Ladies and gentlemen, good day, and welcome to Greenply Industries Limited Q4 FY 2026 Earnings Conference Call hosted by Asian Markets Securities. As a reminder, all participant lines will be in the listen-only mode, and there'll be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this 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 now hand the conference over to Mr. Karan Bhatelia from Asian Markets Securities. Thank you, and over to you, sir.
Morning, all participants logged into the call. On behalf of Asian Markets Securities, we welcome all to Greenply Industries' fourth quarter and FY 2026 investor call. From the management side, we have Mr. Manoj Tulsian, Joint Managing Director and CEO; Sanidhya Mittal, Joint Managing Director; and Mr. Sanjiv, CFO. I would like to hand over this call to Manoj Ji for his opening remarks, post which we can open the floor for Q&A. Thank you, and over to you, Manoj.
Yeah. Hi, this is Sanjiv Keshri. I would like to just highlight that Mr. Manoj Tulsian is not attending the meeting and Mr. Sanidhya Mittal, the JMD of the company is addressing today. Thank you. I'll hand over to Mr. Sanidhya Mittal.
Thank you, Sanjiv Ji. Thank you, Karan. Good morning, everyone. It is a pleasure to have you all on the call today. We close this year on a strong and positive note, in line with our growth guidance, we are carrying that momentum forward into the current year with even greater ambition and focus on growth. We have seen a strong start to Q1 FY 2027, we remain confident on sustaining this trajectory, supported by an improvement in margins. Before providing an update on Greenply's operating and financial performance for Q4 and FY 2026, I would like to address and give few updates. First, on our leadership team. Recently shared in our regulatory filings, Mr. Manoj Tulsian has submitted his resignation as JMD and CEO of the company. Manoj Ji has decided to step down from his executive responsibilities to prioritize his personal commitments.
On behalf of the Board of the management and the company, I want to express our deepest appreciation for his leadership over the last six years. To ensure a seamless transition, we are pleased that Manoj Ji will continue his association with the company in an advisory capacity. Second, a search and seizure operation conducted by Income Tax Department at certain business premises of the company from 26th February 2026 to 2nd March 2026. As on date, no order, no notice of demand or penalty order has been received by the company for the said proceeding. The matter is presently at a preliminary stage and to assess any possibility impact of the financial on statement of the group is not possible at this moment. There's no such demand.
Thirdly, during the quarter we conducted a thorough review of our internal exposure, significantly pertaining to our entity in Dubai. In light of the prevailing geopolitical environment, which has adversely impacted the recoverability of certain assets, we have chosen to take a conservative approach. We have disclosed a total of INR 15.16 crore as an exceptional item representing impairments to our investment, financial guarantees, and advances to GMEL. This one-time adjustment is a proactive measure to safeguard our financial integrity and does not impact our underlying operating cash flow or long-term growth strategy. With this, all or any potential liability on invested equity, corporate guarantees or any types of loan advances have all been totally provided for in the books. Now I would like to share some perspective on the ongoing geopolitical crisis and their impact on the company.
As you are aware, across both our segments we have certain degree of dependence on imported raw materials, particularly timber and chemicals. During the early part of the quarter, the evolving political situation posed challenges in sourcing chemicals, leading to a sharp increase in prices by over 50%. Additionally, elevated fuel charges and war risk insurance premiums have created a volatile and a high cost environment for logistics. The impact was pronounced in the MDF segment, where chemicals constitute nearly 30% of the raw material cost. To mitigate the cost pressure and protect margins, we implemented calibrated price increases of 5% and 10% effective from April. In the plywood segment, the impact was relatively lower and the price revisions were in the range of 4%-5% during the same period.
Having said that, at the same time, we are actively evaluating opportunities to source chemicals domestically with the aim of reducing our reliance on imports. While prices remain elevated, they have stabilized and not expected to rise further. We continue to remain proactive in optimizing our sourcing strategies to ensure efficiency and supply continuity. Let me now turn our operating and financial performance for Q4 and full year of FY 2026. I'm happy to share that Greenply Industries has successfully delivered on its [ pledge] to FY 2026 guidance, achieving double-digit year-on-year growth in both volume and value across its business segments. In Q4 FY 2026, consolidated core EBITDA margins improved to 12%, reflecting a strong expansion of 330 basis points over the previous quarter.
We are proud to report our highest ever consolidated quarterly revenue of INR 776.2 crore, which is a growth of 19.6% on a YoY basis. Our consolidated core EBITDA for the quarter was INR 93.2 crore with a core EBITDA margin of 12% compared to 10.5% in Q4 FY 2025, an increase of 150 basis points. On 12-month basis, our consolidated revenue was INR 2,739 crore, which was a growth of 10.1% on a YoY basis. Our consolidated core EBITDA was INR 270.5 crore, which was a growth of 13.8% on a YoY basis. The core EBITDA margin was 9.9% as compared to 9.6% in 12-month FY 2025.
PBT, before the losses on equity accounted investee foreign exchange gain/loss as an adjustment to finance costs and exceptional items, is at INR 186 crore for 12-month FY 2026, which is a 21% YoY growth as against PBT of INR 153 crore in 12-month FY 2025. Let me now share the highlights of our individual business segments. In the plywood segment, we have achieved volume growth of 15.6% on a YoY basis in Q4 FY 2026, with a revenue of INR 588.5 crore, value growth of 14.6% on a YoY basis, in line with the growth expectation. On the margin front, our core EBITDA margin stood at 10.4% for Q4 FY 2026, an improvement of 120 basis points on a YoY basis.
On 12-month basis, we've achieved a revenue of INR 2,105.7 crore, which is a growth of 7.5% on a YoY basis. Our volume growth on 12-month basis is 8.3% on YoY basis. Our core EBITDA is 11.7% on YoY basis to INR 185.4 crore in 12-month FY 2026. Our EBITDA margin stood at 8.8% as against 8.5% in 12-month FY 2025. Moving to our MDF business. We have achieved our highest ever quarterly revenue of INR 189.4 crore with a volume reaching to 62,000 CBM. That reflects strong year-on-year growth of 39.6% in value and 45.3% in volume terms. Margins for the quarter stood at 17%, supported by higher sales and operating leverage.
For the full year, we have achieved a revenue of INR 635.6 crore, reflecting a YoY growth of 19.9% with margin at 13.4%. Moving on to our furniture and fittings JV. We have achieved sales of INR 12.99 crore in Q4 FY 2026 and a total revenue of INR 44.27 on 12-month basis. The JV reported a PAT loss of INR 13 crore in Q4 FY 2026, with our share of loss amounting to INR 6.5 crore. On a 12-month PAT loss at INR 50.8 crore with our share of loss amounting to INR 25.4 crore. This year marked the brand's initial establishment phase, requiring significant investment. However, we are encouraged by the strong ramp-up and expect the business to grow exponentially.
Now, I would like to provide an update on the progress of our CapEx initiatives undertaken last year. We are pleased to share that the commercial production of the PVC and WPC plant has commenced from April 26, with an annual installed capacity of 6 million kgs for door and 3 million kgs for door frame. With respect to our new MDF facility, civil construction is currently underway and orders for key machinery has been placed. We remain on track to operationalize the facility as per our planned timelines. Construction of the plywood facility is progressing at full pace, with all major orders already being placed and the project remains on track. Despite the growth CapEx undertaken, our consolidated net debt stood at INR 461 crore at the end of the current quarter.
Our debt-to-equity ratio remains at 0.52x, in line with our guided range of 0.5x-0.6x for the year, even after the announcement and execution of the planned CapEx. The board of directors recommended a dividend at the rate 50%, which means INR 0.50 per equity share for the year ended 31st March 2026, which is subject to the approval of shareholders of the company at the annual general meeting. Our strategic roadmap for the remainder year is clear: driving volume while protecting our bottom line. We have set a volume 10% growth target for plywood backed by our strong brand equity. In MDF, we are capitalizing on rising demand and confident in delivering 25%-30% volume growth despite the competitive landscape.
Our focus remains on operational excellence, ensuring that our EBITDA margins remain consistent with our recent performance. With this, I would like to open the floor for Q&A session. Thank you.
Thank you very much. We now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touch-tone 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. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is from the line of Pankaj Tibrewal from Ikigai Asset Manager. Please go ahead.
Good morning, Sanidhya and team, and congratulations on excellent set of numbers. Just two questions I have. One, on the margins of MDF. Compared to what we saw with other players, really the delivery has been excellent. This is before the price increases have happened.
Can you take us through your thought process on how sustainable these margins are? Last year first half, we kind of struggled from the margin perspective across the board. Second, also on the plywood side, after long we have seen a double-digit margin trajectory. When we speak to the distribution on the ground, on the lower end, brand Ecotec on the other side, earlier we were hearing about a lot of quality-related issues. Now, that has substantially come down over the last six, seven months. Is that also helping you on the volume and the margin side? Two questions, one on the MDF margins, how do you see it going forward?
On the plywood side, is the double-digit margin sustainable and the quality issues on the lower end brand behind us and how we are ramping it up? Thank you.
On the MDF front, I think these margins are sustainable, and you are absolutely right that this margin was achieved before the price rise. I think the reason we were able to achieve this was purely the incremental volume that we had achieved in terms of production and sales. Our fixed costs remained the same post our line, post the extension, while the operating leverage kicked in. That is purely the reason why we were able to achieve this kind of margin. Obviously, the timbers, the local scenario of the market, the proportion of the value-added sales and the sales mix, all of this also helps us to achieve that the same. Going forward, we are very confident because the cost increase we already passed on to the consumers.
In spite of the cost pass on, we still see a demand. We are very confident in terms of our guidance going forward in MDF, whether we on the bottom line and the top line.
Fantastic. Fantastic.
And-
Thank you. The second one, the plywood.
On the plywood, I think, we are doing a lot of fundamental changes in our in the way we are producing plywood. In, we have four of our existing facilities. In two facilities the new change is already implemented, and in two facilities the change will be implemented during the current financial year. This not only improves the cost, it also improves the quality in a drastic way. Yes, there has been changes and improvements further in quality. See, it's a very natural product and, you know, any plywood can be said that this is very bad quality or this is very good quality. It's also the perception. Yes, we have made changes which will help us achieve both top line and bottom line.
With our, you know, with the initiatives that the company has undertaken and with the strategy, if we are able to maintain the growth rate in plywood, this margin can easily be ensured. This margin is there because of the growth rate and the operating leverage there also. Yes, we have to maintain this growth rate, and with this growth rate this margin is absolutely possible. We can further improve the margin in H2 of this year after the new process is implemented in all our plants. New process will also improve cost to a certain extent.
Okay. Is it fair to say that on a consolidated basis, the exit quarter of March quarter on an overall basis, the margins should be the new norm for Greenply going forward, because as you say that plywood margin sustainable, MDF margin sustainable, one-off cost is behind us?
Yes, absolutely. Absolutely right. Absolutely right.
That's very heartening to know. Just a last question on the balance sheet. I must compliment that after the significant CapEx, debt has come at INR 450 crore up near about, and what you guided at the start of the year. From here on, how should we think about from a balance sheet perspective, from a CapEx and the cash flows which you will generate? Do we see further deleveraging or the debt level stay here and you embark on the next level of CapEx? Just to get a broader picture.
I think currently we anyways have a big CapEx, which is our MDF plant, which is almost INR 400 crore-INR 425 crore of CapEx. We also have the improvement or the new technology implementation cost of the plywood plant and the Odisha CapEx. With all of this given in place and our cash flows given in place, maybe for 1one year we might peak out to maybe 0.7x or 0.72x debt equity. Again we come back in the range of 0.5x- 0.6x the following year itself. That is our outlook because we don't want to increase the debt substantially further. Yes, we definitely have a lot of aspirations to invest more and, you know, grow.
Keeping our balance sheet in mind, keeping the overall debt equity in mind, 0.7x, 0.72x is the peak we want to go to, then again come back to the 0.5x level. Depending on opportunity, then decide whether, you know, we want to continuously deleverage or continuously invest.
Fantastic. Last three years you have been seeing one-offs every, you know, years, either be Gabon or Forex or whatever. Is it fair to say all these one-offs are now behind us in terms of Gabon write-off and all the measures we need to take on the international and the other side? Is it fair to say that all these one-offs are behind? Or you foresee further challenges on that side?
I don't see any challenges on that side. I had mentioned in my opening remark also very clearly. With this, all the potential liability on invested equity, corporate guarantees and other types of loan advancements have been totally provided for in the books.
Okay. That's good to know. Wish you all the best, very heartening to see Greenply coming back to its original form. Thank you.
Thank you. Thank you.
Thank you. Next question is from the line of Keshav Lahoti from HDFC Securities. Please go ahead.
Hi, sir. Thank you for the, congrats on a great set of numbers.
Thank you.
First thing I want to understand in Q4 whether, you know, the volume growth was positively impacted because of higher channel inventory because price hikes were coming in April. Secondly, you highlighted, you know, Q4, the volume growth was due to higher channel inventory also. Secondly, you highlighted Q1 FY 2027 has started on a good note. By good note you mean maybe whatever you did in Q4, the similar trend rate continues in Q1 also?
Yeah. I think I will not totally disagree to your statement. Yes, there might be little bit of the growth because of overstocking also. The stocking only happened in the second half of March. Two and a half months of the quarter were the regular quarter, first of all. Second of all, what we saw fundamentally was a shift from unorganized to organized. What happened when this when the raw material started going crazy, everyone including importers of chemicals, including resin suppliers, wanted payment like today for supply of today. In that entire cycle, a lot of unorganized plywood players shut down. A lot of the smaller MDF players had issue. They were hand-to-mouth in terms of capital or in terms of cash flow. This disrupted a lot of smaller companies, which we see the disruption even today.
I think that shift, that fundamental shift is also a reason why the branded segment or our segment got the growth. Obviously, with the backed by our strategy also to grow in plywood and MDF. Yeah, it's a mix of all three reasons.
Understood. Got it. Can you give some sense about, you know, what is the MDF industry demand for FY 2026? How has the capacity increased in FY 2026? How will, you know, capacity increase in upcoming years? What sort of utilization we are seeing at industry level?
I think industry-level things are changing very fast. It's very difficult to give you the latest update because in the last two, three months there's a lot changed. I think some of the smaller players are shut. Import is totally wiped out because of the U.S. dollar and the freight situation. I think exports have also been very difficult because of the freights. I think to give a current industry scenario for me will be very difficult. But as far as we are concerned, we have a very small capacity compared to the country. I think at full capacity, if we run our factory, we only can gain 8% market share. As far as our brand is concerned, I think the runway is clear for us for next two, three lines. To sell and to produce, we will not have any challenge.
We just have to keep our balance sheet right and keep growing.
Got it. Last two questions from my side. One is MDF price hike total is 15%. I heard it right. Secondly, on income tax, so what was the reason for the raid? Like, why the Department have conducted it? We hear, you know, it was at distributor level also, and it went on for few days. What was the-
I think it was a raid which was conducted on Greenply, Greenlam and Greenpanel. The reason is obviously not known to us that why this happened. We had clearly filed in our disclosure and in the audit report the auditors also clearly mentioned that there is no liability on the company and there was nothing seized from our premises in terms of documents or cash or any such thing. As of now, the company and the books of accounts are clear. If there's any liability or any such update, we will keep the exchange and the investors absolutely updated with it. We feel that, you know, it was a total wrong intel why this happened.
Understood. Got it. The MDF total price hike is 15% in April, right?
Right.
Okay. Thank you. That's it.
Thank you.
Thank you. Next question is from the line of Utkarsh Nopany from Anand Rathi. Please go ahead.
Yeah. Hi. Good morning, sir. My first question is regarding on the margin side in the March quarter. For MDF segment, if we see, our realization fell by 3% on a quarter-on-quarter basis, but still our gross margin has improved by roughly 530 basis. What is the reason for such big swing in the March quarter?
If you compare the previous quarter and the March quarter, I think the total volume produced has drastically jumped up. In the same factory and the same fixed cost, when the volume goes up drastically, I think the operating leverage kicks in.
Sir, my question is regarding the gross margin, not at the EBITDA margin, sir.
I think Sanjiv Ji, you can explain this.
Yeah. It's the same thing.
Yeah.
If the EBITDA margin will increase, the growth margin will also increase. That is the operational leverage. That the 15.6% increase in the volume in the plywood, it's given a very good growth margin on that.
Sir, for MDF segment I was asking. Sir, I will ask in another way. Our MDF gross margin has been very volatile over the last, say, eight quarters. Sometime it goes up to around 55%, sometime it goes down to 45%. Can you please explain the rationale that why it is so volatile, and whether it is going to continue going forward also, the volatility?
I don't think it is going to be volatile going forward. In the past, if you see the last financial year, two quarters out of the four quarters, the plant were not fully operational. Q1 was a normal quarter and Q4 was a normal quarter. Q1 was a normal quarter with the line unextended, Q4 was a normal quarter with the line extended. The quarter two and quarter three got disrupted because of the, you know, the line extension that we did. The reason why there's a fluctuation in margin is also that. Plus, you know, another reason why the gross margin changes is also the mix change, right? It depends that the same cubic meter that we've sold, what mix we've sold.
If we sell more of the HDMR segment, the company definitely makes more margin than we would make selling interior products.
Okay. Sir, what should be the sustainable gross margin, considering the current raw material cost and the realization? What should be the sustainable gross margin?
I think we can consider Q4 FY 2026, which is the current quarter that we've just finished, as the base. I think we have to, you know, deliver margins at this level.
Okay. Sir, now for the plywood segment, what we have seen that our gross margin has contracted, by say roughly 80, 90 basis points on a YoY basis, and it has also gone down on a [Q1-Q] basis. Can you please explain what was the rationale for the same?
Right. Okay. This is the reason of the product mix only.
Okay. sir, like we have seen pretty strong demand for plywood in the March quarter, also our ad spend has gone down substantially on a YoY basis. What was the thought process behind curtailing down our ad spend in the March quarter?
I don't think there was any thought process in curtailing. It must just be the, you know, the annual cost to maybe. You know, it varies from quarter- to- quarter, and the auditor is very particular that, you know, whatever spend is there has to be debited in a particular quarter. So maybe the campaign burst happened in previous quarters, and March was just a spillover regular expense. It wasn't a new campaign or a new spend. And the amount, absolute number, if you see on an annualized basis in INR crore, is absolutely the same. There's no change.
Okay. sir, lastly, on the CapEx front, sir, you have guided that we are planning to spend around INR 425 crore on our plant growth CapEx. Can you please provide a split how much it would be in FY 2027 and how much it would be in FY 2028? That's it from my side, sir.
I think INR 425 crore was only on the MDF segment, out of which I think almost close to INR 300 crore would be in the current FY and INR 125 crore would be in the next FY.
apart from MDF, any other, in FY [audio distortion]
We have-
[audio distortion]
We have certain improvement projects taken up in the plywood segment to change the technology of manufacturing, also we have Odisha plywood, the new plant. In the plywood segment on Odisha ply, the total cost will be around INR 130 crore for Odisha plywood. All the other plywood improvements would be around INR 45 crore-INR 50 crore, all plants put together.
Okay. If I understand correctly, INR 300 crore we are going to spend on MDF in FY 2027, another INR 130 crore on plywood because it is likely to get commissioned in this fiscal year, and INR 45 crore-INR 50 crore on maintenance CapEx. All put together roughly INR 480 crore-INR 500 crore.
Not maintenance CapEx. This is the CapEx that we're doing to change the technology of plywood production.
Okay.
It was already implemented in the last fiscal year in two plants. Two more plants, the technology will be implemented this year.
Roughly, sir, INR 480 crore we are going to spend in FY 2027. Is it correct, sir?
Almost, yes.
Yes. Yes.
Almost, yes.
Okay. Thanks a lot, sir.
Thank you.
Thank you. Next question is from the line of Ritesh Shah from Investec India. Please go ahead.
Yeah. Hi. First, congratulations on a good set of numbers. Thanks to Manoj Ji for his guidance and learnings for all the years. Coming to the question, Sanidhya, for you, how should we look at the management transition? Besides Manoj Ji also, what we see is there have been a lot of changes, be it in HR, IT, marketing, of late or last six months. How should we read into this? Is there some change in game plan? That's the first question.
I think, more. See, people come, people go. As far as Manoj Ji is concerned, you know, he's already, you know, still part of the company in an advisory capacity, you know. He will be an advisor. It was his decision, because of his, you know, personal needs that, you know, he wanted to take some time out and be not an active day-to-day role, but as an advisor to the organization. That is the reason why he stepped down. I think, going forward, every business already has its respective, you know, sales hierarchies in position. All the plants have their plant hierarchies in position. IT, HR, marketing, like, you know, all the support functions have their heads in place.
You know, whether it was Manoj Ji or me or my father, the Chairman, we were guiding people at a strategic level. You know, we were not driving things on a daily basis. As far as the growth going forward is concerned, I think the team is already in place. Team will run the show. At any level, if we feel that, you know, we need a full-time replacement because Manoj Ji is moving out of the organization. That will also be considered. Most importantly for us to understand and know is that to get anybody at a critical level or at this level is not very easy to find. Yes, we are open. At some point we might bring in somebody at his level, but not immediately because there's nobody that we have in mind at that level today.
That helps. Would you like to highlight specifically on the changes on the marketing level? I understand we have hired somebody, very senior, from Pidilite. What transpired this hiring or was it somebody moving out and we just replaced him? Any change in thought process on the marketing and sales side?
Marketing, I don't think we have anyone from Pidilite. I think at sales we have someone who had joined us from Pidilite. The previous gentleman was actually retiring. You know, that was the reason of change, and we wanted to bring young and we wanted to bring somebody from an organization that we look up to, we want Greenply to become like. Which other organization in our segment could we have hired other than an ex-employee of Pidilite? That was the reason.
Fair. That's great. My second question was on working capital. If you look at the receivable days, it has actually increased. Inventories, I presume, it was year-end plus, because of Iran, I think we could have liquidated inventory. How should we look at the increase in receivables on a year-on-year basis?
I think a little bit of the increase could have also happened because of the highest ever numbers that we hit. The balance, one second, let me just look at the number and give you exact.
I'm referring to number of days.
Okay, you're referring to number of days. Yes, it is an increase.
Yes.
You're absolutely right. From December 25, we've gone up by three days. I think.
Correct. Last year INR 47 crore-INR 54 crore.
It is a mix, you know. Our OEM business is also now growing drastically. Even though the payments are protected in terms of LC and other instruments, but the better days are much higher there to achieve growth. You know, to achieve growth, we're also doing certain B2B sales, which is OEM. Also there's a fundamental shift from project business and routine trade business to furniture being made in furniture factories. Because of MDF, the exposure of the organization has become very high in that segment. The same team is pumping in plywood and MDF into the OEMs. Maybe slightly the days have gone up because of that, but the payments are totally protected in terms of LC.
Sure. This is quite useful. Thank you so much and all the very best. Thank you again. Thank you.
Thank you. Next question is from the line of Maitri Shah from Sapphire Capital. Please go ahead.
Yeah. Good morning. Am I audible?
Yes, please.
Yeah, hello. A few questions. Firstly, on the margin side. For the quarter four, we saw a very stagnant growth in the EBITDA margins for MDF and plywood. Do you see those margins sustaining for the next half of the year or like the FY 2027 to FY 2028, with also increasing costs coming in because of the raw material? You did mention you're going to pass them on, but how do you see them kind of balancing for FY 2027?
On MDF, we are not worried about the margins. I think 17% is something we can sustain because whatever cost has increased, we've already passed on. In the increased passed on cost, I think we are still able to do the volumes that the company requires to do. In MDF we are confident that, you know, this margin can sustain. On plywood also, I think this margin can easily sustain, provided we are able to achieve the desired volume growth that we have targeted. This margin in plywood only kicks in once the volumes are achieved. Whatever margin we've been able to deliver was purely on account of volume. If the volume guidance is achieved, then we will 100% hit the plywood margins as well.
In H2, slightly we'll get a tailwind in plywood once the new technology is implemented in all facilities. Slightly on the cost side we'll start getting an advantage, which is not there at the moment. That advantage might kick in in the H2. It's very difficult to quantify, but it will definitely help us improve the margin, for sure.
Okay, that is great. Secondly, you mentioned the 25%-30% kind of growth in volume for the MDF segment. Could you quantify what growth will happen on the pre-lamination part? Because I think those gross margins are much lower compared to the MDF volume.
I think it's going to be proportionately. You know, today whatever mix we have in pre-lam and plain, in that same proportion we are going to grow across all segments.
Okay. Got it.
The plain proportion will also grow at the same rate, and the pre-lam will also grow at the same rate. In fact, in early Q2, our flooring will also be fully operational. That will start giving us incremental margins and higher realizations in the MDF segment for the same cubic meters sold.
What sort of capacity do we have on the flooring side?
Almost an annual top line of about INR 70-INNR 75 crore at peak is the capacity we have.
Okay. That's all.
Sorry to interrupt, Maitri. I'll request her come back for a follow-up question, please.
Just one question, if that's possible.
Go ahead, ma'am.
Yeah. Any effective tax rate that you can guide for for the next fiscal year?
I think Sanjiv Ji, what is the effective tax rate for the organization for next year?
The effective tax rate is around 22% because we have the in the Greenply on the standalone, the tax rate is 22%, and our subsidiary companies, the tax rate is around 17%. Effective it will come to around 22%.
Right. Okay. Yeah. Thank you so much.
Thank you. Next question is from the line of Karan Bhatelia from Asian Markets Securities. Please go ahead.
Hi, sir. Thank you for the opportunity. Recently you've been referring to this new technology in production plywood facilities. Can you just give us broad detail what are you referring to? Is it to do with the productivity or is it to do with the cost savings, or how do we see this technology changing?
This technology cost and all is an outcome, but the primary objective of bringing in this technology is improving quality and making it to the global standards of plywood production, number one. Number two, it is also to make plywood more ready to be acceptable by machines and not humans. As you see, as the countries maturing or the category is maturing, the business is moving into the hands of OEMs. OEMs need a much more precise plywood than a carpenter can handle. Given all these reasons, we've moved into a way of producing plywood, which is seen in other parts of Southeast Asia, mainly Vietnam and China. We are calling this internally a ContiRoll technology, where there's a Conti assembly tables, and there are people standing on both sides, and they continuously keep assembling.
The material keeps getting cut and keeps getting stacked and taking the pre-press. Thereafter, the process is regular. This saves overall manpower, cost, material, as well as improves the quality drastically. So much so that, you know, you can even pre-lam the plywood right after the ply is made directly with paper instead of laminate. I think the with this technology in place, the company can really improve sales and margin, both.
Right. Right. Are we the first company to go ahead with this technology or it's very accepted?
Absolutely. Absolutely. We are planning a investor, you know, like an analyst meet or a investor day sorts in our Sandila facility where we'll be displaying to all of you our capability in this, since clearly showing you a difference between a plywood from a regular plant versus this new technology.
Perfect. sir, we've been mentioning of market share gains, you know, purely because of cost escalation, and, you know, early payment for raw materials. any commentary on market share gains because of BIS which was, you know, implementing in the last year? Any visible?
I think, I don't think there's a visible gain because of that. Yes, the visible nuisance because of that has come down. In MDF category there was a nuisance of import, right? That nuisance of import has gone down significantly because of BIS. Even in plywood, there were certain grades of plywood in the premium segment which was coming in from other countries. All of that is wiped out, which is definitely helping the category overall. It is very difficult to comment that how much Greenply has gained because of that. Yes, the nuisance that the company had to face in certain markets, that has gone down.
Thank you. That's a reminder.
Thank you. I request all the participants, kindly limit yourself to two questions per participant. Next question is from the line of Sneha Talreja from Nuvama Wealth. Please go ahead.
Hi, team. Thanks a lot for the opportunity and congratulations on the of numbers. Just couple of questions from my end. What could be the industry growth at this particular point and your market share both in plywood as well as MDF segment?
I think industry growth in MDF would be 15%-20% annualized growth. I think our growth is limited to the capacity we have. This year, more or less, we intend to, you know, use the dire capacity that we have to the fullest. In plywood, I think the growth is hardly 3%-4%. Yes, the industry size is huge, so opportunity for a player like us is not the growth, but the industry share size.
Your market share approximates?
I think it's very difficult to say in plywood. In MDF, I had calculated that around 8.5% of the total industry's sale would be ours at peak.
Understood.
At current levels, maybe 7%.
Understood. How is the competitive intensity in this segment? The reason I'm asking is, in the month of March and probably even April, we've seen a substantial increase in resin prices. Is it fair enough to say that unorganized player could have been more harder hit because of this situation?
Absolutely fair to say. I think suppliers have blackmailed organizations for material. Importers said that if you don't advance today and lock the price at this minute, you will not get the material. Same did the resin suppliers. Yes, for larger companies to cope up with this challenge was much easier than smaller companies. Yes, they have got hit. In certain areas we've also seen notifications where plants were running for three days and shut for four days in certain states in case of plywood, local plants.
Oh, wow. This has given us a substantial leeway in terms of market share.
Yeah. I think it's given every organized player a substantial leeway.
Understood. Lastly, how much would have been the total increase in the raw material pricing? You of course quantified on MDF end, could you quantify how much price increases you've taken on plywood as well?
I had mentioned that 3%-5%, 4%-5% is what we've taken in plywood from brand- to- brand, market- to- market, product- to- product.
That takes care, of course, of the complete cost increases so far. That's why you're confident of maintaining margins.
Right.
Well done, sir. Thanks a lot. Thanks.
Thank you. Thank you.
Thank you. Next question is from line of Anu Parakh from Anand Rathi. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity. My first question is, by when the furniture fittings business is likely to break even?
I think the year after this, somewhere in the middle of the year, we should reach a situation where the business starts breaking even. The reason is that, you know, we've already done the CapEx for both phases, and we have only installed machines for one phase. Our depreciation, our interest load is actually for a much larger business on a much smaller business in terms of production. Also, when we import the same product, which we are not producing here and selling, we're making very low gross margins. The expenses and the supply chain and all of that remains the same, very expensive and imported. The moment the entire product start getting made here, the gross margin of the company will improve, and we can start making margins.
Sometime this year or maybe the year after this is when, you know, we'll do the Phase 2, and after that the margins will drastically improve. The good thing is that, yes, we are seeing green shoots in terms of demand, in terms of the domestic sales and export sales. Both are improving and the products are really accepted. That's the silver lining.
Okay. Okay. The next question is, how have the timber prices behaved in quarter four for plywood and MDF? What is the outlook for FY 2027?
I think timber prices have been quite stable for us in quarter four, and the year ahead also looks like that. There's a wishful thinking deep within me which says that the prices should come down and, you know, we should get some windfall there. The real thinking says that, you know, let's plan for a stable year with the same price, you know. If there's any decrease, there'll be a additional gain. As of now, we are considering that it'll be the same. It'll be flat.
Okay. Last question is, what would be the revenue contribution from the PVC board business in FY 2027?
In FY 2027, I can give you the potential revenue of the line. You want the potential revenue of the CapEx? Because it also depends on how much you're being able to sell.
Yeah. Yes, sir. That works.
Okay. We'll give you the potential cap, revenue that we can.
[audio distortion]
Sreeni, what is the potential cap revenue we can achieve in the given CapEx we've already done for WPC?
INR 75 crore- INR 80 crore.
Around INR 75 crore-INR 80 crore is the peak revenue we can achieve in the given CapEx.
Thank you. Anu, I'll request you to come back for a follow-up question, please. Thank you. Next question is from the line of Aasim from DAM Capital. Please go ahead.
Yeah. Hi. Just actually I had a question. Actually, there was a earlier question on the receivables bit. You said Q1 has started off well, and this is despite the price increases. Now, I think, if your focus is rising on OEMs, that will have an impact on increasing overall receivable days. Just I wanted to understand, you know, given that Q1 has started off well despite price hikes, are we also incentivizing the channel by increasing credit days by any way to push growth despite the smaller players being on the sidelines?
No, I don't think we're doing any such thing. For the channel, the only policy we have is our standard credit policy in both businesses, MDF and plywood. The only thing we promote in channel is channel finance, which we have like, you know, four, five partners who provide our dealer distributor channel finance to transact with us. That's the only thing we promote in the channels. OEM is a strategic focus for us because we feel a lot of people in urban India don't want carpenters to come into the house and work, which basically means that their mindset is becoming more towards organized, readymade furniture buying. We don't want to ride slow in that category. We want to even capture that category because that category is ultimately replacing our sales. As a strategy, we are focusing on OEMs.
Okay. Ex of OEMs, there is broadly no change in your credit policies to the channel before and after the war?
Not at all.
It's broadly the same.
Not at all.
Okay.
Not at all. Not at all. We are not satisfied with these numbers. We are not trying to justify. Internally, we are also not satisfied. We also want to improve this.
Sure, sir. Good to know. Second bit just, on the CapEx. On the MDF CapEx rather, this year you said you'll spend INR 300 odd crore. If I remember correctly, the total budget was INR 450 odd crore. Have you spent anything?
in FY 2026 so far? INR 425 crore, sorry.
Uh-
FY 2026, any amount has already been spent?
We have paid only the advances for the main equipment supplier. It is around INR 10 crore. Rest of everything will be around INR 300 crore will be spent this year. Balance, it will be spill over to the 2027, 2028.
Got it. Okay. Those are my questions. Thank you.
Thank you. Next question is from the line of Arun Baid from ICICI Securities. Please go ahead.
Yeah. Hi, Sanidhya . Just one question here. On the plywood front-
Arun, sorry to interrupt. Can you speak a little louder, please?
This is better?
Yes, go ahead.
Yes, yes. Yeah, yeah, Sanidhya here. Just on the plywood front, do we see Mr. Rajesh Mittal coming back in a bigger way there? Because what I've seen, you know, when he was there, we had better growth in the earlier years. Is his involvement going much more than what we have seen in last five, six years in that category particularly?
Yes, I think he's been definitely a driver in every category. You know, whether it was Manoj Ji or me, we were going back to him and taking our inspiration and guidance and coming back and performing. I think he was anyways involved. He will be definitely more involved in the current scenario in the plywood side. Yes, maybe now more in the front end also. It was more back end in the last five, six years where he was taking care of the plants and the outsourced business much more than the, you know, market and marketing. Now maybe he'll be involved on that side also.
That's nice to hear. Second thing is on the MDF front, we have done a few new hirings. We have read about that. Is now more or less that's set from a perspective of the team-wise with all the new production capacities you got in place now?
Sorry, I didn't get your question. What? Sorry.
On the MDF front, we have seen you've done a few new hirings there also, right? Is now the team completely set with the kind of capacity we have in place now?
Yeah, it's absolutely set, with the new hiring and the team and, the new construction is also going on full swing and the current plant is running, the way it's expected to.
Great. Best of luck. Thank you so much.
Thank you. Thank you.
Thank you. Next question is from the line of Parth Bhavsar from Investec. Please go ahead.
Hi, sir. Thank you for the opportunity, and congratulations on the good set of numbers. Sir, I just have one question, which is on profitability of MDF. Profitability has, you know, increased by INR 2,000 per CBM. Just wanted to break that up, like what sort of contribution came from, you know, gross margin, where basically your realization has declined, and what sort of contribution was from operating leverage?
I think it's mainly on account of operating leverage only. If you see the previous, you know, quarter, the overall volume was 42,688 versus 62,021 CBM. 45% change in the overall volume and the fixed cost remains the same for the entire factory and the sales team and all the overheads loaded of that business. You know, that is what has majorly contributed in, you know, increase of margin. Even though the sales mix has reduced the average realization, but the overall margin has gone up because of the operating leverage.
Sir, the only reason I ask this is because the gross profit margin number that we've given, it was INR 16,000 per CBM in FY, basically Q3, and INR 17,000 CBM in Q4. Even that has improved by INR 1,000 per CBM, whereas your realization has gone down. I understand that your product mix would have changed, but this number has also improved.
This gross margin is also increased just because of the product mix, nothing else.
Okay. What is the-
We stopped. Yeah, the reason is also that, you know, we've stopped trading, you know. Initially in quarter two and quarter three to just, you know, service the market, we had to also buy MDF and sell MDF, which hardly had any gross margin and which was overall impacting the overall margin. Now in this quarter we hardly had any trading volume. That is also a reason why you see this margin.
Sir, basically your value-added product as a percentage of revenue, how much, sir, that would be?
I think it's difficult to comment, but it's around 5%-6% I think, right?
Value-added products?
No. Are we talking about pre- lam boards or you're talking about lam? What are we constituting as value added?
Value- added.
Only pre- lam boards you're talking about?
Pre-lam plus HDF HMR and-
That would be higher than 50%, but it's not, we cannot give you the exact number for that. That would be higher than 50%.
Okay. That would have changed quarter-over-quarter, I believe, sir.
Right.
Increase, hopefully. Okay.
Right.
Perfect. Thank you so much for answering my question, sir. Thank you.
Thank you.
Thank you. A request to all the participants, kindly limit yourself to two questions per participant. Next question is from the line of Nikunj Gala from Pararthya Capital Management. Please go ahead.
Yeah. Good afternoon, everyone. I've just one question on MDF side. At peak, you know, utilization of MDF capacity, what is steady state ROCE you aspire to have?
I think I've answered this question in the past also. In today's time, even at 17%, 18% EBITDA, the ROCEs are not very attractive.
Right.
You'll have to see these ROCEs on a three-year, five-year, seven-year period, and I think then it will start looking justified to us. In a short period it might not look justified today.
Yeah, I understand. What is the [crosstalk]
I think anything between 18%, 20%, if, you know, if we are in that range, I think we are very lucky and we are well-placed.
Okay. Yeah. 18%-20%, like any MDF player or, you know, you should be aspiring to have at least that kind of ROCE to justify your investment, right?
Right. I think, if you see the new CapEx also that we're doing, we've reduced the investment per cubic meter on a conti capacity. What we are trying to do with that change in CapEx behavior or CapEx style of investment is also only to improve the ROCE and to be conscious that, yes, see, for Greenply to grow and to remain dominant in the wood panel category, MDF is an absolute sense. To also maintain the ROCEs and make every work for every stakeholder, we've improved the CapEx turnover ratio so that the ROCEs can ultimately keep improving in this category going forward.
Okay. Yeah.
That is the reason why we have done INR 425 crore CapEx.
Okay. Thank you for your comments, sir. Yeah, thanks.
Thank you. Next question is from the line of Vijay Karpe from Shriram Life. Please go ahead.
Yeah. Thank you so much for giving me the opportunity. Sanidhya, l ots of question has been asked from the trade
Vijay, sorry to interrupt. Can you please speak through the handset? The line for the participant dropped. We move on to the next participant. Next question is from the line of Mithun Aswath from Kivah Advisors. Please go ahead.
Yes, sir. Congrats on a good set. I just wanted to understand, you mentioned that a couple of your facilities on the plywood side, you have used a different technology and upgraded it. Once you implement that in your other facilities as well, is there an improvement in margins? What is exactly the benefit? You will get better realization? If you could highlight on that.
I think the benefit is better quality and a quality which is more internationally acceptable and more acceptable obviously to the retail market as well as furniture makers. In return, because we've implemented this technology, as an outcome, we've realized that the cost will also slightly improve. At this moment, how much cost will improve, it's very difficult to quantify. Definitely there'll be a huge improvement in quality and overall perception of the material, which will definitely help us achieve better numbers, better sales.
Right. In terms of your debt levels, do you see them remaining at the same levels next year considering the large CapEx that you have planned?
I have mentioned this, that the current level is 0.52x, right? 0.52x debt-equity level. At peak, this might go up to 0.7x or maybe even 0.72x, which might be the next year-end or the year after that. Immediately the following year it'll again come back to the 0.55x or 0.52x level because the company is also the operating cash flow also continuously increasing with the given CapEx plan.
Right. Just wanted to understand in terms of the competitor environment. Do you see a lot of players continuing to ramp up capacity on the MDF side? Or do you see that we have kind of reached some sort of equilibrium and that's not to be seen now?
I think there are certain players whose plants are either starting construction or due to end by the year end. They have already started. I don't see any new major capacity being announced other than which is already announced. That is a good sign. As far as Greenply is concerned, with our brand, you know, first two to three lines we should have zero complaint of sales. You know, honestly, I'm not focusing on that. I'm only focusing on our line running, our material getting sold, and our new facility getting constructed. We're not focusing on what the outside world is doing because we feel that, you know, with our given brand, first three lines should be very easy to sell.
Sure. All the best. Thank you.
Thank you.
Thank you very much. Ladies and gentlemen, we will take that as the last question. I now hand the conference over to the management for closing comments.
Thank you all for taking time to participate in this call. In case of any further clarification or queries, please feel free to reach to us. Thank you.
Thank you very much. On behalf of Asian Markets Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you.