Ladies and gentlemen, good day and welcome to the Greenply Industries Q1 FY 2027 earnings conference call. As a reminder, all participant lines will be in the listen mode only, and there will 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Karan Bhatelia from Asian Markets. Over to you.
Good evening, Usha, and everyone present out here. Welcome to Q1 FY 2027 investor call of Greenply Industries. From the management, we have Mr. Sanidhya Mittal, JMD, and Mr. Sanjiv, CFO. I now hand over the call to Sanidhya for his opening remarks, post which we then open the floor for Q&A. Over to you, Sanidhya. Thank you.
Thank you, Karan, and good evening, everyone. It is a pleasure to welcome you all to Greenply Industries earning conference call to discuss our performance for the first quarter of financial year 2027. As highlighted during our previous earnings call, we were witnessing encouraging demand momentum across our businesses, and I'm pleased to share that this trend continued through the first quarter. In Q1 FY 2027, we delivered double-digit volume growth in both segments, in line with our guidance. On the marketing front, we continued to strengthen our brand presence and reinforce our commitment to sustainability during the quarter. We launched our One Sheet, One Tree campaign, a long-term sustainability commitment under which we plant one tree for every plywood sheet supplied for infrastructure and interior projects across India.
This is not a time-bound campaign, but a continuing promise that reflects our vision of contributing to a greener India alongside our business growth. The ongoing geopolitical tensions and the recent conflict in the Middle East resulted in elevated imported chemical prices, extending the sharp cost pressures observed towards the end of Q4 FY 2026. This price increased across the industry. As this situation gradually improved and supply chains normalized during the second half of first quarter FY 2027, input costs began to moderate. Consequently, the effective price increase currently stands at approximately 7%-9% in the MDF business and 3%-5% in the plywood business. We are regularly monitoring the situation and will take corrective measures as required. Now I would like to update you on Greenply Q1 FY 2027 financial and operational performance. Consolidated revenue for Q1 FY 2027 stood at INR 724.9 crore, registering a robust 20.7% year-over-year increase.
Our consolidated core EBITDA was INR 78.3 crores, with a core EBITDA margin of 10.8%, representing an expansion of 50 basis points year-on-year. Let me share the highlights of our individual business segments. In our plywood business segment, we've achieved a volume growth of 13.8% on a Y-o-Y basis in Q1 FY 2027, with a revenue of INR 526.6 crores, value growth of about 16% on a Y-o-Y basis. The realization stood at 265 per square meter, a growth of 4.3% on a Q-o-Q basis. On the margin front, our core EBITDA margin stood at 8.4% for Q1 FY 2027, a growth of 50 basis points Y-o-Y. Moving to MDF business, we've achieved a quarterly revenue of INR 195.7 crores with volumes reaching approximately 58,000 cu m. This reflects a strong Y-o-Y growth of 32.8% in value and 24.7% in volume terms.
The realization improved from 33,525 per CBM, a growth of 9.9% on a Q-o-Q basis. Margins for the quarter stood at 17.3%, supported by higher sales and operating leverage. Moving on to the furniture and fittings JV, we achieved a sale of INR 13.61 crores in Q1 FY 2027. The JV reported a PAT loss of INR 11.48 crores in Q1 FY 2027, with our share of loss amounting to INR 5.74 crores. I'm pleased to announce that the MDF segment commercial production of new flooring manufacturing line commenced successfully on 20th July 2026. This is marking another significant milestone in our growth journey. Our expansion projects, including the new MDF facility at Vadodara and the new greenfield plywood manufacturing facility in Odisha, are progressing as planned and remain on track for commissioning within the committed timelines.
On the balance sheet front, we continue to maintain a prudent financial position while investing for future growth. As of the end of the quarter, our consolidated net debt stood at INR 533 crores with a debt equity of 0.57x. This remains well within our guidance, for the range of 0.7-0.75, reflecting our strong, disciplined CapEx allocation and healthy financial position, even as we continue to execute our planned CapEx program. Overall, we remain optimistic about the demand outlook and the momentum across our businesses. With our expanding manufacturing footprint, strengthening brand portfolio, and unwavering focus on operational excellence, we are confident of sustaining our growth trajectory.
We are confident to achieve the target of 10% volume growth in plywood and 25%-30% volume growth in MDF segment for the full year and remain committed to delivering consistent, profitable growth while creating a long-term value for all stakeholders. I would like to open the floor for Q&A session. Thank you.
Thank you very much. We will now begin with the Q&A session. Anyone who wishes to ask a question may press star and one on their touch-tone phone. 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 a moment while the question queue assembles. The first question is from the line of Sneha from Nuvama. Please go ahead.
Hi, good evening, team. Thanks a lot for the opportunity. Just a couple of questions from my end. Firstly, just wanted to understand on the plywood margins front, while your gross margins have improved on a quarter-on-quarter basis, what could be the reason for a drop in your EBITDA margins? That is first.
I think the major reason for a drop is even though the volume growth we have been able to achieve, but I think the absolute number was very low, and the base in Q1 FY 2026 was kind of low. Even though we achieved the volume, but the absolute number is far away from the number we did in Q4. The moment we start reaching the Q4 number, which is anywhere close to 600 and 600+ every quarter, I think 10% plus is very easily achievable.
Could we aim that from coming quarter or for annual number, are you comfortable giving 10% as a margin guidance?
We still are very confident on the 10% margin guidance that we've given. The only challenge that we had in Q1 was that we lost out on sales. If you look at our overall utilization level in the capacity of the plants also, it was only at 92%, 93%, which last quarter was above 98%, 99%.
Ladies and gentlemen, the line for the management seems to have been disconnected. Please hold while we reconnect. We have the management back. Please proceed.
Yes, sorry. We were answering Sneha's question and the line got disconnected. The absolute number in this quarter was much lower than Q4, and I'm quite confident that once we do the much higher numbers in coming quarters, I think we'll easily be able to achieve the 10% guidance. Also, typically April, May, there's always a, plywood being a very manual business, I think the labor force availability in April, May is lower. There was election this time, so that's the reason our plant availability utilization was lower, and even outsourced utilizations were lower. That kind of did not help us achieve the ideal turnover. We could have done much better number. Going forward, I think we will get this 10%.
Similarly, on your MDF business, while your volumes now have again dropped on a quarter-over-quarter basis, definitely it doesn't increase. Your gross margins have actually improved and your EBITDA margins Actually, your gross margins have fallen and your EBITDA margins have improved. Can I just get the connection here also in the MDF side?
I think Sanjiv.
Sure.
I think if you compare from the previous quarter last year, we were sitting at about 46,000. Against that, I think we've done 57,805 cu m , right?
Yes.
Our volume is kind of gone up by 24.7% Y-o-Y.
No, I'm again trying to compare quarter-on-quarter. Quarter-on-quarter definitely there's a dip in MDF, which is seasonality, I understand. If I look at your gross margins, they have gone up. Let me just put it other way. In case of your EBITDA percentage margins of MDF, with whatever value-added share that you're doing, what could be the EBITDA margin movement that we can see even from these levels?
It's very difficult to tell you, but I think Sanjiv Keshri will come back to you that what will be the range.
So see-
Sure.
as per the capacity right now we have, the EBITDA margin will be around say 16%-17% on a sustainable basis. Once the other line will come up, where we are doing around 70% extra capacity we are adding. There we will get some operating leverage on that time. The EBITDA margin may increase by 1% further.
Understood. That time it can actually reach up to even 18%, is what you're trying to say.
Yeah, because one manufacturing location, people are not going to double with the capacity doubling. The cost won't double in that tune.
Understood. I'll get back in the queue. Thanks. Thanks, team. Have a good day.
Thank you. The next question is from the line of Jeeval Shah from VVD Asset Managers. Please go ahead.
Hi. Thank you for the opportunity. Could you please provide us an update on the trend in wood prices, particularly for the timber procured from South India?
Can you please repeat? Timber procured from South India.
Can you provide us an update on the trending wood prices, particularly for the timber procured from South India?
Greenply is honestly not very heavy in South. We're hardly procuring anything from South India. It's very difficult for me to comment about the South Indian timber prices. Very soon, once we have the Odisha facility up and ready, we are very physically close to Vizag. There'll be some amount of influence of the South Indian pricing on the pricing in Odisha also, that part of Odisha where we are going. Today, we have no connection to the South India timber prices because we are not treating that as attachment to source timber.
Okay, fine. No problem. That's it.
Thank you. The next question is from the line of Disha Chamriya from Trinetra Asset Managers. Please go ahead.
Hello. Are you there?
Yes, please.
Yeah. Thank you for the opportunity. My question was about, of this plywood volume growth, how much was the change in demand recovery versus how much was actually from the market share gained from the unorganized players?
I think if you look at the overall plywood number, I think 13.8% was the volume growth and value growth was about 16%. This is whatever green shoots we are seeing as a category post-COVID, I think definitely we are eating the share of the unorganized. That's why we are seeing these green shoots. Our numbers could have been much better than this. As I mentioned earlier in Sneha's question, that, A, there was a lot of disruption because of elections in manpower across all plants. April, May, the utilization levels were lower than expected, and also the outsourcing didn't work very well for us in Q1. Honestly, if these two things work, the number could have been even better. To be very honest, I think we've lost sales in Q1.
We are very seriously building Odisha, and probably even after that, we won't stop. We'll yet again build another plywood facility.
Okay. Another was on the plant. You said the commissioning would be starting from 20th July. Am I right?
Yes. 20th July, we did the first production for the-
Flooring.
for the MDF flooring. From this month-end itself, I think it'll be in the market. There should be some revenues in the MDF numbers starting this month for the flooring segment.
Okay. If I can get the utilization level that you see for the next quarter or maybe H2 FY 2027, how do you see this plan going on?
You're talking about the plywood business or the MDF business utilization levels?
Both, sir.
I think in plywood, honestly, we've even gone up to 98%, 99%, or 100%. Obviously the target will be to max out our available capacity. In MDF, I don't think it's practical to go above 80%, 82%. That will be the kind of target that at this year we'll want to operate our plant at full capacity, assuming that next year will be the new capacity addition, and we should be already ready to sell the new capacity we're going to bring in.
Okay. The demand is very strong. We missed a bit of the demand in this quarter, the same we seem to utilize in the next one. Am I seeing it right, sir?
Sorry, you are not very clear. Your voice is a little muffled. Can you please repeat?
Yeah. Am I bit clear now?
Yes. Please.
Yeah. My question was that this year, I mean this quarter, we kind of missed demand, from the next quarter with the upcoming capacity, we will also cater to the demand that we missed here, the utilization will plan according however you said by this year.
Right.
Okay, thank you, sir. That's all. I'll come back to you with the Queue.
Thank you.
Thank you. The next question is from the line of Resha Mehta from GreenEdge Wealth. Please go ahead.
Yes. Thank you. First, just a clarification. I think you called out some numbers, ply 3%-5% and MDF some 7%-9%. What was that being referred to? The price hikes taken?
The effective price rise taken. In MDF industry, the industry had taken about a 15% price rise, and in Q1, I think we've enjoyed about 7%-9% rise, and the balance got passed on in the form of schemes. That was the reference to MDF, and in plywood category, about 3%-5% was the price hike from different product categories and brands.
Understood. What is the reason for decline in gross margins in MDF? If I look at it Q-o-Q, there's a 300 basis points decline.
Right. I think there's a slight rise in the timber cost. Typically, when there's monsoon and the timber you start getting wet and the cutting stops happening. There's always a slight price rise that happens during this period.
Ladies and gentlemen, the line with the management has disconnected. Please wait while we reconnect. Ladies and gentlemen, thank you for your patience. We have the management line back. Please go ahead with your question.
Yeah. The other bit was on the ROCEs for MDF. I think last year, FY 2026, we were at around 8% kind of ROCE based on the capital employed numbers, the margins that you gave. How do we go to 17%-18% targeted ROCEs for the MDF segment?
I think it is a multiple approach that we are trying to take at Greenply. We are trying to be very cautious of the CapEx that we're doing for the line 2. Over there, we are working on improving the asset turn ratio. The CapEx that we've announced for the second plant is much lower CapEx per cubic meter compared to the CapEx we've done for line 1. That on a long-term basis will help us achieve better numbers. Also, the first two, three years we were kind of setting up our business. The numbers are very bad. Right when we started, I think there was a lot of competition. I think Greenply is a very strong player. We've been around for four decades and ready for the next four.
I think, on a long term and a medium-term basis, I'm very confident that we'll do 17%, 18%. When Greenply was one entity, we've seen MDF business perform between 2008 and 2018 till Greenply demerged. On a long-term period, we've seen great ROCEs in this business. There'll be times when people will be putting too much capacity, then everyone will get demotivated. The market is going to catch up to the capacity. Everybody will make money. Again, bad times, good times. Every five year, seven year period if you see it, I'm very confident that we will be at that 17%, 18% level. Honestly, that's not the best level. It's a basic acceptable level.
Right. What margins at what utilizations what are the three, four milestones which we will hit will lead to the 17%, 18% ROCE-
I think we have to-
which you are probably targeting?
I think we'll have to sell 100% of our capacity profitably, then only we can get closer to that number. We have to be very careful in all the CapEx initiatives that we are doing in the future so that once there is scale in this business, it should make sense. Today, this business is very small for us. Eventually, when the scale of the business should make sence.
Right. I think you did mention that you all are being cautious in your capital outlays for future CapEx in MDF. I think for this newer plant we've gone ahead with Chinese machinery. If Chinese machinery were cheaper and probably it had lesser downtime, then why wouldn't we have gone ahead with the Chinese machinery back in the day when we actually set up our greenfield MDF facility?
I think it was, being very honest, it was a learning curve for the organization, number one. Number two, also the first time around, we didn't want to take a chance. We were announcing Greenply's entry into this category. The day we were investing into the MDF line, our net worth and the investment was the same. We wanted to be very careful. We wanted to go for a sure thing. Honestly, technology is changing every day. In the last two, three years, honestly, there's been a better development on the Chinese machine sides. Even the new line is a combination of Chinese and European. Where the heart of the plant is where we manufacture the fiber, that's still 100% European. The press is converted from German to Chinese because honestly, we found better merits in this Chinese press.
Understood.
Specifically on the 4 ft line.
Yeah, specifically on the 4 ft line, which we are investing in currently.
Right. On the ply side. Just a legacy question here. If I look back at your last three years of ply growth, average ply growth for us has been around 8%, and for Century, that's been at around 13% CAGR. What have been the reasons for this gap and have we tried and fixed those? Because I see that of course since the last two, three quarters our ply volumes are up with our focus on Ecotec. Historically, what were the reasons for lower revenue growth in ply versus let's say the leader here?
Honestly, I think we were busy implementing and setting up an MDF business. We were getting into furniture JV, and we were expanding categories And trying to make a big change from Kolkata to Mumbai. When we were doing all of this, I think they were busy in planning their hypergrowth in plywood. Our growth stage planning or the hypergrowth planning, I think we missed that out by two years. Honestly, we paid that price in the last three years. I'm quite confident that going forward, we're not going to pay that price.
Absolutely right. Lastly, on the ply margins, again, if I compare our margins with Century. We have been at around 8.5% average EBITDA margins over the last three years and versus Century at 13.5%, 14%. Now we are guiding for around 10% margins. Do we think that with scale, with the kind of INR 600 crore quarterly revenue run rate that we are targeting, can we also reach 13%, 14% kind of EBITDA margins?
Honestly, if I do Century type of number, I would do probably higher than even 13%, 14%. Anything 600+ , if I'm doing at today's cost base, I will be at double digit for sure, 10+ . If I start doing an INR 800 crore number in plywood for the quarter, even I would do about 13%, 14%, 15%. It's not a challenge. Beyond the point, I think they're getting the advantage of scale. Also, for us, the businesses got demerged long ago. All the cost gets loaded onto the largest business, plywood, on turnover basis. Once as they scale in the MDF business and we enter newer categories and there's enough scale there, automatically the apportionment of cost would improve on the plywood side, and 1% or 2% should improve from there as well.
Got it. Thank you so much.
Thank you. Ladies and gentlemen, in the interest of time and fairness to others, we request you to restrict to two to three questions per participant. The next question is from the line of Parth Bhavsar from Investec. Please go ahead.
Hi, sir. Thank you for the opportunity. I had a couple of questions. The first one related to employee cost. If we look at our employee cost on quarter-on-quarter basis, both in terms of absolute number as well as percentage of sales, it has gone up substantially. Can you throw some color on this? What has led to this?
I don't think there's substantial increase. I think partly the provision for increment that will be given from 1st April onwards. That's the provision and lower sales. I think these are the reasons why percentage from the cost looking out and absolute terms it has to be higher because we've taken the provision for increment already.
Sir, what would be the normalized number? Again, that would be INR 89 crore sort of a number? Or what would be the provision that you've made if that is available?
This quarter we have given around INR 98.88 crore. This INR 100 crore would be the, I think, for the year is the quarterly number would be.
Okay, it will be in this range only.
Yeah.
Got it. Sir, the second question that you've commissioned this flooring MDF. Wanted to get some sense on what is the capacity like or you can give us a sense on what is the potential peak revenue basically for this business, for this sector.
Potential peak revenue from this would be at about INR 75 crore, INR 80 crore, I think. Somewhere between INR 75 crore and INR 80 crore is the potential peak revenue. However, when we start achieving potential peak revenue, we'll miss some of the plain board sales because today, let's say a panel is getting sold to the plain board at, say about INR 24,000, INR 25,000 realization, and that would get sold after getting converted into flooring at about INR 60,000, INR 70,000 per cubic meter. Definitely value terms overall we are going to grow. In cubic meters, the plain board will get replaced by flooring.
Got it. Perfect, sir. In terms of CapEx. Hello?
Yeah.
Sir, just wanted to get a sense on your CapEx for 2027 and 2028. Hello?
Ladies and gentlemen, the line for the management has disconnected. Please wait while we reconnect. Ladies and gentlemen, we have the management back online. Please go ahead with your question.
Yes. You were talking about the CapEx for this financial year, right?
Yes.
For the current financial year, I think in the parent standalone GIL, we would have about INR 47 crore of total CapEx, including loss funding for Samet. In GSPL, we would have at around INR 100 crore. In GSPPL, we would have around INR 300 crore of CapEx. Approximately INR 500 crore of total CapEx for this financial year.
Got it. Sir, that is very helpful. Thank you for answering my questions.
Thank you. The next question is from the line of Utkarsh Nopany from Anand Rathi. Please go ahead.
Good evening, sir. Sir, my first question is regarding the timber price movement. If you can just decipher some, what has been the change in the timber price for plywood and MDF in this June quarter on both Y-o-Y and Q1 2026-2027 basis, and what is the outlook for the next two to three quarterly periods?
I think it's going to be quite stable. Currently also there's not a big change. I think whatever change has happened is because of the seasonality. It is kind of understood that in this season, because when it's monsoon and peak monsoon across India Even if the farmer cuts the timber, they can't drag it out. It's very difficult for them to load onto a truck. Typically, in this season, both moisture increases, which means you're paying more for the same material, and also slightly the price goes up. It's a very standard kind of increase which has happened, which is cyclic. Honestly, we are not assuming that there will be any price fall. We are assuming that it will remain stable at these levels. If there's any fall of price, then that should be a windfall gain that the organization should enjoy.
Whatever comments we are making or projections we are giving, we are assuming that timber price will remain stable, and based on that, we are giving our projections.
Okay. Sir, on the chemical side, as the crude oil price has gone up sharply over the past one month, are we seeing any cost inflation pressure on chemical side as well?
To be very honest, May, June, we had kind of started stabilizing in June. Again, this month, things are going crazy. Yes, you are absolutely right, crude is going up and chemicals are also seeing a new high every day. Availability challenge is not there. When the Russia-Ukraine war broke out, that time people were scared that we won't get material. Now, at least that fear is not there. Prices have gone up, we will get raw material.
Okay. Is there any possibility of price hike in plywood and MDF because of rising chemical prices in near future?
Maybe. It's very difficult to comment today. Maybe. Maybe we stop discounting the way we are discounting in MDF. We pull back those schemes, in plywood, if it continues this way, maybe we take another small increase.
Okay. That's it from my side. Thanks, Sanidhya.
Thank you. The next question is from the line of Karan Bhatelia. Please go ahead.
Hi, Sanidhya. Just wanted some update on the benefits you're getting from this, some technology advancement you've done at the plywood units. Any color you want to give out here?
Yeah, sure. In plywood, I think we've moved to a new technology, which we are calling as the ContiRoll. Unfortunately, we had planned a meet also at our factory, which we could not do, but we're very keen to do that meet for all the investors and analysts, where we will show the new technology. Today, India plywood is pressed at a low moisture. The new plywood that we are trying to press will be at global standards where we'll be pressing the plywood at a much higher moisture level, which basically means that the material will look much better and will have a much better surface finish. In this process, we also get a by-product, which is material saving and human resource saving. These two savings will also help us achieve a much better margin.
As of now, four factories in India, two factories process fully implemented, two factories during H1 of this year, the implementation will happen. Major implementation planned in this month and the next and the next. Quarter four onwards, you should start seeing some gain on the P&L because of that as well.
Right. Sanidhya, revised guidance you want to give for the hardware business for this year and maybe
Sorry, please come again.
In the hardware business.
Sorry, Mr. Karan. Could you please come closer to the mic? There is a lot of disturbance. Are you using a handset?
Yeah. Is it better now?
Yes, much better. Please go ahead.
Yeah. Sanidhya, any changes in guidance for the hardware business vis-a-vis what you spoke over the Q4 call?
I think hardware business, I mentioned it earlier, I think somewhere around next year mid is when the losses will become zero. Going forward from there, I think it will be positive. Today, the biggest challenge is because of the currency, all the traded goods, which is about 60% of the turnover, we make negative gross margins on it. We make zero gross margin on it. Basically, we lose money every time we achieve higher sales on the traded goods because of the euro and the dollar and the way the costs have gone up for importing. While the two products that we're producing in India, the interest depreciation for the entire business is loaded on those two products, because for the factory, we've built the entire infra on day zero.
Now, this year and next year as phase 2 CapEx happens, I think there'll be a huge drop in prices for the imported products, which will give us better sales. In spite of a huge drop in prices, we'll make a much higher substantial gross margin.
Right.
I think things should start improving from there. Also, I think there are green shoots. If you see, if we compare the last year same period to this year, I think we've almost doubled our domestic number. Yes, there are green shoots, but I think long way to go. We are very confident that we'll zero our losses, for sure.
Right. Debt repayment part for next two years, that's in the mind.
Sorry, come again.
Any clarity on the debt repayment once you are done with all CapEx?
Yeah. I think debt, we've given a very clear guidance that in spite of all the CapExes that we've taken, at the end of this fiscal year, which is 31st March 2027, we will hit peak debt around an absolute value, anything between INR 710- INR 725 , INR 730, something like that. If you talk about debt equity that day, we'll be at 0.75x. I think immediately six months after that, we should come below 0.7x, and the year-ending, we should be at 0.7x, 0.65x, something like that.
Yeah. Thank you. That's it from me.
Thank you. The next question is from the line of Aditya Kamath from Anand Rathi Share and Stock Brokers. Please go ahead.
Hi. Thank you for the opportunity. Am I audible?
Yes.
Okay. My question is regarding the MDF segment. Can you throw some clarity on what geographies have seen this MDF volume growth?
I think we are trying to focus pretty much pan-India. We've seen this growth across India, whether it is south, east, west, north. I think almost every area we've done decently well, and we've grown across.
Okay. Yeah. Thank you.
Thank you.
Thank you. The next question is from the line of Guru Darshan D from Kitara Capital. Please go ahead.
Hi, am I audible?
Yes.
Am I audible? Hello.
Yes, you are audible. I can hear you. Hello.
Yes. Thanks for the opportunity. My question was on the furniture business. What revenue you're targeting for FY 2027 and FY 2028?
I think we'll share that with you. I think should be around INR 120 crores-INR 150 crores, that range. I think a major shift in the losses will come only once the imported bit is zeroed, the finished goods and all of that converted to domestic manufacturing. That's when the business will be firstly zero loss and then eventually positive.
Okay. How do you expect the business move towards manufacturing? Currently, we produce only two products, right? Hinges and one more product.
Right.
When will you start manufacturing products which are being imported currently?
I think somewhere at the end of this financial year and beginning of next is when this CapEx will be done. Once this CapEx is done, I think we can easily start producing everything here because the larger infra, whether it is the plating line, the polishing line, the civil building, the office, the workers' accommodation, the engineers' accommodation, everything is built to full scale, and the interest depreciation for that is only loaded on the two products that we're producing today. You know, both ways we are getting hit. Plus dollar and euro has been so against us that import on a daily basis for this JV, from the day this JV started, it kept getting expensive as the day passed. Each quarter our gross margin kept shrinking.
That is the reason why the losses are so big for the size of the business.
Got it. Just one last question. Let's say in FY 2028 we start manufacturing all the products, do you see any export opportunities, we being the cost-efficient manufacturer? Do you see any export opportunities for this business?
Even today, this JV was always formed to sell the material to India. It was never meant to export. Honestly, looking at the Indian expertise of manufacturing, the availability of steel, the quality of steel available, and the overall Indian cost and scheme of things, our partner is very motivated to take the products back to their home market. They are actually not utilizing certain capacity of their own and supplying material back to their home market from here, simply because of the cost that they are enjoying here compared to Europe where they're producing the rest of the goods. Yes, I think makes a lot of sense in the future also to continue to export.
Got it. Thank you so much and all the best.
Thank you.
Thank you. Ladies and gentlemen, this is a reminder for all participants, please press star and one to ask a question. The next question is from the line of Varun Julsaria from 360 ONE Capital. Please go ahead.
Yeah, hi sir. Sir, just wanted to understand on the finance cost. I mean, this quarter against last quarter we saw a drop. I know there's some bit of Forex gain that we booked. Other than that, did we repay a substantial amount this quarter?
See, if you see the finance cost, it is equivalent to the last quarter mostly, because in the last quarter, there is a Forex loss was there. Second, that the debt has increased, we have taken the disbursement on the second half of the June. That's the reason it is not impacting on the finance cost.
Okay. Otherwise, what is our blended interest cost that we have on our debt?
On the term loan side, it is around the 7.25% on a quarterly basis. On the working capital side, it is around 7%.
Okay. Next on the furniture fitting business. Sir, last three quarters, we've been doing similar kind of revenue. Just wanted to check, even though we have added a lot of new dealers, but still our revenue is almost flat for last two, three quarters. Just want to understand, is it a deliberate attempt because we are making gross margin loss or is it we're still not finding the right kind of demand there for our product?
It's not about the right type of demand. I think some of the imported products, the prices also need to be slashed once they're produced in India. Also on the BIS side, the implementation is very poor. Even today, random Chinese hinges are available from China. If you look at our other business, plywood or MDF, I think BIS has a phenomenal control and it's really given us a tailwind. In furniture fittings, the BIS implementation has been very poor and I don't think we're getting much of a traction due to lack of import because import continues and anybody and everybody continues to import.
Okay. Are we seeing any green shoot there in terms of? Obviously our product is premium and there's like even plywood, our competitor is more of the branded segment. Here also we are competing since we are only branded. Even if
Even though we would like to compete with the Hettich, Häfele, for example, Godrej is 100% Chinese hardware which is imported from China. We end up competing with them also, even though we would want to only compete with Hettich, Häfele. By default we would end up competing with others as well. The China imports are really helping them.
Okay. Sir, how is our pricing versus, say, Hettich or Häfele?
Typically if you see our MRP levels, we are very close to Hettich. If you see a dealer landing, we would typically be 8%-10% more beneficial than Hettich's landing. The dealer here enjoys a better margin, hence it becomes a preferable brand for the dealer to push in terms of margin.
Okay, sir. That's it. Thank you.
Thank you.
Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing remarks. Over to you.
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 so much.