Ladies and gentlemen, good day, and welcome to the Greenply Industries Limited Q1 FY25 earnings conference call, hosted by Asian Markets Securities Private Limited. 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 date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. Actual results may differ from such expectations, projections, et cetera, whether implied or expressed.
Participants are requested to exercise caution while referring to such statements and remarks. As a reminder, all participants' lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I'll hand the conference over to Mr. Karan Bhatelia from Asian Markets Securities Limited. Thank you, and over to you, sir.
Thanks, Neha. Hi, everyone. On behalf of Asian Markets Securities, we thank you for joining us on the Greenply Industries Q1 FY25 conference call. So in the panel today, we have Mr. Manoj Tulsian, Joint Managing Director and CEO, Mr. Sanidhya Mittal, Joint Managing Director, Mr. Nitin, CFO. May I now invite Manoj to begin the proceedings of the call. Thank you, and over to you, sir.
Thanks, Karan, and good evening, everyone. It's a pleasure to have you all on this call. I'll be updating you on Greenply's operating and financial performance for quarter one and FY 2025. I'm happy to share with you that we have achieved a consolidated revenue of INR 584 crore during the quarter, a growth of 35.7% YOY. During the quarter, our consolidated EBITDA also grew by 101.6% on a YOY basis to INR 58 crore, and the margin during the quarter was at 10% as compared to 6.7% in quarter one FY 2024. Our profit after tax for the quarter was at INR 33.2 crore, which includes the impact of income tax refunds pertaining to earlier years. Now, I'll share highlights of the individual businesses.
In our Plywood business, our volume grew for the quarter, growth for the quarter was around 8.6% YOY, and value growth for the quarter was around 7.1% YOY. On the margin front, our adjusted core EBITDA margin for the Plywood business for Q1 was 7.9%, as against 8.7% in quarter one FY2024. The margin declined on a YOY basis by 80 basis points due to increase in raw material prices. Moving on to MDF business, our revenue in Q1 was at INR 132 crore, very similar to that of quarter four FY2024, and volume at 42,734 CBM. However, we improved our realization to INR 3,817 per CBM, which is an increase of 10.6% over the last quarter.
I'm also happy to share with you all that we have also improved our EBITDA margins during the quarter to 16.6%, as against 14.1% in the previous quarter. We are confident of continuing this improvement in performance in the coming quarters. More details on the MDF business will be shared by Sanidhya later on. On a consolidated basis, our net debt levels are at INR 431 crore, against previous quarter net debt level of INR 502 crore, which is a reduction of almost INR 70 crore.
The reduction has been possible owing to many reasons, including reduction in working capital, utilization of GST credit in our MDF business as we continue to ramp up, and cash profit generated due to strong profitability during the quarter. We continue to maintain our year-end debt guidance of around INR 450 crore. With this statement, I would like to hand it over to Sanidhya to provide more insights on our MDF business.
Thank you, Manoj Ji, and good evening to everyone on the call. In our MDF business, we are progressing well. I'm happy to share with you that our realization has improved substantially during the quarter as we focused on value-added products, such as pre-laminated boards. Pre-laminated boards contributed to almost 22% of total sales in the quarter. During the quarter, we were able to improve our raw material cost as a percentage of sales. In the current quarter, as a result of significant focus on effective sourcing strategies, as well as significant process improvements as we continue to learn.
Our other expenses have gone up as we have started putting additional efforts on sales and marketing activities. We have also initiated CapEx program to set up our production capabilities in the value-added products, such as MDF flooring, pre-laminated boards, et cetera. We are also building the in-house resin production capability and for acquisition of other general fixed assets. With this perspective, I would like to open the floor for the Q&A session. Thank you.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking the question. Ladies and gentlemen, we will wait for a moment while the question queue is seamless. The first question is from the line of Hrishikesh from Kotak Bank. Please go ahead.
Hi, it's Agar , good evening. Hello.
Hi, good evening.
Hi, good evening. Sir, just one question: When I look at your MDF profitability, especially comparing Q1 with Q4, now, if I look at it, volumes sequentially are lower. Your overall revenue, you are broadly flattish, but your margins apparently have seen a significant expansion of almost close to 17% compared to 14%. So how should we reconcile this in the absence of operating leverage?
I'll answer this question. I think we've sold a better product mix in the market, so even though the absolute number in CBM remains kind of minus only compared to Q4 when you compare Q1, but because the product mix which we've sold is much better, the realization is better, and hence there is better profitability.
Just one clarification: Has there been increase in timber cost sequentially in MDF segment?
Yes, there has been slight increase in timber cost. It's not that it's not a zero increase. It's on the upward trend, but, you know, compared to the peers, I think we are in a more comfortable situation in Gujarat.
Okay. Okay, thank you.
Thank you. The next question is from the line of Keshav Lahoti from HDFC Securities. Please go ahead.
Hi, thank you for the opportunity. Sir, congratulations on good set of numbers. So want to understand, because of change in product mix, which we are seeing each quarter, improvement in product mix, so how much, you know, product mix can bring, you know, improve margin from here onwards?
I want to imagine a very big number, but, you know, it's very difficult to say. You know, things have worked for us in quarter one, whatever we were planning. And honestly, you know, last year, our attitude in MDF business was to grab the market share. And, you know, Greenply has been a branded player selling, you know, kind of the most expensive plywood in the country.
So our focus in MDF also remains the same, that we want to really grow and become big in the value-added segment, you know, whether it is the higher density boards, whether it is Boil Pro 500 or the Club . So our focus is there. How much we'll be able to achieve and how continuously we can keep improving, I think that will be speculating. Internally, obviously, we want to achieve maybe 100% of our sales and value added. I don't know how much practical it is.
Understood. Got it. What is your guidance for this year for MDF volume and ply and margin side?
Manoj?
I think we already gave the guidance on MDF. On the margin side, we said we'll be around 8-16% this year. So good that in the first quarter itself, we have been able to hit that number, so, you know, our confidence has grown further. In terms of overall sales for MDF, we have said that we'll grow at 50%+ in MDF over previous years. And, coming to plywood, we said that our volume growth this year would be close to around 8%-10%, and margin can be flattish, you know, or plus minus 50 basis points here or there.
Because right now, if you see first quarter, it has not been great in terms of margin, again, the type of pressure which we have been facing, and I, and I don't see that coming down in quarter two also. So I think margin, you know, though internally we are feeling that we can improve, but at this point of time it looks slightly as a challenge to improve the margins this year.
Understood. Now, in ply we have been, you know, hearing the industry might take a hike in its prices in next one month. So what is your sense on that? Is the Greenply also planning some sort of hike in ply segment to pass on the timber cost?
Yeah. So I think what you have heard is right. You know, we have already taken one price increase during this quarter, but the impact of that will be visible only in the coming quarter. So we, we took it around June. And looks like we might have to plan another price increase also, so in the coming quarter.
Okay, and the hike was like 3%-4%?
No, no, no, no. See, it was different in different product categories, but, you know, mainly if you've seen plywood, I would say it was in the range of 1.5%-2%.
Okay, got it. One last question from my side. This quarter already you did, you know, 17% margin in MDF, and possibly, ideally, what we hear from industry, the prices are at its bottom. So won't you like to, you know, increase your guidance? Because it's just the Q1, and the volumes should be better in upcoming quarters also. So that way, is the margin guidance quite conservative?
I don't think so, because, you know, I mean, we've been able to sell this kind of value-added mix in Q1. We hope to improve this mix going forward, but, you know, you never know, you know? We don't want to overcommit. I think, let us deliver first.
There is a pressure on the raw material side, for sure, okay? And I think all the industry players are under pressure. Good that at least we have been able to improve our margins. It will also be a factor of how the industry behaves. So if most of the players you know looks at price increase, then possibly, you know, we'll also follow the same, in which case we might add delta to our margins further. But on a steady state, I think, you know, if we assume that if things are the way they are, 16%-17% margin is now looks like something which is doable for us. Maybe we can improve also on the existing one also.
Got it. That is helpful. That's it from myself.
Thank you.
Thank you. The next question is from the line of Sneha Talreja from Nuvama Wealth. Please go ahead.
Hi, good evening, sir, and thank you a lot for the opportunity, and congratulations on the set of numbers. Just on expansion on the first question which was asked, which was regarding your MDF margins, it really surprised us positively despite operating the leverage on a quarter basis. And, you know, you gave a giving of product mix. We just wanted to compare your and, you know, your peers' product mix.
It seems that, you know, they've got a better product mix. Your prices have moved up for both. Besides that, you've shown a sharp decline in margins, versus you've shown a sharp expand, if you wanted this kind of expansion. So just wanted to, you know, get more reasoning from you. Has there been any price revisions from your end? Because we heard of discounting from their end. Have you increased any prices, or are you planning to do anything of that sort?
No, honestly, but this year we haven't done any new price cuts or, you know, any new schemes. So whatever was continuing last year, we just continued the same, but we were very clear that in our approach, that we are going to change the mix itself, because of which the average value of every truck will go up, the average value of orders will go up, and hence the realization and eventually the bottom line. So I think our focus worked for us. We haven't increased any scheme. There were a lot of people in Q1, I don't want to name any particular company. People have increased their outflows in Q1 further compared to Q4, but Greenply has not increased any outflow in Q1 compared to Q4.
I mean, it's also the cost efficiency that has come into play. Sorry.
No, Sneha, to add to this, if you all recall, last year, we continued to maintain that, you know, this MDF plant takes some time for getting better operational efficiency on the production side. Okay. And in the last call also, we mentioned that, you know, now we have started working on the internal operational efficiencies to improve, and that will add up to the margin percentage, because, you know, our margin percentage was very low in last quarter.
So, some of those things have also started working, you know, which is helping us to improve our overall cost of production at the plant level. That is not nothing new, nothing, you know, this is like the industry, the way the industry behaves that after 2, 3 quarters, you know, you are able to get better operating efficiency at your production site. That helps you to bring down your costs of production.
Just to, you know, continue with the question, what would be your average tender prices for this particular quarter as well as, you know, quarter four?
Around INR 6 something.
INR 6, yeah, INR 6.
Around INR 6, but in the range of INR 6.10-INR 6.20.
Largely flattish or 3-4 odd% up, maybe?
Uh, almost-
Slight, slight increase or flattish or slight increase, maybe 2% increase.
Understood. Understood. You know, I mean, getting back to the question, of course, you know, you already have done 16%-17% kind of margin utilization level is still, you know, lower than the peer. Given that, you know, you see increase in value-added share, given that you will also see increase in utilization from here on, what's stopping us to, you know, give a higher guidance in terms of margins? And secondly, just to, you know, extend the question, looks like, you know, everyone has been speaking about bottoming out situation and, you know, pricing at rock bottom. Any talks on to raise prices, given that raw material prices have largely stabilized at this point of time would be very useful.
I mean, the reason we can't commit for a higher margin or, you know, give a projection for a higher margin is because in Q1, literally every other month or every other day, whenever we had an internal review of the sale, we realized that the competition is further cutting prices. We were very comfortable in the existing volume. We could not grow our volume, but to sell the existing volume at our old prices, whatever we were selling last year, we were very comfortable with a better product mix.
So, you know, that kind of makes me, like, I'm not comfortable kind of giving a higher guidance because entire Q1, everybody was, you know, cutting prices, including the month of July as well. So I don't know how the industry is going to stop and increase prices. I'm very confident of our working, that we've committed 16% plus, that is what we're going to deliver through the year. Whether the industry takes a rise, does not take a rise somewhere.
See, if the industry takes a rise, Sneha, you know, for sure, you know, our margins will also improve. Okay? But assuming at the, at the competition at this point of time, this is what we were looking at, mostly from our own, internal operating efficiency build-up. So if you really ask us, we are happy about it, that the two things which we were able to do, one, we are able to build up on the operating efficiencies internally. And second, as Sanidhya is saying, that, the product mix is something where we are able to do certain, something better.
Understood. Understood. Thank you so much.
Maybe after quarter two, you know, if the quarter two also, you know, we are able to do around 16, 16.5, or 17, then, maybe we'll be in a better position to even give, or revise guidance for the rest of the year.
Understood. Volume-wise, whatever guidance you have given, you would want to stick around that?
Yes, yes, yes. Yes.
Understood. All the best, sir.
Thank you.
The best thing.
Thank you. The next question is from Udit Gajiwala from YES Securities. Please go ahead.
Yeah, thank you for taking my questions, and congratulations on a great set of numbers. So barring MDF, if you can comment, I mean, what is the ramp-up at our SAMET project as well, and what kind of execution do you see for FY25 and going ahead as well?
Ramp-up which has happened on?
SAMET project.
SAMET project.
SAMET.
Okay. So SAMET, SAMET project, you know, we faced a few hurdles in the last quarter, maybe in terms of what we were planning versus how we were able to execute. One, there were delays in receiving certain machineries, which were important to ramp up the production side. In fact, those machines have still not been shipped. So, you know, we have there is a delay on account of that, and also to certain extent, in terms of hiring certain key positions, not the key position, but the team below on the sales side. So because of these two reasons, whatever we could have sold also in quarter one, we really could not do much.
Quarter two, we are assuming that, you know, given that some of these factors will get corrected, we'll start selling from the month of September, and quarter three, we will build up on the same, because by the time that line will also come in, it will get installed also. So from quarter three, we will be in a better sales position into the market. Most of the other work has been done. All civil work, everything is completed, so the plant is fully ready to produce. It's just that some of the key machine has got held up.
Got it. Got it, sir. So, I mean, where we are planning, you know, to ramp it up in next three years, say by 2027, you wanted to reach a peak revenue. That still holds, right, on an annual basis?
Yes, I think given our strength of distribution and, you know, given the type of response right now, what we have got already, okay, I think that is still doable. We'll be able to catch up for sure.
Got it. And so just couple of clarification in the opening remarks where you stated that, being in Gujarat is somewhat beneficial right now in terms of timber. So what is the difference between the prices that you're getting in Gujarat versus the north and south average pricing?
I think, when you-
North is around INR 0.50, more expensive, I think, and the south is around INR 0.40, INR 0.35-INR 0.40, maybe still cheaper.
Right.
That is what is my idea, right?
Absolutely.
Yeah.
The north is almost around INR 7 on average.
North is around, you know, INR 0.50-INR 0.80 expensive than, you know, our average, and south would be maybe around INR 0.40-INR 0.50 cheaper than our average.
Understood. Understood, sir. And so just on the opening remarks by Mr. Sanidhya, he stated that in the CapEx, you are doing some internal raising thing as well. So what will be the CapEx cost for this year, and what is this in-house raising that you all are planning?
So, to set up an in-house resin manufacturing plant, you basically need the environmental clearance. You know, we were waiting for that. In Q1, the company was able to get the clearance. Now we are building our own capability for producing resin for our MDF plant so that we can maintain the quality, cost, et cetera, on a long-run basis, and also to secure the investment, you know. You are running such a big line, you cannot be dependent on a small vendor sourcing your resin. So, you know, we wanted to quickly ramp up and start the production, hence, we started even without the resin facility, which was in our plan to take permission and then eventually set up. So that's going to be implemented. Along with that, we're implementing flooring line and some other small value-added CapEx.
The total CapEx as a company for this year, we had estimated around INR 70 odd crores. It will be in that range only, including for MDF, these new additions, what we are talking and even plywood, the normal CapEx, what we will do, the regular maintenance CapEx, everything together.
Understood. And so just lastly, if I can squeeze one, the in-house capacity for plywood, what will that be currently, and going ahead, do you plan to add any brownfield expansion here or some other plans to add capacity for plywood? That's the last one from me.
Yeah. So, you know the existing capacity, I think it's given in the presentation, the 52,
48.4 will be.
Forty-eight point-
We are testing the capacity.
48.4. We have done some line balancing, as I had mentioned in the last quarter. We are getting that certified, and we'll come back with the revised capacity, which will be maybe additional, you know, 2.5 million-3 million square meters. And, yes, I, I don't think this will be adequate enough for us to cater to our next year demand, so we have now started planning, you know, one new facility.
Got it. Those plans might be finalized in coming quarters or so, or is there something on drawing board that you would like to give directional number?
So, you know, 3-6 months is, I am sure, within which, you know, we'll have to finalize everything. And, then another 6-9 months, for the plant facility to come. So I would say around 15 months from now, we should be able to see a new facility.
Got it. That's helpful, sir. All the best.
Thank you.
Thank you. The next question is from the line of Bhavin Rupani from Investec. Please go ahead.
Hi, sir. Thank you so much for the opportunity. My first question was related to MDF. Sir, in the press release, you have mentioned that some expansions of MDF to be completed by FY25. Can you please provide what capacity addition that we are planning over here?
So basically, I think we had spoken about the extension provision that we have from the machine supplier, that our existing line is an 800 cubic meter MDF line, and this line can be expandable to 1,000 cubic meter. Basically, we can increase the capacity by 200 cubic meters per day. And for this expansion, we have already funded the CapEx through internal accrual, and we've already imported the extension. However, at the moment, we are not in a position to do this because our supply to the market is hand-to-mouth, so whatever we are producing is what we are selling typically every month. So because of this situation, we are not in a situation to shut down our plant and increase the capacity.
Whenever we have the next capacity or if we have a cycle when we get some time, we are going to quickly take a 20-day shutdown or a 25-day shutdown and increase our capacity further. But right now, we are not in a situation to commit when this can happen, because we are really hand to mouth as far as capacity and market serviceability is concerned.
In the press release, you have mentioned that we are planning to add this capacity by end of FY25, so this should happen anytime in the next 9 months?
Sorry, come again?
In the press release, we have mentioned this capacity to be completed by FY25, March 2025. So should we assume that it will come up in the next nine months?
I mean, we were hoping that, you know, we'll be able to build some buffer, and we are going to get this window some point this year itself to do this, but I'm not sure if we'll be able to finish it this year. Maybe it gets carried on to next year also sometime. But we have to see, basically, we need around 30-40 days of excess inventory with us. We're not being able to produce that. We've been trying since last year.
We need to ramp up our production further. If we are able to do that, and if we are able to create some spare inventory, then for sure, you know, we want to do it, within March. Because, you know, we'll prepare ourselves for the next year in that case.
Got it, sir. And sir, as far as value-added product is concerned, we are right now at 17%-20-odd% right now of the total production. Where do we see this increasing to after this expansion?
See, with the line getting extended, it has nothing to do with value-added products. We are investing into newer product categories like HDF flooring. So HDF flooring is a value-added product within the MDF range. So if we can scale that up, our average realization and average profitability for the entire plant keeps going up. So similarly, we will keep investing into value-added products. So for the moment, we have invested into a flooring line, and also we've invested into some new prelam presses, and we, we intend to increase our Prelam business as well as our Flooring business. And in the near future, maybe next year, next to next year, every year we want to add a product or two in the value-added segment and keep growing the offerings in the value-added segment.
This 200 CBM that you're talking about, this will be totally prelam or will be value-added product, is what we can assume?
I'm talking the raw board, so the main MDF line today is the 800 cubic meter line. Tomorrow, this line, after expansion, becomes into a 1,000 cubic meter line.
Got it.
The raw board, you know, it doesn't matter what you are producing the raw board. Whether you're producing HDF, MDF, it doesn't matter.
Got it. And also, sir, is it possible for you to comment on the margins for value-added products and on the standard MDF? What would be the differential in margins?
I think within value-added also, each product, kind of differs only... I cannot give you a number. It'll be vague. Sorry.
All right. And sir, last question is related to plywood. Is it possible to provide the breakup of mass and premium volumes during the quarter, proportion of mass and premium?
Proportion of?
Mass and premium.
Okay. Volumes you want, right?
Volumes and value, both.
So volume is, premium is 44%, and, the value segment is 56%. And in terms of value, it is 57% and 43%.
What would it be last quarter?
Last quarter, premium was 43%, and your value segment was 57%.
What about last year, FY 2024?
Q1 FY 2024, we were at 45% and 55% premium and value.
All right. Perfect. That is helpful, sir. Thank you.
Thank you.
Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Ritesh Shah from Investec India. Please go ahead.
Yeah, hi, sir. A couple of basic questions. Pardon me for my ignorance. Sir, first is on MDF. I understand, like, the larger companies, when we order the equipments, it's predominantly from the same equipment supplier. So I was trying to understand, basically, how is the market segmentation when we understand, when we hear the market sizing, let's say, 3.8 million CBM, how should one dissect it, on the basis of quality or on, or on the basis of thickness or on thickness and width? So when you look to optimize your pricing and margins, what is the difference that we offer in the marketplace?
3.8 million capacity, if we have to break that between, let's say, you know, all these automated machines versus the Chinese machines.
See, I think 70%-80% is with the OEMs, with the larger guys.
Yes.
Maybe the top five companies.
70%, yes, now, yes. 60%-70% is all automated machine. You know, there, there are two major manufacturers, if you really see, and then, then they have some extended arm in China, through which also they supply, but I think they are all equally good in terms of quality. So, I, I don't think that you will be able to differentiate much in terms of quality of the major players. And, in terms of thickness also, Sanidhya, can you give some more idea on thickness in terms of... See, we can speak about our thickness, our range, and we can speak about-
Like, we have to divide the total market into thickness.
He's just asking whether that is the right way to look at it.
I think the right way to look at it is what gets sold through the trade for us and what gets sold directly through the OEM. OEM is typically at a lower price point, and it is the mass product. If you look at trade, that is actually where you're building a brand, and where you're actually building retail space, because that network is actually eating into the cheaper plywood.
Yeah.
The network of the trade. And that is where I think any brand today is making a buck. But for anyone who's wanting to pay a premium with the trade, who's wanting to pay the premium. And that is where, honestly, Greenply is enjoying its brand name, its, its relationship with the traders, which is, you know, probably now 3, 3.5 decades old. So that's where we got a, I think, a warm welcome, and, you know, we were able to establish ourselves very quickly.
Right. So what was the trade sale number by value and volume, if that's possible, for the quarter?
I can give you in percentage by split. Typically, my target for this year is 88% business from trade and 12% business from OEM.
Okay. And for the quarter, I think for in Q4 it was 73%, if I remember it right, via trade sales by value. So in Q1, what, what number was that?
Sorry, please come again.
He's saying in Q4 it was 73%. No, I, I also don't think so. If in case we mentioned that possibility, there might be a mistake. But what we can do is we can recheck those numbers and maybe, you know, somebody from our team can get back to you on this.
Sure, sir. Sir, if I just-
Right now.
Sure. If I just put the question in the other way around, does the thickness of the material vary when it goes into trade or when it goes into mass? Because I understand the equipment that we have is from 2.5 to 40 MM. So when we sell something from an end application standpoint, be it trade or mass volumes, is it, is it something which is different or is it probably, the same, similar?
No, no. I think every type of thickness can be sold to OEM and to trade. There is lower thickness in trade as well as in OEM and even higher thickness, same applies. I think grades vary. So the moment you go to trade, you can sell more of your MDF, and the more you are OEM, maybe you will end up selling industrial grade more. So as a company, our focus on industrial grade or on interior grade is very low. Our focus is on all other grades. So hence, we don't want to focus too much on OEM at this point, because, you know, we have only one line at this moment. We want to optimize the maximum out of this. Tomorrow, when Greenply has another line, the strategy might be different.
Okay, so just to-
Application, see, you know, in case of MDF, you have applications. That's why one has the liberty to sell, you know, different thicknesses also. So because MDF goes much beyond furniture making.
Right. Sir, sir, the idea to answer this question was to understand and appreciate the margin profile that we are churning right now. So to what I understand is amongst the organized players, product is not a mode. Everybody is getting the same output probably from the same equipment supplier. It is the mix on trade and non-trade, that is what is the key differentiating factor. Is that the right way to look at it?
Yes, that is one, trade and non-trade, and then within the same trade, again, you know, what type of product which you are able to sell.
Okay. Sir, a related question: If one has to look at imports into the country, are these imports more on the thinner gauges or is it more on the thicker gauges? The idea to ask this question again is, so the Baroda plant, what you have, do you configure it for a particular thickness, so that you can avoid the imports, direct competition, and that's where we are getting better pricing and better margins?
Sorry, can you please repeat the question?
I don't think so that is the differentiator, okay? Mainly, the import market, you know, depends on your interior grade. They don't have the value-added products today, which actually really comes to the Indian market. And again, there is a differentiation in terms of, you know, the density of the product, what we manufacture in India versus what gets imported. So it is actually not even a one-to-one comparison thoroughly.
Yeah, and if the comparison between imported and our product, there's a huge difference in the raw material. I mean, most of the material which is imported is rubberwood, you know? So the nature of the product and the workmanship on that gets very difficult. So when we compare import, actually, it's not an apple-to-apple comparison.
It is not.
The industrial grade, which the competition talks about, I don't think we even make it, you know. The commercial grade or the industrial grade, we don't even manufacture it, which they manufacture to compete with imports. Honestly, we are not competing with that segment.
See, it's like in plywood also, when you look at when we say that, you know, the unorganized market is 80%, organized is 20, or let's say 75, 25, there is at least a good 25 or 30 or 35% of the market where we can't even think of competing in those markets, you know, which is very low value added and very different in terms of product also. So similarly, one of the reason, if you really see that import has not been able to hit beyond the point domestic manufacturers, this is because the product profile is different. The customers are different.
Sure. Sir, that's, that's quite useful. Sir, my second question is on the raw materials, specific for the Baroda plant. Where do we procure the raw material locally from Gujarat or any of the other states or even Kerala? And have you also explored, importing raw material for this particular facility? And how should one look at the economics over here?
So I think, importing pulp, timber or pulp, grade chips at the moment is still not viable. The landed cost is, I think, I think INR 10,000+ at any Indian port today per ton, while we are still operating at, you know, around INR 6.10, we're still talking about INR 10. So there's a huge cost jump when it comes to imported. I know paper industry has been importing in India. We've been closely studying it, but we are not in a situation to act on that as of now. As far as our current raw material is concerned, so I think 50%-60% dependence is on, you know, Gujarat, Maharashtra. Balance dependence is on across India. And, yes, that is how we are operating today.
I think in the future, maybe next year, maybe, maybe the year after that-
... 100% of raw material will be locally available because now we are planting enough for the last three years in Baroda itself.
Okay. Sir, just last question. You indicated a new plant and a commissioning in, say, 18 months, if, if I heard it right. Sir, can you give some broad color? Just trying to understand it from a balance sheet standpoint, what sort of leverage indicative CapEx we are looking at?
See, if you look at, I think, this year, as we mentioned, our debt profile would be somewhere around INR 450-odd crore by the end of the year, whereas the net worth keeps improving. So, we'll be comfortably placed around 0.5 debt-to-equity this year. And looks like that, you know, we will be able to manage this debt profile of 0.5 going forward also.
Okay.
Plywood, you know, even if we invest in a plant, it will cost maybe around INR 120-INR 125 odd crore, at best.
Okay. This is very useful. Thank you so much, and all the very best. Thank you.
Thank you. Thank you.
Thank you. The next question is from the line of Karan Bhatelia from Asian Markets Securities Private Limited. Please go ahead.
Hi, thanks for the opportunity. Sir, just to continue with the plywood plant that we are evaluating. Will that be purely a premium kind of a production, or we are looking for a mix of premium and mass category?
No, no. Now, now, see, most of our plants, you know, we actually manufacture premium as well as mass category. Okay, and I, we felt that, that model works well.
Right.
There's a lot of controls which we are able to exercise. So, you know, yes, don't hold us by our neck, but, for sure, we'll have to come out with the plant. As I said, in fact, in the last call also I mentioned that we will need capacity addition in FY 26. What I'm giving right now is a tentative schedule, and I think-
Right.
Yes, within those 18 months, you know, we definitely will need a plant, otherwise possibly we might go short on growth. We might have to compromise on growth. So that's why I was saying 15-18 months, we'll have to get another plant.
That's right. That's right. Right. Right. And, with respect to, you know, debt reduction, you know, over a slightly longer period, 2-3 years, you know, what kind of average yearly debt reduction can we, you know, see?
Look, I think, I think the next big investment, whenever it happens, will be for the next MDF line.
Okay.
Other than that, most of the investments like, you know, setting up one plywood plant, which can help us to cater to our demand of next two years or three years, whenever we do it-
Mm.
is only around INR 125 odd crore. The other maintenance CapEx, in any case, will continue, for which I think our depreciation will be good enough to take care of the same. So the next big investments which will come is for setting up the next MDF line.
Right.
By the time, I'm sure that, you know, our debt already will come down to a level of around INR 200-INR 250-odd crore by the time we announce. So, and then again, you know, the investment of MDF takes place over a period of two years, normally.
Mm.
So, that's why we have been maintaining that. Looks like INR 450 crore of debt is something which will look like a peak debt going forward.
Thank you.
By having new capacity expansions.
Right. And are we looking at laminates as a segment as well?
At this point of time, I'll say no. We have just done a very small soft launch, which is purely on a trading platform. We just did it.
Mm-hmm.
Not even worth mentioning. Okay, so we are just trying out that how is the market today. We'll get a feel of the same for the next 6-12 months. Then anything, if we really want to invest on that, is something which we will, at that point in time, start thinking. At this point of the time, we might be doing something on the trading platform-
Right.
at a small volume.
Great, great. Thanks. Thanks for the clarification. I think that concludes my call.
Thank you. The next question is from the line of Mithun Aswath from Kivah Advisors. Please go ahead.
Yeah. So, congrats on a great set of numbers.
Thank you.
Yeah. So what is your take on your joint venture with SAMET? In terms of how large is this opportunity, and what kind of revenues are you looking to do this year? And just as a thought, this business may be higher ROC compared to your existing businesses, and you do mention that you want to put up more plywood plants and other units. Does it make sense to focus on this in an aggressive manner as well, since there aren't too many local players in this category, and you'd be one of the first? So I just wanted to understand.
Too many good questions. See, first thing first, I think, we will definitely work aggressively in terms of ramping up the same, but then, you know, even aggressive has limitations. Okay, because there are some very strong players who are here with, for ages, already into this market, selling similar capability in terms of the product engineering, side of it, okay? Yes, Greenply definitely brings in that added advantage of distribution and, you know, that has been the forte. SAMET definitely brings in very good experience in terms of engineering and the products, what they have already, you know, innovated. So those are the strengths on which we want to build up.
We, as we mentioned earlier, that, you know, our total investments in three phases, over three phases, would be close to around INR 250 crore, okay? Which will give us a capacity of top line of around INR 750 crore. Our initial calculation also shows that, you know, once this business gets built up beyond INR 300 crore, the EBITDA margin can be as high as more than 25%. So the business looks to be very good, very, very promising, and the first target itself would be to see that how fast we are able to ramp up over the next 2-3 years.
So-
Yeah.
As you mentioned, INR 250 crore. How much of that would be done in FY25?
FY twenty-five?
Yeah, FY 25.
We have done most of it in FY 2024 itself. We have done almost close to around INR 150-170 odd crore.
So far.
So far.
So today-
INR 140 crore-INR 150 crore was done by, completed by FY 2024. In FY 2025, we might add another 40 or 50, 50 odd crore, and then, in FY 2026, we will have maybe another 50 odd crore.
CAPEX number.
The CapEx number.
Is it safe to say that we can touch the INR 300 crore number in FY 26?
No, no, what are you asking? Are you asking about the, about the revenue?
FY26 revenue.
Revenue, yeah. Yeah, yeah.
Revenue from this business?
No, no. FY 2026, INR 300 crore.
Yes. Yes.
No, no, no, no. No, no, no, no. No, what we have given is possibly by FY 2027, we should be looking at a number of INR 250 crore-INR 300 crore, for sure.
Okay. Okay. And how many, you know, centers or places is the product available currently?
No, it's, you know, it's just a beginning, so I don't think these numbers will make any reference at this point of time. Give us two quarters, and then I think these numbers will have a lot of relevance.
Sure, sir. Thank you so much.
Sure. Thank you.
Thank you. Ladies and gentlemen, you may press star and one to ask a question. As there are no further questions from the participants, I now hand the conference over to Mr. Sanidhya 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 us. Thank you.
Thank you. On behalf of Asian Markets Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.