Ladies and gentlemen, good day. Welcome to Greenlam Industries Limited Q4 FY 2023 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on this conference call. These statements are not the guarantees of future performance and involve risks and uncertainties regarding the current setting. As a reminder, all participant lines will be in the listen-only mode. There is 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 your touch-tone phone. Please note that this conference is being recorded. I hand the conference over to Mr. Saurabh Mittal, Managing Director and Chief Executive Officer, Greenlam Industries Limited. Thank you. I over to you, Mr. Mittal.
Thanks. Good afternoon, everyone. A very, very warm welcome to you all to your Greenlam quarter four earnings call. On the call, I'm joined by Ashok, our CFO, Samar from the finance team, and SGA, our investor relations advisor. To relate, the results and presentations, have been available on the stock exchanges and the company website. I'm hoping that you all have had a chance to look at the results. I'll give you a quick brief on how we see the demand situation in both the domestic and international markets, and then give you an update on where the critics, you know, situation is with the various, you know, endeavors we have, which are ongoing with the new facilities and active action. On the domestic front, we believe the demand is pretty reasonable.
We've been able to grow both in volume and value, in value across categories, versus two, three sequentially, and Q4 of FY 2022. On the domestic market, with the introduction of products across our price points and laminates with the Gujarat factories, you know, takeover, we think now with us having products across various price points, our ability to enter markets or sell, you know, upsell partners to higher products and also fill in the, you know, gaps in the market, I think possibly. We are increasing our focus on adding channel partners, going out to more geographies and introducing new products.
With the introduction of plywoods too, we think, our strength, in the market will only increase with the channel, you know, with the trust becoming more important, partner with the dealers and with the influencers. Otherwise, by and large, throughout the country, you know, we are adding more numbers, and we're adding, more work on ground to be done. On this, on the domestic setting, other noteworthy point would be we think this is from unorganized to organized company, and we see unorganized companies on player getting bigger and more organized and larger brands and better managed companies getting stronger. We see that trend in the laminate space, and even in plywood, we hear that, you know, the mid-size and organized companies are struggling with, you know, markets and profitability and sales, et cetera.
On the international market, we continue to be in the international market as laminate concern. For certain product categories in the international markets, currently we are constrained for capacity. With the Ambur facility, you know, adding this Q2 of this financial year for certain dimensions and for certain markets, you know, that shall kind of move up the numbers with the factory faster. With our facility too, we've added certain products, certain markets, which in the past, we had ignored. We were not able to serve due to capacity restrictions. Overall, in the export market too, we think, we should be looking good in the export market too. Certain markets which were having currency challenges, you know, I think the intensity of the problems has reduced, but there are still some challenges.
By and large, we think, the international business and export business should do well for the organization. That's probably, you know, more like a helicopter view on where the, you know, market trends for the. On the performance update, you know, we surpassed the 2,000 crore milestone in revenue in FY 2022, and we also surpassed 100 crore in after-tax in FY 2022. This is the first time we did as a Greenlam Industries. Across parameters of gross margins, net margins, operating margins, working capital cycle, I think across various operating parameters, we've improved, and we can easily improve in Q4. Losses in the veneer and allied categories have reduced. Margins of the laminate business have expanded.
Likewise, ROCs have also improved to the 24 that we can exceed previous targets of Ambur special Tamil Nadu. On the capital front, the Gujarat facility is more or less stabilized. We are upgrading the facility with the third production line coming to production on May 17th, and we hope that very soon we should bring the plant to maybe 80%-90% utilization level. With the upgraded capacity of Gujarat, the total laminate capacity is now 21 million sheets. This will become about 24.75 approximately, with the addition of the Ambur laminate facility. The plywood plant should start in the month of June 2023. The Ambur plant of laminates should begin commercial production in Q2 of FY 2024.
Both plants should start production towards the end of Q4. From the capacity, creation and expansion, which we are undergoing. Shortly, you know, that's it from my side. Obviously, I'll be happy to answer your queries and questions in the Q&A session. I will now hand over the call to Ashok. Ashok will take you through the financial and operational highlights of the quarter and the year. Ashok, over to you.
Thank you, sir. Good afternoon, sir. I'll take you through the quarterly performance then move on to the annual performance. For the Q4 on a consolidated basis, our net revenue for the quarter grew by 16.2% on year-over-year basis, grew by 6% on sequential basis to INR 534 crores as compared to INR 466 crores in Q4 last year. Gross margin grew by 390 basis points or 48.8% in this quarter from 44.9% in Q4 last year. On a sequential basis too, the gross margin grew by 50 basis points. EBITDA margin was up by 320 basis points, stood at 13.9% in this quarter, as compared to 10.7% in Q4 last year.
On a sequential basis, margin was up by 300 basis points. EBITDA in absolute terms grew by 49% to 74%, INR 74 crore in this quarter, in comparison to INR 50 crore in Q4 last year. Net profit for the quarter stood at INR 46 crore, as against INR 25.7 crore in the Q4 last year. Moving on to annual performance. Consolidated net revenue for the year grew by 18.9% on a year-on-year basis to INR 2,036 crore in comparison to INR 1,773 crore last year. Gross margin was up by 210 basis points to 46.7% from 44.6% last year. Gross margin in absolute term grew by around 25% to INR 947 crore this year as compared to INR 759 crore last year.
EBITDA margin was up by 50 basis points to 11.5% from 11% last year. EBITDA in absolute terms grew by 24.5% to INR 233 crore, as compared to INR 187 crore last year. Net profit grew by 41% and it stood at INR 128 crore in this year, as against INR 90 crore last year. Moving on to segmental performance. First, the laminate. For this quarter, laminate revenue grew by 16% on year-on-year basis, and 7.1% on sequential basis, and it stood at INR 492 crore as compared to INR 424 crore Q4 last year.
Volume growth stood at 16.8% on year-on-year basis, the domestic laminate revenue grew by 11% on year-on-year and 2% on sequential basis. Volume growth stood at 26.7% on year-on-year basis. International laminate revenue grew by 20.9% on year-on-year and 12.2% on sequential basis in value terms. Volume grew by 5.3% on year-on-year basis. EBITDA margin stood at 15.6%, a growth of 270 basis points on year-on-year basis and 320 basis points on sequential basis. Production volume were at 4.55 million sheets at a utilization level of 96%. This volume for the quarter stood at 4.67 million sheets, and our average realization for this quarter was INR 1,008 per sheet.
Moving on to annual performance. Laminate revenue grew by 19% on year-on-year basis to making INR 1,852 crore from INR 1,566 crore last year. Volume grew by 3%. Domestic laminate revenue grew by 25% in value terms, and in volume terms, it grew by 15.6%. International laminate revenue grew by 13.6% in value terms. However, in volume terms, it degrew by 9.3%. EBITDA margin stood at 13.1%, a growth of 40 basis points over last year. Production volume were at 17.40 million sheets and at a utilization level of 99%. This volume for the year stood at 17.04 million sheets, and our average realization for the year was INR 1,038 per sheet.
I'll move on to another segment, decorative veneer and allied segment, which consists of decorative veneers, engineered floors, and engineered doors. In the decorative veneer segment, revenue grew by 6.8% on year-on-year basis. However, it degrew by 4.9% on sequential basis, to INR 42 crore from INR 39.56 crore last year. Volume grew by 8.4% on year-on-year basis. Revenue of decorative veneer business grew by 18% on for the full year to INR 174 crore, in comparison to INR 147 crore in FY 2022. Volume grew by 11%. Sales volume for Q4 stood at 0.32 million CPM.
Yes.
Yes. The previous INR 173 crore is for the entire wood and light business, entire veneer and the light business. Sales volume for the veneer for the quarter stood at 0.32 million square meter, for the year as a whole, it was 1.21 million square meter. Capacity utilization for the quarter was 19%, for the year as a whole was 29%. Average realization for the quarter stood at INR 859 per square meter, for the year stood at INR 877 per square meter. Moving on to engineered wood flooring. Revenue for the engineered wood flooring business de-grew by 20% on year-on-year basis, de-grew by 22% on sequential basis to INR 8.5 crore this quarter, as against INR 10.5 crore in Q4 last year.
For the year, engineered wood flooring business grew by 16.4% to INR 14.7 crore, as against INR 36.7 crore last year. Our capacity utilization was 8.8% in this quarter and 12% for the year as a whole. Moving on to engineered doors. Revenue for the engineered doors business degrew by 8% on year-on-year basis, and degrew by 29% on sequential basis to INR 6.4 crore this quarter, as against INR 6.9 crore quarter four last year. For the year as a whole, engineer door business degrew by 9.4%, INR 24.3 crore, as against INR 26.8 crore last year. Capacity utilization for this quarter was at 16%, and for the year as a whole, it stood at 15%.
Net debt for the quarter in for the quarter ending stood at INR 312 crore, as against INR 148 crore at the end of December 2022. This is on account of project debt, which was drawn in this quarter. Net working capital for this quarter stood at 66 days, and for the year as a whole, it stood at 70 days. That's all from our side. I would now like to open the floor for the question and answer.
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 your telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Please and gentlemen, we will wait for a moment while the question queue forms. We have the first question from the line of Mr. Achal from JM Financial. Please go ahead.
Yeah, good afternoon. Thank you for the opportunity. Congratulations for the great set of numbers. Just couple of clarifications I wanted to check on. A, with respect to the, you know, the gross margin improvement, if you could elaborate a little bit, and specifically, if I look at the EBITDA level improvement, QOQ, quarter-on-quarter, it is fairly large. When the gross margin improvement is 30 bits, the EBITDA margin improvement is two AC. Just wanted to understand, is that entirely due to operating leverage? Is there any write-backs or anything, which we should be aware of, sir?
No, Achal Lohade, there is no write back in terms of that. There are a couple of things. One, the revenue went up from in comparison to last quarter, revenue were up by nearly around 30 crore-32 crore, and gross margin has improved 48.9%, 48.9% to 49.2%. The expense were not gone up in the same proportionate, and some of the expenses, like we did not do in this quarter, and which may happen in this, in the next quarter, like one of the advertisement that which we do, normally every quarter. That is not happened in this quarter. That may happen in next quarter.
Yeah, some of the, what you are seeing, some of the this one, expense may go up in the quarter, but overall trajectory will remain on, towards the, higher EBITDA in comparison to last year what we used.
Understood. Is it possible to quantify, sir, what is the AMP in this quarter in absolute number in comparison to Q2 and Q4 of Q2 FY 2023?
I will come back to you on this.
No problem, sir. The second question I had, with respect to volumes, I mean, if you look at the volume growth of 17%, YY, obviously it is great, but it's also to do with the low base. How do you look at the volume growth for FY 2024? If you could also give a, you know, some sense of how realistic and it's how the volume growth would look like?
For volume growth itself, capacity available to us in FY 2024 will be partly the full year or 11 months capacity of three lines in Gujarat. The Gujarat factory started last year, probably end of August, September. We have that capacity available with us. We'll also have the Andhra Pradesh plant during the production in Q2. Clearly, capacities available will expand and also with product without entering certain set of markets, certain segment of markets, which we were not meaningfully present in, also drives more volumes. Clearly, I think if you look at FY 2024, we should be looking at a maybe like a 10%-12% kind of volume growth, you know, at least. Yeah? Talking laminates right now.
Yeah. In the last quarter, you had talked about, I think, 13%-15%. You would maintain that? Or when you say at least, I presume you would maintain that?
I'm not blaming those to what was last quarter, obviously the endeavor will be in that direction. Like I said earlier in the call also, for certain export categories, you know, we are running full with certain capacities, and those capacities are coming up in Andhra Pradesh plant. When they get into production, I think we'll also have a little push there. You know, those are normally the bigger size laminates. You might not see big quantity numbers growing, but you'll see hopefully reasonable volume, values coming up there. It should be in that direction, more or less.
Got it. Just a clarification on this margin part. You know, what is the margin you think for the full year, the laminates EBITDA margin is somewhere around 17%? What is the number one can look at, the range one can work with, sir?
Hard to give a margin, but as we talk right now, with, higher revenues, with more sizes scale, with costs, at the moment being about stable. And as you probably know, in laminates business, we have a big chunk of exports and imports coming in, and we were severely under stress, you know, in the FY 2022, you know, with margins and costs going up, and that kind of normalized now to pre-COVID level. More or less, I think, on ground situation looks normalized from a sea freight. The sea freight impacts us in import and export in terms of costs. I think if you are able to drive the volumes, and we should be looking at... And with the way things are looking now, something dramatically changes, obviously, one can't say about that.
We should be looking, you know, where, you know, in a decent range in what, you know, we've done in maybe two, four types. You know, we should be somewhere in that direction.
All right. I'll come back in the queue for follow-ups. Thank you so much.
Thank you. The next question is from the line of Udit Gajiwala from YES Securities. Please go ahead.
Yeah. Hi, sir. Udit Gajiwala . Just firstly follow up on the previous participant. What kind of revenue growth should we expect? Are you expecting to continue price hike, given that the Gujarat plant will be more of a mass market product? Will the revenue growth be lower than the volume?
Overall, as a company, we are saying we should be like at 20%-25%, you know, revenue growth, considering the Gujarat plant, considering plywood plant starting in the month of June, and also considering Andhra Pradesh factory starting in Q2. We should be like at 20%-25% kind of revenue growth target for FY 2024. As far as price hike is concerned, I don't see us taking price hikes in laminates or veneer products. As you know, that we always work towards improving the value mix of the products. Maybe prices per sheet increase will not happen, but if you are able to improve the value mix by selling higher value items, maybe the price relation, you know, kind of improves, still improves from where it is right now.
Understood. Understood, sir. Similarly, sir, what kind of details should we be looking at in FY 2024? Obviously, existing projects, highlight that how much you have incurred for each project and what is expected in 24 to close?
For this project, for these two new projects, which is plywood and laminate and particleboard, we have spent close to around INR 450 odd crores till now in this, and we expect another around INR 500 crores will be spent in this, and some might move on to the next year in terms of that. In terms of debt, net debt level, we were at around close to INR 312 crores in this quarter. We expect that to be in the range of around INR 700 crores-INR 750 crores by end of this year.
This is net debt, right?
Yeah, this is net debt.
Okay. Thank you so much for your answer. Thank you.
Thank you. A reminder to all the participants, anyone who wishes to ask a question, may press star and one now. The next question is from the line of Sneha Talreja from Edelweiss. Please go ahead.
Hello, sir. Thank you for calling, congratulations on great numbers. Just wanted one clarity on the exports front. We have, actually on the domestic front, we have seen very strong volumes with very strong growth. On export front, we are not yet back to the volumes that we have achieved. One thing that you mentioned was that your AP plant will come in right now with the utilization constraint that you have.
... how were we earlier doing, you know, in higher volumes in export markets, which was the previous slide? Some clarity there would be helpful.
I'm not sure. Are you asking what the volumes are, or are you saying we're not achieving those volume growth in exports? Is that what the question is?
How was we earlier doing higher exports if we are currently lacking capacity? We had earlier done, you know, much higher export volume.
No, but we're not not doing exports. In Q4, in volume growth is about 5.5%, 5.3% more than Q4 of FY 2022, and value is about 23% higher. Versus Q3 sequentially, export volume was over 13%. I'm not sure what the question is. Ashok, you can answer. Yeah, as we mentioned previously, also in this year for a couple of quarters, we had challenges in some of the export markets, where the currency challenges and all these things, which has impacted in between Q2 and Q3. We are now slowly and gradually coming back to normal.
If you can see in this quarter, the growth was in volume terms, also growth was 5%, and in the value terms also the growth is there. What sir was mentioning, in some of the variant, we had the capacity constraint, which is primarily the bigger size of laminate, wherein we as of now, we have more orders, but we can't ship because of the. Even though the overall capacity may not be within 100% because of Prantij. But in the Prantij, we manufacture only four by eight kind of a thing. The bigger variety, we are having more orders, which will get resolved once our Naidupeta plant comes in, because there we will have all the three sizes. That's what.
Understood. That will happen from here onwards, we will have the commissioning happening.
Yeah, we will have the for the Naidupeta, it is planned in Q2.
Understood, sir. You also mentioned on the margin part, which is helping us, you know, obviously with the gross margin improvement. Given that our volumes will only increase from here on, are we sustainable margin 50% coming further?
Well, you know, like we said earlier, the environment of cost, it is in front of us. If we're able to drive more volumes and contain realizations by constantly working on volume mix improvement while we also push for more volumes in every segment of the market. Yeah, maybe we think we should be able to sustain it, but, you know, one can't say for sure for uncertainty. Yeah, we think we should be in this case.
Understood, sir. Lastly, on the door side, the first Ashok was mentioning on the call numbers. Numbers for the doors division look essentially as well as Y-o-Y down . Any significance happening on the doors front? Would you like to highlight any, you know, vision for this particular segment from the doors and recurring business? Obviously, how looking at this segment, given that you also have particle board, plywood, you know, orders coming up.
If you check quarter-on-quarter, flooring business is at INR 7.8, which is about 25% volume down. Realization gone up because we've not been able to do any exports in both floor and door segments due to sort of challenges in the markets and at that point, you know, the free trade conditions and import and export, all the restrictions were there. On an annualized basis, flooring is down about 16.5% more than FY 2022. It was down about INR 42 odd crores and doors down about 11% lower overall, which is at about INR 22.42 odd crores. We think we're very close to kind of bringing the business to profitability.
I think with cost, you know, more or less under control, we need certain volumes. We need more volumes in the segment to improve, you know, the business. Realizations have gone up in both the flooring and the door business, because lastly, the focus has been on the domestic market in this business. Yeah, that's where we are on this process.
Understood, sir. Thank you. Thanks a lot. All the very best.
Thank you. The next question is from the line of Praveen Ranjan Sahay from Prabhudas Lilladher. Please go ahead.
Hi, sir, thank you for taking my question. It's related to the laminate and allied product business. If I look at from the last three quarters, your realization is continuously going down. Is it because of the some product mix or the softness or the correction in the prices? You are reducing the pricing?
Yeah, Praveen, as you see that we have entered into, we have entered into a, we have entered into liner or maybe the starting category of the laminate from the start of our Prantij plant, which is at a lower price point, so that we have not reduced the price in general, for our laminate. On account of this, yes, the overall price realization did look to come down a bit. That is being met through the value mix increase in the other businesses other than the Prantij business. Yeah, there is some impact on the overall, but there is not much if you compare from the last year. Before of last year, it was INR 1,001.
This year also it is 1,008, which in fact is going up by 0.7. Yeah, of course, if you compare from the Q3, then it is like 2% down on a sequential basis. Nothing in general price reduction is happened as well.
The way forward.
Give me a moment, sir. sir, on the management line, sir, there is a slight static on the line. If you have a receiver, can you please pick up the receiver and speak?
We are from the Polycom.
Polycom. Okay, sir, no problem. I would require the speakers to, you know, shift little bit farther from the-
Sure.
Polycom. Okay. Please continue. Thank you.
I mean, on the pricing, like the Ashok pricing mentioned, there's been no general reduction, and the marginal reduction in realization versus Q3 was due to certain cases, case to case. You know, we have corrected to the competitive competition intensity. With Aramco coming down, CS coming down, we have corrected some, you know, pricing, but very, very marginal.
That's helpful, sir. Can you also give some color on the domestic and the export realization? Is that domestic is on the lower side versus the export?
As of now, if you see the domestic prices are lower in comparison to export prices, and that's because the difference in the unit. If you see in the domestic side, mostly the eight by four laminate sheets are being sold, whereas in the export market, there are bigger size laminates as well as the boards are being sold, where the unit realization is higher than the sheet price. It's, it's a, it's a part of the product is a bit different in export products and maybe larger units also. Yeah. Maybe this is not the best comparison, but for simplicity sake, and to bring something for certain calculation we've arrived.
Thank you, sir, for that. Related to your veneer, you know, segment, I can observe that the on the physical basis, the production has been down, whereas sales has improved in the volume terms. Like you had a production in the last quarter and which you were able to sell in this quarter, is it something like that, I think?
That's what my guess is. Yeah. That's what my guess is, yeah.
You say the match?
Yeah.
Okay. Thank you, sir. Thank you for taking my question.
Bye.
Thank you. The next question is from the line of Rajesh Ravi from HDFC Securities. Please go ahead.
Hi, sir. Good afternoon. Am I audible?
Yes, Sir. Please go ahead.
First of all, in terms of the capital projects, is there all the ongoing projects, is there any cost in this escalation which you look forward to, like in the particle board and the laminates plant?
There could be certain escalations in civil costs, you know, in construction costs, et cetera. Yeah, but it's all more or less manageable. In machineries and all, not much escalations. Somewhere fees rates have come down, which were taken earlier, so it's not been able to exactly determine it, but there could be some escalations in the in the cost.
Okay. Could I presume that there would be closer to 5%, not more than 5%, than the earlier stipulated five years?
Well, you know, last one is a little bit more hard to give you a number at the moment, but it's more or less in that, in that range.
Okay. Secondly, this available floor which you are expecting to, you know, spend in FY 2024, could you give a breakup of the same across the three units, ply, laminate and particle board?
We will share that offline.
Sure. The volume guidance which you are giving, you know, between or 10%, isn't that conservative number, given that you have 5.5 million sheets capacities from the Prantij plant, which will be ramping up, I assume, at full utilization this year. Given this AP plant, which you'll be setting up, given that you have already consumed your capacities and you have a strong distribution both in domestic and export market, are you building up a slow ramp-up, are there some constraints, which will slow down the utilization of the new factories?
Nothing like that. We just think that sometimes just to convert the, you know, action into reality, just take some time. I don't think it's conservative. I think it's more feasible, but there are always some or the other surprise will come in. You know, we'll not stop at 10%. If you can do more, more will be done. I think that's more fair to expect that.
You know, what sort of declination we should factor in for the Gujarat plant and the new Andhra plant? Assuming the Andhra plant is available for six months and the Gujarat plant is available from full year now.
Gujarat plant is already standing amongst it is up and running, and we are as, yeah, we are as of now, it's good to around 35%, 80% in this, and we have told in the beginning of the call also, we are expecting the similar kind of achieve in the next year, in this year. For the, and for the, for the Andhra plant, we have budgeted to 60% in the first year from the day the commercial production will start. So it's a six-month window for at to 60%.
Okay.
The difference will be there. It's a more sheet and board, whereas the other plants are predominantly only sheet.
Correct. The other plant is Gujarat, only sheets, low end sheets.
Mostly sheet, correct. Yeah.
Correct. Correct. you know, if we build those two numbers, we would be looking more than 50% volume growth. Am I missing something?
We just run the math.
We'll, Ashok, run the math again, and then we, you know, chat with you on that.
Sure, sure. Okay, I'll come. Thank you. Thank you.
Thank you. Anyone who wishes to ask a question, please press star and one now. The next question is from the line of Hrishikesh Bhagat from Kotak Mutual Fund. Please go ahead.
Hi, thank you for the opportunity. Two questions from my end. firstly, with regards to this pouring into the plywood, now considering the plant is very close to commercialization, now, where do we see the AMP strength and probably promotional spend, how would they stack up for FY 2024? That's my first question. second question is related to particle board. Now, considering the C4 connection that you highlighted, obviously, costs must have also gone up. Any impact you have seen on the particle board industry because of the higher inputs?
The plywood, our strategy is to largely focus on South India and not go Pan-India with the plant being in Tamil Nadu. Our A&M strength will be largely localized and not max in nature. The factory starts in the month of June. You're right on that. That's on the ply piece. On the particle board, you're right, CIF have, you know, come down, which definitely expands the possibility of board being imported. As you are aware that the model of particle boards is that 50%, 50% of revenues will come from prelam particle board and not from plain boards. The whole focus will be on, in a way, every particle board becoming user form, where we laminate the particle boards with other people and then ship to the market.
Yes, it will have some impact, you know, with, you know, in terms of, more imports, that's what we're getting. But by and large, I think from the model, we won't see much challenges because our eventual sale in the market is not plain boards, it's going to be pre-laminated particle boards. The plain boards, if anything, will just be a stop-gap or a small part of the overall, you know, revenue mix. Does that, does that answer your question?
Yeah. Thank you. Thank you.
Thank you. The next question is from the line of Bhavin Rupani from Investor. Please go ahead.
Thanks for the opportunity. The first question is, sir, how should one understand the pricing with raw material cost declining? Do we plan to pass on the benefit, to the customer?
Like we said earlier to some other participants, in general, we've not reduced any prices. Case to case in certain categories, you know, we have done some pricing, we might have to do some pricing. Yeah.
Okay, sir. I also want to understand the margins from Prantij plant, Gujarat plant. Will it be possible for you to quantify?
Very hard to give you that number, because if we produce only a certain category of product in that factory, independently running the math of that plant vis-a-vis others will not be a fair comparison. I think we'll have to look at the Prantij plant's margin in totality as a laminate verticals margin. That's a decision the company is taking on some products to be produced, you know, in some plant, in some to be the other plant, considering availability of raw material costs, you know, freight, you know, et cetera.
Okay. Thank you.
Thank you. The next question is from the line of Abhishek from DSP Mutual Fund. Please go ahead.
Hi, sir. Thanks for the opportunity. Just a couple of questions, given that the CIF have now normalized, how does your, you know, the overall competitive scenario and pricing scenario for participants between. Are you able to, you know, become more competitive now? Because that had two channels to work against us. Yeah, this is for place.
Like you rightly mentioned, Abhishek, with CIF normalizing our competitiveness versus our international competition, people who are producing laminates and ply categories from the respective country, our competitiveness actually expands with the normalized availability of containers, normalized filling time and normalized space. We think we will be taking away more market share from the international analytics system. With our base of teams, warehousing, distribution, you know, by and large, in a good position, we think we can get more market share in the international business.
Okay. The other thing is also in terms of the domestic management, how competitive are you there from the organized and the lower end of the value rate?
Not much has probably changed in terms of competition, intensity. We do think and we do know a lot of mid-size, lower level companies, you know, are having challenges, you know, with sales and with, you know, collections and, you know, all of that. I think at first, nothing has dramatically changed, but we think those companies are getting weaker, and we are probably taking some share gradually from that segment.
Just in density wood panel and especially plywood also speaking now, are you seeing even the sharp increase in timber prices that has been. You know, how we, your procurement be, are you enough, you have enough, to sourcing and any months reorganizing player to manage savings significantly? Some color on that again, please.
As far as timber sourcing from domestic market is concerned, is relevant to the plywood and the particle board business. Both our factories, plants are coming up in North India. As we talk right now, you know, we are kind of now entering the raw material buying season for the plywood factory or plywood plant, and we'll know more in the next, you know. As we see things now, obviously our wood costs have risen sharply, especially in North India and slightly in South India. Our guess is if wood costs will go up, we go and pass on the price increases to the market. We do know that at the moment, the rate of increase in South is lower than North, other parts of the country.
I think we'll be bit more wiser, you know, in the next three to six months when we actually go and buy raw material and resume normal dealing. As far as the unorganized companies are concerned, clearly, I think the organized companies have a better position in terms of when these things happen, because their buying capacity, their teaming capacity is superior, and contractors and the farmers and aggregators are have organized companies as a preferred buyer than unorganized companies. Yeah. This is the sense we have at the moment.
Okay, thank you so much for your time. Wish you all the best. Thank you so much.
Thank you.
Thank you. The next question is from the line of Ankur Kumar from Alpha Capital. Please go ahead.
Hello, sir. Thanks for a good set of numbers. Over the first question is on, what will be your peak revenue potential at current prices when we go to full utilization, considering what the system?
We said that earlier in the year. Considering the peak utilization of Andhra Pradesh plant, Gujarat, plywood, particle board, I think the peak revenues will be in the band of INR 3,500 crore-INR 3,600 crore, approximately with the investments we're doing now. Unless we are able to improve any value makes or improve utilizations, but by and large, it will be somewhere in that space.
Can we expect like three years for us to reach those levels?
Well, that is the endeavor. You know, what happens with the market or not, yes.
sir, on margin, lower A&M, can you please quantify that number as in how much was it versus...
For this quarter only, normally one quarter will be in the range of around INR 6 crore -INR 7 crore.
INR 6, 7 crore?
Yes.
Okay.
this is, which is the happen in this quarter, which is around INR 6 crore -INR 7 crore.
this is as in last Q4, how much was it?
Sorry.
In the last Q4 of the year, what was the number? Usually, just for people to know how much every have we used on that?
It is gone up. In the year as a whole, if you see, then it has gone up, in terms of that. It's only that one line item expense change happened, which is around INR 6 crore -INR 7 crore only. Otherwise, the overall expense has gone up, yes.
Q4 A&M.
Line has gone up. Other line has gone up. Yes.
Everything is going to go.
If you see in this year, the overall expense has gone up in comparison to previous year.
Okay. What is our expectation for next year? How much of A&M would we like to do?
If I could give you the in terms of, in terms of that, this will be in line with what we said in the beginning. I think as a %, probably will be similar, because plywood, you know, will have lower revenues, you know, and higher A&M as a %. Probably as a company, you know, % probably will be similar, I guess. Maybe I should try to give you the data on that.
Got it, sir. Sir, last question would be, you said revenue will be actually 20%-25% growth for this year. Volume side, you said only around 10%, 12%-15%. You also said that pricing, we don't expect much jump. Can you please?
Plywood revenue will also come in the overall revenue. We talked about the volume growth of only laminate, not the other categories. We said that for laminates, 10%- 12% type of, you know, volume growth. We also said the prices may not increase, but our endeavor is constantly to improve value mix. Then there'll be plywood revenue coming in for about six to nine months. There'll be revenue coming in from veneer, which is our volume demand. Considering all of that, you know, we said 20%- 25% kind of revenue growth.
Got it. Sir, our brand is quite built in the market, but if I look at our margins, it seems lesser than company Century and Stylam types.
I'm not sure whether what you're saying is correct. It may be to review that point. I think if you see the margins are also to see return on capital employed. We are saying, Ashok has to run a math review on that.
Got it. Thanks a lot.
Thank you. The next question is from the line of Nikhil Agarwal from VT Capital. Please go ahead.
Good evening, sir, and thank you for the opportunity. Sir, my question was on the employee costs. Since, you have been, you have about three new plants coming up in the next one year. What sort of growth should we see in the employee costs?
Yeah. If you see in terms of this also, we are building up the team for the newer verticals. Plywood vertical, new team has been built. We are expanding the team to run to expand our overall reach in the laminate. We believe that it will remain in this range-bound at least for this year.
remain in the range bound, so about.
About same as a % in terms of what it was there in the FY 2023.
Okay. Got it, sir. If you could throw some light on the raw material prices, like I believe chemical costs have increased, but what about the costs from the kraft paper front? Like, what have the prices been out there?
It is stable as of now in this quarter, in the last quarter and this quarter as of now, what we are talking. The laminates, the craft and paper prices. The chemical prices, as you said, that it is stabilized and decreased often in comparison to previous year, previous quarter.
Oh, oh, okay. Got it, sir. Sir, one last question. Sir, if you could throw some light on the unorganized market and how has it been selling? Like, what would be the size potential selling, like between the organized players and the unorganized players?
For that one, we will take separately, I think.
Yeah, it is already, as we mentioned at the beginning of the call, that it is ongoing process and the whatever we have the understanding and knowledge that unorganized players are beating, on a daily, on quarter or in other way, the organized player growth are higher than the overall industry growth. We believe that we are taking market share from the unorganized segment in terms of that.
Any reason why the unorganized sector is down beating? Any, like, any specific reason?
There are a number of reasons in terms of their size, not investing, in terms of their consumer preferences are moving, not only in our segment, in every other segment, that consumer segments are moving in terms of the organized product, because they offer the value for money in terms of, you know, cost can be more, but they offer value for money, good quality, good choices, availability of the material. There are N number of reasons that why people are moving towards the organized segment, kind of a thing. Basically, the main difference earlier was mostly the people unorganized guys do a lot of evasion, which is also coming under pressure from the government. We believe that going forward also, it will move towards the organized rather than the unorganized.
Okay. Got it. Thank you so much. That's it for me.
Thank you. The next question is from the line of Achal from JM Financial. Please go ahead.
Thank you so much for the follow-up opportunity, sir. Once again, you know, the question here is that, in terms of the mix for laminates, in terms of B2B and B2C, in terms of the end usage, any more perspective you can provide, how much would of the laminate would be directly consumed by the customers, or, how much would go in the institutional setup?
We can't provide, like, much information on this. As you probably know, that homeowners buy laminates, which is aided by influencers, so architects, IDs, so professionals. That's a mix between residential, commercial. That's one mix, that's one, possibly one way to look at it. If your question is what's been done by carpentry, what's been done by OEMs? I'm not sure what you wish to ask us in-.
Yeah, yeah.
I think I can look really-
Both the aspects, if you could.
Our overall market would be more like a 60%-65% residential, 35%-40% commercial, and I'm not sure if that has changed. Maybe geography, some changes might be there. As far as carpentry and OEM is concerned, so clearly we see, you know, larger carpenters, contractors, opening workshops with mechanized furniture, panel manufacturing, and then installing furniture fit outs on the site. I can't put a % to it.
Understood. Where I'm coming from is in terms of the particle board, you did mention that 90% of our sales will be laminated.
That's right.
To understand if.
80%.
will come the cost of the laminate, because ultimately the customer has a choice between the-
Right.
customized laminated furniture or ready-made furniture.
I understand. I said 80%, not 90%. prelam particle board is largely an off-site manufacturing product, which means that one has to work on the boards in a workshop or in a factory or in an OEM setup. Typically, because of the dimension of the board, which on average will be higher than laminates, and it'll be thicker and carries many SKUs, is not practical on ground in India. Goods from the manufacturing plant of the company get shipped to fabrication plants more directly. In particle board, mostly it's specification-driven model focused on OEMs of which are manufacturers doing commercial furniture, doing kitchens at times. In India, usage of boards in kitchens, particle boards in kitchens is very limited, although internationally a lot of kitchens use particle boards.
Mostly it's gonna be commercial furniture, loose furniture, study tables, TV trolleys, you know, desktops, et cetera, which will be using particle board. The number of SKUs will be fewer than laminates in terms of design options and texture options. Yeah, that's as earlier. Currently also, if you see, I mean, we said that in our reports earlier to really INR 4,000-5,000 crores of market has existed in particle boards. I think we'll end up seeking share of unorganized companies there, too, because good quality boards are not available, quality of lamination is very inferior, the physical and surface properties are very poor. This is how we look at it.
Got it. Just last question. With respect to this INR 5,000 crore market, how much of this will be currently impacted and, basis our cost of production, what would be the point difference between us and them.
I don't have the math right now because we are still a bit away from commencing it. Obviously, we've done our work and all that, so but maybe we can respond to you in a more meaningful manner at a later point on this particular one.
Got it. This is very helpful, sir. Thank you so much.
Thank you.
Thank you. The next question is from the line of Udit Gajiwala from YES Securities. Please go ahead.
Thank you for the follow-up, sir. I can't quantify yet, level losses for the wooden door and floor segment for the quarter and the year.
For the quarter, floor and door are having a loss of INR 2.7 crore at EBITDA level, and for the year as a whole, it is having a loss of INR 9.7 crore.
This is both together? Both, okay.
Both and floor.
Thank you.
Thank you. The next question is from the line of Rajesh Ravi from HDFC Securities. Please go ahead.
Hi, sir. I have a few follow-up questions. This Andhra Pradesh laminates project, once this particular board is fully commissioned, how much would be for, say, the laminates would be for captive uses?
I'm so sorry, I didn't hear you clearly.
Yeah. Am I audible?
Yeah.
Yeah, yes, audible.
Rajesh, I'll respond to this. Rajesh, in this case, when we are talking about the prelam particle board, in this the entire laminate need to be put on that. It's only the top layer of laminate, which is-
Yes.
decorative paper that only need to put. Both these facilities are independent of each other. Laminate is not going to be used in most of the cases on the, on the particle board.
I just wanted to understand, the particle board unit will have a lamination, laminate, lamination unit, I mean, the laminate unit, or it will be made from the laminate plant, which is commission, next quarter?
That's what I was trying to tell you.
Okay.
The laminate, only the top layer of the laminate.
Right.
-which is the decorative paper, only will get...
Yeah.
It will have a separate line for this.
Okay. Okay.
This capacity does not include the current capacity, which you're mentioning. Yeah. The two independent plants, the process of lamination particle board is different from high-pressure laminates, which is.
Yes.
In terms of, the pressing line, the dimension, the cycle time, et cetera, are two independent ones. The only thing common between them, which can be possible, is the paper energy.
Okay, understood. Understood. For the laminate exports market, what is the growth outlook and where are you positioned, given that it, you know, in terms of, your position based exports market, given that you have strong distribution, you know, regional distribution across markets?
Right. We said that earlier. I think we should look at a reasonable or decent growth in the export market, and I think this is continuing. I think we've been growing at a certain pace over the last several years. I think if you're talking of 10%-12% quantity growth, it also includes, you know, export market. Export market should also grow a little bit, plus minus this year in FY 2024. We also set certain categories of export markets. Those capacities at the moment, you know, are challenged, but once another factory comes in, you know, we'll also have some more capacity to push exports in certain dimensions, certain markets.
Okay. In the past two boards, when you think about market size of INR 5,004, could you also explain in terms of volume terms, in CPM, what would be the market size in India?
Yes, I think that's because we can have a look at that virtual later on. We have the entire breakup of volumes in domestic imports, prices, realization. I think that can be a different conversation.
Okay. Great. That's all from my end. Thank you.
Thank you.
Thank you. The next question is from the line of Bhavani Kumawat from PhillipCapital. Please go ahead.
Yeah, thank you so much for the opportunity. Am I audible?
Sure, yeah.
Yeah. Just to understand on the international business plan, how is the current scenario currently, on international side?
Hard to like give you one blanket answer, because we operate in about 20 countries right now. Overall, you know, I would say, if I use the most appropriate word that comes to my mind is reasonable. Some markets are doing better than the others. Like we said, with key trade conditions normalizing, and with us finding more capacity, you know, we should look at taking more market share from its national competitors.
Okay. I just wanted to understand about your distribution model in international business, market, additional as well.
Sorry, could you come again?
I just wanted to understand.
I can explain, like, very brief. You know, I can, like, give you a quick brief. It has a dual approach. We have a distribution model with partners. Again, it varies from geographies, obviously. I must say that first. We have partners having, holding stock on ground and then going out to joinery, standard manufacturers, furniture producers, etc. Some large OEMs, we ship directly, you know, because they have a lot of consumption. We have sales teams in most markets, which work with the channel partners. In certain markets, they work with architects, interior designers, builders, developers who generate demand. Different geographies have slightly different operating model based on the condition on ground.
Okay. What is the pricing difference, sorry, sir?
It's very hard to give you one blanket answer, because different geographies have different product offerings in terms of thickness, dimension, etc. You know, we can't give you one flat answer because every geography has a slightly different approach. As you can see, the average realization of exports is slightly higher on a per sheet or per board basis, because certain markets of exports take more, consume more larger sized products than the normal profile with the consumer in India.
Okay. Thank you so much.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Thank you, everyone, for joining the call today. For any further query, you can get in touch with us or, call to the SGA or investor relations advisor. Thank you.
Thank you, everyone. Thank you so much.
Thank you very much, sir. On behalf of Greenlam Industries Limited, I thank you for this conference. Thank you for joining us. You may now disconnect your lines. Thank you.