kind of a revenue. If you see the players in the market already, I'm not sure if anybody is at that figure in the industry as one company. I wouldn't say slow because sales just started in the month of March. It is like one full year. Because the model is largely Laminate d boards and not plain boards, although we'll be selling plain boards also in the initial period. It may not be right to say slow, but anyway, it is what it is, Sneha.
Understood, sir. Just wanted to get a sense on the raw material pricing for particle board. How is it at this point of time with respect to timber pricing, and how do you expect going forward? Will that be another level for you to improve your margins?
Currently, whatever we're talking to you all is on the cost we have for, let's say, Q1. What we know is that there has been a bit of a softening on the wood costs, and that might impact us in Q2. We still want to have a full year of operation to see if there are any impacts of seasonality and how costs kind of move. Yes, we don't expect costs to go up. The feedback is that costs are gradually coming down. That's the feedback.
Lastly, if I may, on the realization front, this particular quarter, we have seen a sharp improvement in realization, especially on the export side. Is that related to the freight rates going up? If that's the case, when do we see those freight rates normalizing, and is that also impacting sales in any manner?
That's not reflective of freight sales. Despite our volumes coming down, it's also the mix of orders, and we also opened a larger warehouse in Italy. There are some European sales there. It's just value mix improvement. It's not related to freight costs going up. Freight costs are not going up as we see things now. It's gradually softening, unless there's a specific route or something of that sort. In general, we are not seeing freight costs going up in our export business.
That was quite helpful. Thanks. Thanks a lot and all the best.
Thank you. Next question is from the line of Rudraak Shahija from ithought PMS. Please go ahead.
Yeah, thanks for the opportunity, sir. Sir, I wanted to understand the production cost differential between India, U.S.A., and Europe for Laminates.
I don't think we'll be able to provide that at this call. I think it's a conversation you'd have this year for a later point. I don't know if they can also provide that. They can only give you a general feedback on how costs are in these various geographies you are. I'll appreciate it if you have this conversation offline with our team, please.
Yeah, sure, sir. But any general feedback that you could provide?
Generally, like obviously, people costs are higher. Energy costs are higher there. Paper costs, maybe similar, deco paper costs, glass paper. We believe there's a little bit of a difficulty obtaining the right quantity of glass paper in many of these markets. Many glass paper producers have moved to the packaging business. Clearly, production costs will be higher. How much higher, can't quantify at the moment. Generally, cost of production in the Laminate space will be higher in Europe than the U.S. because until now, the industry has only been able to do so much automation. Unlike the chipboard and MDF business, where automation costs are different in India and those geographies, in Laminate s, the cost of production is higher in Europe and America.
Got it, sir. In the global Laminate s market, apart from India, which countries are like a serious threat in terms of quality and the prices that Indian players can match in the global market?
In the international markets, our competition is with the regional producers in those geographies. There are producers in America, in Europe, in Southeast Asia. It's with the local producers there. The Chinese producers are also present in the market, but their presence is mostly in the lower end of the market. I think from a product perspective, we, as Greenlam Industries, and in general, Indian producers stand in a very good position for the quality they offer, for the certifications they have, and at the price point they offer. If you see at that point, are there many comparable regions or countries, the answer would be no.
Thanks for the clarification, sir. Thank you.
Thank you. Participants, to join the question queue, you may press star and one. Next question is from the line of Udit Gajiwala from Yes Securities. Please go ahead.
Yeah, hi sir. Just a couple of questions. One is on the domestic Laminates. So overall, going ahead, how do you see your Laminate s volume growing and if you could split it into exports and domestic?
Yeah. This year, the overall Laminate value goes up by 4%, and it was 14%. In terms of quantity value, it was like 2.8% growth in domestic and 5.8% in export. Overall growth was 4% growth in the volume terms. Going forward, we believe that this should be better in this year because in the last year, as sir has also mentioned, that especially as to the growth was slowed down, we believe that in this year, we will see a better growth in comparison to the previous year.
Understood. So it will be more export-driven or domestic?
It will be both. We believe it should be both. Both segments should grow. Last year, the export growth was slightly better than the domestic, but we believe in this year, both segments should grow.
Understood, sir. Actually, lastly, sir, let us know that if this is a big debt, then what kind of a debt reduction we should expect in the coming two years?
If you see in this year, there is still some more amount of CapEx is pending on account of projects. Debt reduction in this year may not be very large exchange, but we're hopeful that from next year onwards, when most of the CapEx is being done, the entire cash will be used to bring down the debt. This year, we are expecting in the range of around INR 950 crore the debt. However, from next year onwards, it should keep coming down.
Got it, sir. That was helpful. Thank you.
Thank you.
Thank you. Participants, if you have questions, you may press star and one. Next question is from the line of Ritech Shah from Investec. Please proceed.
Yeah, hi sir. Two bits of questions. First is if you could indicate some pricing trends specifically for decor paper and kraft paper. Is there any incremental cost inflation that we are looking at in forthcoming quarters? That's the first question.
Okay. So in terms of decor paper, we are not expecting any price hike in the foreign currency term. Obviously, whatever changes happening in dollar or euro, that may be reflected on the cost. In terms of kraft paper, we use various grades of kraft paper. So these prices are a bit fluctuating. It goes up and it comes down also, but nothing specific is expected in this quarter.
Sure. Sir, my second question was on distribution. Just wanted to understand. I think there's a lot of local competition which is actually coming up in Laminate s. Our distribution has been pretty robust historically. To what I picked up last, we have like 17 RDCs which are there. Has there been any changes over here? Anything on the distribution side? If you can speak about, say, fill rates, service levels will be quite great.
There have not been changes, and we do not have 17 RDCs. We have 12 RDCs, if I remember right away. There have not been many changes on the RDCs front, but clearly, our reach in the market has increased across tier one, tier two, tier three, number of counters. I think that is clearly happening. Now, as you know, we have products across price points, starting from the liner category to the mid price to 1 millimeter. We also have premium of 1 millimeter, 1.25, 1.5. I think the distribution, the expansion of the distribution and strengthening of the network is a continuous process. I think that is going on. No major changes on the RDCs front, but the secondary push is continuous.
Would you like to give some data points on how many distributors data that we have? And if we have any targets in place to, how should we look at this number over the next two years?
We cannot give you a data point at the moment on what the target will be in the next two years. I think that's something we cannot give. We can share separately on how many distributors we have. We already mentioned publicly to about 30,000 dealers, retailers, distributors. Very specifically, where will the reach happen in two years? Obviously, we have internal targets. We will not be able to share that piece.
No worries. Sir, just last question. I think, have we already implemented SFA and DMS? Was it done sometime this year?
We implemented DMS about, if I remember clearly, three years ago. SFA has also been there for about three years maybe. Yeah. Three, four years maybe.
Okay. The benefits of that are already there. We are already reaping the benefits.
It is still work in progress, to be honest. Yeah.
Sure. Would it be possible for you to comment on whether it has been launched on a pan-India basis, or is it only in certain regions that it has been implemented?
It's on the pan-India basis.
Sure. This was helpful. Thank you so much. I'll join back with you. Thank you.
Thank you. Before we move to the next question, a reminder to the participants to ask a question. You may press star and one. Next question is from the line of Bhavin Rupani from Investec. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity. My first question is related to particle board. Sir, at what utilization do you expect the plant to break even?
Bhavin, it is depending upon the product mix in between 45%, near about 45%.
So somewhere in Q1 next year is what we're expecting. Is that a right understanding, sir?
Should be in the next year.
All right.
Also, sir.
Got it. Also, new plant of one of our competitors is expected to be commissioned in South India soon. Do we expect this should lead to some demand-supply imbalance for chipboard raw material? Hence, it should impact the prices going ahead. What is your sense on that, sir?
I'll say much on it. Clearly, if one more capacity does come up, there would be more competition in the market. Will it impact raw material costs or not? I'm not so sure on that as yet.
Got it. Next is on Plywood. As you have specified earlier, we are chasing more of premium over mid and mass category. That is the reason why our utilizations are very, very low since the last two years. I just wanted to understand at what point in time we decide or we even think of going into mid and mass category. Is there any situation wherein you will think, "No, now I'll move to mass, and we won't be focusing more on premium"?
Currently, as you saw last year, we've doubled our revenues in about one and a half years of operations. One year nine months, to be more precise. That's INR 1,200,000,000. Now we're adding a few more states. Just to be clear, we haven't even gone pan-India as yet on the segment we are present in. This year, we're adding more states. We still have several more states yet to be added to the premium category. I think currently, as I see things now, I'm not sure that we'll be even going to a mass segment at least for the next two-odd years or two-three years. I think we have enough room in the space we are in, and we are gradually settling our distribution network and building more secondary sales and building more demand in the market.
Got it, sir. Thank you.
Thank you. Participants, if you have any questions, you may press star and one. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on your touchstone telephone. As there are no further questions from the participants, I would now like to hand the conference over to the management for the closing comments.
Yes, sir.
Thank you for your time.
Thank you, everyone.
Thank you so much.
Thank you, sir. On behalf of Greenlam Industries Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.