Good day, ladies and gentlemen, and welcome to Century Plyboards (India) Limited's Q1 FY 2025 result conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the management's opening remarks. Should you need assistance during the 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. Navin Agrawal, Head, Institutional Equities. Thank you, and over to you, sir. Good afternoon, ladies and gentlemen. It's my pleasure to welcome you to this financial results conference call on behalf of Century Plyboards and SKP Securities. We have with us Mr. Sanjay Agarwal, MD and CEO, along with Mr. Keshav Bhajanka, Executive Director, Mr. Arun Julasaria, Chief Financial Officer, and Mr. Sumant Wattas, CEO, MDF Business. We'll have the opening remarks from Mr. Sanjay Agarwal, followed by Q&A session. Thank you, and over to you, Sanjay ji. Thank you, Navin ji. Thank you. I welcome you all at FY 2025 Q1 earnings call of Century Ply. Before I start, I shall like to state customary disclaimer that this call is just to discuss company's historical numbers and future perspectives. In no way it should be construed as invitation for investing in the company. Results, along with analytical presentations, are sent to you and also hosted on the stock exchange website. I presume you all have gone through them, so I will not be repeating the numbers. Although the industry is continuing to struggle for growth and issues with raw material availability and price, on overall basis, the results are in line with guidance shared by us in last call. On year-on-year standalone basis, our total revenue was up from INR 862 crore - INR 952 crore. On consolidated basis, it was up from INR 891 crore - INR 1,005 crore, posting a growth of 10.5% on standalone and 12.8% on consolidated basis. Plywood division posted better than expected year-on-year growth of 14.9%, with EBITDA margins of 14.4%. Compared to other players, our better raw material linkages helped us to keep our cost under check. Aggression on the part of sales team put sales ahead and improved sales mix. This resulted in continuing substantial improved profitability compared to our peers. We continue to maintain our guideline of sales growth of 10%+, with EBITDA margins between 12%-14%. Although laminate division missed growth guideline, but improved EBITDA margin to 12.3%. Our Andhra facility is ramping up and will add to sales of laminate segment, as we can expect to see guided growth in coming quarters. Newly set up MDF facility at Andhra has picked up exceptionally fast in very first quarter of operation and added year-on-year growth of 47.3% volume to MDF segment. New facility is ramping up very fast, and we expect it to be EBIT positive by third quarter. MDF market is facing huge supply pressure, leading to correction in average realization. While we expect substantial growth, we are unable to predict improvement in average realization, consequential improvement in EBITDA margin. Going forward, we expect 40%+ value growth with some improvements in EBITDA margins. Particle board industry is under huge pressure, both at average realization and raw material cost front. Number of small players are there in the industry. We are coming up with a facility with continuous process, which will result in improvement of quality and also reduction in cost. This new facility we expected to start by end of this financial year. We shall expect growth and profit improvement after our new facility starts production. Till then, we expect to maintain flatish growth. We have also set up PVC board facility at our Andhra location, which has started production in the month of May 2024. This facility is also ramping very fast and will add to almost INR 100 crore revenue by next year. The transaction on account of sale of our Singapore subsidiary, along with Laos step-down subsidiaries, was completed in the month of April 2024. We have taken impairment loss of INR 24.06 crore for the same in our last year accounts, which was reflected in our standalone accounts as exceptional item. However, as the transaction is completed in April 2024, we have derecognized all assets, liabilities, and minority interests in such subsidiaries in current quarter in our consolidated account. The resulting difference amounting to INR 13.33 crore is shown as exceptional item in consolidated profit and loss account in compliance to accounting standards. With these words, I rest my opening statement, and we are open to questions from all of you. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions 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 handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, please press star and one. The first question is from the line of Rahul Agarwal from Ikigai Asset Management. Please go ahead. Yeah, hi, very good afternoon, Sanjay ji and team. Yes. And so no question on guidance today. I think that the interview and the presentation made it very clear across segments. You know, I had two questions. Just wanted to set the context right, you know, keeping ROC in focus. And, you know, I can see Century nearing CapEx completion in the next seven to eight months. Both OpEx and CapEx intensity, you know, as well as balance sheet leverage, looks like peaking out right now. So two questions: firstly, one on plywood, second on MDF. On plywood, Sanjay ji, do you see a structural cyclical turnaround, going forward in terms of volume growth? Because when I look at, you know, past 7-8 years, excluding fiscal 2022, 2023, post-COVID, I think the segment grew single digits for many years. Do you see a double-digit volume growth sustaining over the next five years, given, you know, where macro is, competition, you know, and substitution talks for plywood? Let me answer the question. Let me answer the question, then you ask the second question. You see, in India, I think the things are so dynamic that we are all talking of so much of growth. We are talking of very high, you know, GDP growth. But at the same time, we are seeing that the times are really not growing. We are seeing that the FMCG goods are at a growth of maybe 2% or 2.5%. So you see, there is... We all believe in the story. The India story is absolutely there, and everything positive is happening. There is no two things about it. But to predict for the long-term growth of 14% will not be right on my part. But I have been telling that we are doing too many experiments. We have found the best of the things through our experiments, and we have implemented them across our country now in all our branches and our products. And I think the thing that yes, that is what is really resulting in the present jump, as far as plywood is concerned. We will certainly love to have this kind of a growth, because the growth has continued for the first quarter, it has continued from July, and it seems that, yes, it will continue for some time. But for five years, I don't think anybody has the capability to tell you. But I can tell you, for plywood, because it's a branded product, and brand will always keep profits and the sale within a particular parameters. It will probably can go only up without our expectations, but it will not go too low. That is what we have seen over so many years. You can ask your second question, Rahul. Got it. Got it, Sanjay. And secondly, similar question on MDF, like, would you like to call it a bottom here? Because only two quarters since, you know, Century has been into MDF business, the EBITDA margins are falling below 15%. My sense is, henceforth, you know, the margin should stay here over, let's, let's say, till next two quarters, worst case, till we get the new plantation timber, and then we see a strong upcycle, not only for Century but for the entire industry, as demand-supply mismatches are covered over the next few five years. So would you like to call a bottom in terms of margin for MDF here? That's my second question. If you look at our, hi, Keshav. If you look at our standalone numbers, so we had about 14% margin, and I think that, yes, this would be the bottom, because going forward, we are going to attempt to increase value-added products. We are going to attempt to increase capacity utilization. However, timber costs have increased slightly higher, so that is the challenge that we are all grappling with. But by and large, I think this will be the bottom. And going forward, with increased capacity utilization, we should definitely see some room for improvement. Got it, Keshav. Thank you so much. I'll come back in the queue, and best wishes for the times. Thank you. Thank you. The next question is from Keshav Lahoti, from HDFC Securities. Please go ahead. Hi. Thank you for the opportunity. Hi, Keshav. Yeah. I want to understand one thing. The laminate plant got commissioned in January, so its commercial production started from this quarter or in Q4 also some production has happened? And secondly, in this facility, what our computation says, the NSR is as high as INR 6,000 per sheet. Is it a right interpretation? S o I will take that. The laminate facility, even though it, you know, it came on board in February, but for the first few months it was just trial production. And to ramp up, because this is a more export-oriented unit, has taken a little longer. Our Greenguard Gold Certification also actually has just come in within the current month of August only, so that is why. And yes, the average realization from this facility will be higher because, a large chunk of it will be compact laminates, and that too, larger size. So if you look at it in per sheet basis, it will be higher, but overall, from the current two hot presses that we have there, its total turnover and we can expect that peak utilization will be about INR 250 crore. It is similar to what one standard press of eight by four would be giving us, perhaps slightly higher. Okay. Got it. Understood. On this MDF plant, we can see a, you know, small increase in CapEx to INR 730 crore. Earlier, 700 crore was the guidance. So is it like you're adding something new, or is it the, you know, hike in the equipment or something cost has rose? No, it is a hike in cost. Costs have been shooting up, and, I think that certain elements that we had expected to be completed at lower cost, for instance, roads and material, et cetera, have cost slightly higher than what we had thought. So this is predominantly an increase, not due to any addition in terms of plant machinery, but due to an escalation in cost. Understood. Got it. Last question from my side. Firstly, on the ply side, this quarter we did 14.5% margin, and the company has also taken a hike in June, so that will fully get played out in next quarter. And what we hear, you know, ply industry is also planning next quarter, next round of hike. So what sort of hike you are planning possibly in this quarter? And will you like to up the ply margin guidance to something like 15%? And lastly, on the progress on Hoshiarpur ply, which earlier call you highlighted is on hold, so what are the plans on that side? No, Hoshiarpur is still on hold, because what we expected in Hoshiarpur, the kind of plantations which should have happened, we saw that that kind of a plantation was not happening, and more of this timber was coming from UP and then other areas like Odisha. So we, the planting is still on hold. We are thinking about our other facilities which are existing. As far as your question of our EBITDA is concerned, we have—I've given the in my opening statement itself, that we still maintain between 12%-14%. As far as the price increase is concerned, we increased 2% from May 1st, and we have increased 2% from July 1st, August 1st. So we have increased 2% from June 1st and 2% from August 1st. So 4% price rise has been taken across in all of our plywood products. But the cost of raw material has gone up. Only reason for a higher EBITDA can be higher quantity of sale or growth. If the growth is higher, then a little bit of EBITDA will be higher. But then that also, I cannot say that, we can sustain that for a very long period. That could be there for 3 months or 6 months. So our, guidance will be 12%-14% from this. Understood. Got it. Thank you. That's it. Thank you. The next question is from the line of Praveen Sahay from PL India. Please go ahead. Thank you for taking my question. Thank you. The first question is related to plywood. Yeah, hi, sir. Related to the plywood. So, earlier call, you had given us some volume growth guidance in the plywood in the range of 8%-8.5%, while you had delivered a far better number in the Q1. Is there a further revision in the volume growth for the plywood? And at what utilization you are- We have given a guidance 10% plus. So 10% is a revenue, first. 10 plus 10% is a revenue. So still you are holding 8% around volume growth? 10% volume growth, yes. Sorry, just to clarify this, sir. In the sales growth guidance, you had given a 10%- Yeah, yeah, yeah. -for plywood. Yeah. Yeah, yeah. Not the volume. Yes, yes, yes, yes. Uh, eventually- But I still maintain, you know, that we should have about 10%, maybe 11%, maybe 12% of the value growth only. For the moment, yes, we have higher than growth, and if the Q2 also goes accordingly higher, then we may revise our guidance for the whole year. But right now, we'll, I will be little cautious. Okay. Okay. And, also, if you can highlight, With all the things going around, Bangladesh and what is happening with Iran, we really don't know what is going to happen. So, so basically my question is: From where you are getting this kind of, volume growth, 13.5% volume growth in the plywood? So from where you are getting this, how, you know, is it a market share gain or? You can say that from, not from where, but actually, we were doing a lot of experiment in our sales team and our sales method. I think, we have been able to consolidated them, and we have been able to implement them across the country, and that is helping us. We are not the same company which we used to be, say, five years back. So it's a completely changed company, the way we operate, the way we operate with ID, AID, or we operate with our dealers or our sub-dealers or our contractors. So everything has changed. So maybe, you know, that kind of data or, studies you get in India is really very difficult and not really not so organized. So we all speak to each other, and we speak to media, and we try to understand, yes, what is going around. So that tells me that, yes, whatever we have done is giving us very results. And the quality, our quality has really improved because the percentage of complaints has more than—our percentage of complaints, complaints, even point zero something, and even that has also helped. There is a reduction of 50% in our complaints, even that is also will result in, good sales actually. Okay. Great, sir. Sir, the next question is related to the MDF. So in the guidance, you had given a 15% margin guidance for 2025. And I understand fully with the AP plant commissioning, your margin on overall MDF segment has, you know, decreased. So, how, like, how in the next 9 months you are confident of delivering for a full year of 15%? Even if I look at consolidated basis, it's 1.5% for a quarter. On a standalone basis, we are confident of the 15%. For Andhra, you are right, it will take some time to ramp up. But we are confident that by Q4, even the Andhra capacity or even the consolidated margin will be a 15%+. The 15% is steady state margin. Yes, you're right, with Andhra ramping up, the overall consolidated margin could be a little bit lower. Okay. Okay, and second thing is on the realization related to that, because the realization in the opening remark also, sir, has said in the MDF, you know, it's a decrease and the way forward also, you know, we expect some decoration. So, do you believe with the South plant coming up, usually our realization expected to go down from here as well, what we are right now? I don't think so. I think in the South currently, we do not have a very high percentage of value-added products. Our lamination line also started producing from the second half of July. So prior to this, we actually had a much lower share of pre-laminated MDF in our Andhra facility. Going forward, we are going to increase our value-added products, and that should give us slightly higher realization. Having said that, yes, South as a market perhaps will not have high, high realization as we were doing earlier, but I don't see realizations dropping much further from here. They could improve a shade going forward. Okay, good. And lastly, sir, if you can give some you know number related to the timber pricing. So how is the North timber price in this quarter, the past quarter? And how has it grown year-over-year or sequentially? Yeah, hi, this is Sumant here. I'll take that question. In MDF in North, our timber price is between INR 6.5- INR 7 per kg. In South, it is about INR 1 cheaper, so it's in the range of INR 5.5 per kg. Okay, and how has it sequentially? How much it has increased? As compared to last quarter, it has increased, you know, marginally, in the range of 5%-7%. You know, for the rest of the year, well, we hope it remains steady, but given the plantation cycle, you know, it's hard to say where it will fall. You know, our expectation is it might marginally still increase in the next two quarters, but it's very difficult to say for sure, for sure. Yes. Okay. Got it. Thank you, sir. All the best. Thank you. Thank you. The next question is from Sneha Talreja from Nuvama. Please go ahead. Hi, sir. Good afternoon, and thanks a lot for the opportunity. Just two questions from my end. Firstly, you mentioned a lot on board. Thank you. You mentioned about, you know, prices, margin bottoming out, and, you know, prices also bottoming out, and maybe, you know, we should see improvement. Is it based on the fact that we have thought about some price hikes here, or will it be based on the fact that, you know, our utilizations would improve and our value-added mix would improve, so that we can focus on price? Are you talking about plywood or MDF, Sneha? MDF, MDF, MDF. MDF. Okay. Yes, in MDF, currently, while there is no clear visibility of price hikes, but considering the state of margin across the industry, I think it is only logical that prices should start to increase. However, as of now, we don't have any price rise in mind. If there is a development, then or if there's an opportunity, we'll definitely take one. But having said that, value-added products are going to increase for us, because if you look at it, in the first quarter, like I mentioned, from Andhra, we had 0 pre-laminated MDF, and that, of course, is a much higher value-added product. So once these products start increasing, then we'll see margins increase slightly. You'll see realizations increase slightly. Understood. My second question was related to, you know, how much more write-offs would be, you know, pending from the overseas subsidiaries. Are we done with all the write-offs or some more write-offs left with? Yeah, there is more write-offs as such. You know, this is just only an adjustment to comply with the accounting standards. We had an opening balance sheet which contained all the figures of subsidiaries, which now seem to be subsidiaries. And the conversion was completed last year only. Sorry, conversion was, impairment was taken last year only, but conversion was completed on February 25th. So this is just removal of the balances, and resulting difference, we had to reach the profit and loss account because we have to take it. We own the accounting, it in the booktake it. Understood. So this is lastly done? Yes. This is, you can call it a not mentioned. Understood. And so my last question was on MDF. Could you actually describe the utilization rates for our new facility at AP, and what would be the Hoshiarpur plant running at this point of time, utilization? Currently, at Andhra, first quarter, we are at a very low utilization. As you know, we will be at less than 20%. Quarter two, of course, we are trying to ramp it up substantially higher. In Hoshiarpur capacity, we would be running at close to just 85%-87%. Understood. Yeah. Understood. Understood. Thanks. Thanks a lot, and all the best. Thank you. Thank you. The next question is from Shubham Agarwal, from Axis Capital. Please go ahead. Hi, Shubham. Hi, thank you for the opportunity. The first question is regarding the gross margins. So I was just comparing the consolidated and the standalone gross margins for laminates and MDF. And what I see is that there's a gross margin loss from the new subsidiary that we've incorporated. Just wanted to get a context, like, how should we look at it? So basically, we have sold maybe less than 10,000 cubic meters from a capacity that is substantially large in the first quarter. So because of that, all the expenses, overhead, none of that is getting covered. Mm-hmm. And in gross margin, we also account for factory overheads. So our gross margin is not only raw material, but you also take into account factory overhead, and you are seeing this. However, going forward, with Andhra ramping up in this quarter, you will see a drastic change in the picture. Got it. Got it. And the second thing is, in the opening remarks, you mentioned something about, Century doing something specifically that helps keep the RM inflation for plywood under check. Well, I just missed that. If you can elaborate and explain us what, what is it that helps Century control RM inflation for plywood? We have done from a very quite some time, we have been in agreement, and we have got certain agreements with raw material suppliers, not only in India, but overseas also. So we are now having a very good supplies from the best of the suppliers in Brazil, in Vietnam. So many other countries, we have connected in for quite some time, and now we are able to, you know, ensure that we get the raw material at the right quality, at the right price. And you also know that there is so much of problem going on as far as the container freight is concerned. I hope you have heard about it, that the freight, sea freight has really increased all around. And there also, we have been able to manage much better than anybody else because of our CFS. We are in touch with all the sea lines in the world, and that's how we are able to get a better rate also. All these things have resulted in ensuring the quality, in ensuring the quantity, both at the right price. Right. So, what I understand is you're so it's now viable to import the RM for plywood, and you are doing that, and incrementally that share of... share is increasing, and that will keep increasing till the RM prices are high in India. Once it eases- Yes. like all other players will also. Yes, and tomorrow, if the raw material prices after a year or two year, if they fall down, if they reduce, then import will stop. But then the moment an import from so many countries comes into play, the increase, increase, increment in the prices of raw material will slow down in a very degree. Because we, the local suppliers have got a competition from now overseas. And there, the prices are quite stable because there are so many countries are there who are ready to supply. Got it. One point here, we should also take into account that our large manufacturing footprint, which is pan-India, including three factories that are port-based, and three factories that are more domestic coal-based, helps us substantially. In times like this, our port-based factories actually give us a substantial advantage, whereas when domestic raw material costs are low, the landlocked factories are the ones in Hoshiarpur, Guwahati, and Karnal, in particular, give us a substantial advantage. So strategically, we are well placed to cover either scenario. Got it. Got it. This is helpful. Thank you. That's all from me. Thank you. The next question is from Nikhil Agarwal, from Kotak AMC. Please go ahead. Hi, Nikhil. Hi, sir. Good evening. Thank you for the opportunity. So my question was regarding the impact of MDF, sorry, BIS norms that will be coming in plywood. Do you see a sizable import reduction post that? Sorry, could you repeat the last part? Can you see- Sizable import reduction post the implementation of BIS norms. Yes, definitely. You see, the MDF that is being imported into India today does not match Indian specifications, it does not match the quality of MDF that domestic players are manufacturing. For instance, if you test the IB or the wax content of any of the imported boards, you will see that there is a huge difference between what we are currently making and what is getting imported. So I don't think that it will have, you know, it is going to have a major impact. And taking a BIS license in itself for an international player will take some time, but even in the long term, for them to comply in the smaller quantity that India purchases from maybe some of these manufacturers, is not going to be easy. Okay, and even if they match up to the BIS standards and improve the product quality, what would be the increase in their cost of production for this, to? It would be a substantial increase in the cost. Today, for us to manufacture this similar product would entail a 20% cost saving, so for them, there will be a 20% cost jump. Sorry, I think that is 20%? For them, it will be a 20% cost increase in order to meet the current standards that are being manufactured by us or the other branded domestic players. All right, understood. What about the unorganized, smaller unorganized players? Like, are they BIS compliant, or are they also on the same setting, set as the importer? It depends from player to player. There are a lot of unorganized players, so we can't simply say that, you know. Mm-hmm. one size fits all. It depends. I would say that some are compliant, some are not. All right. Understood. And, do you plan with this Andhra facility once it ramps up, do you plan to export as well? It will depend on profitability, but, yes, we have already exported some containers. Going forward, I see there is scope for export, but it depends on viability. All right. Lastly, could you just help me with the MDF imports into India for the last three months approximately? Hi, this is Sumant here. I can take that. Look, you know, the MDF referring to this whole shipping freight and fees that has reduced the MDF imports somewhat. So usually, the MDF imports are in the tune of 25,000-30,000 CBM per month. If I look at the last three months' data, you know, I would agree that it's about in the range of 15,000-16,000 CBM. So it's come down by about 50%. You know, but as the freight crisis emerges, we'll see whether this trend goes, you know, upward or downwards. But it's come down in the short term on account of freight. All right. Understood. That's it from me. Thank you so much. Thank you. The next question is from Abhishek from DSP. Please go ahead. Hi, Abhishek. Hi, sir. Thank you so much for the opportunity. Just few questions. In the plywood segment, when we look at a volume growth, it's almost about 14% for the current quarter. Now, this is happening at a point in time when the overall building material demand, when we look at it, is subdued. So how should we look at your growth trajectory in plywood, when things normalize, given that so much of real estate sales has happened, just from a market share gain perspective? And is it more coming from the Sainiks of the world, which is largely competing with the semi-organized to the unorganized? This time we are seeing that, even in Q1 and even after that, both Sainik and our prime material are growing. Both of them have grown well. I cannot say that... Even earlier, I have just said in this call only that, how long we will be able to sustain it, but we believe that our everything we have done, the changes in our sales process and our quality, both are now doing very well. So we expect to get some more share of market from our competition and equally for the Sainik also. And I also see that the market is slowly changing from totally the lowest class, the lowest class of plywood to the value of the market, where the customer is asking for a little better plywood. They are not ready to buy the best, but it seems they are now looking for the middle range plywood. So I think if that changes, change also happen, it's going to be very big for the industry. But yes, we are yet to wait and watch. Okay. Sir, just the other thing, just one thought in terms of, that when raw materials go through such sharp increases over a sustained period of time, what we usually observe is that the unorganized tend to suffer a lot, and this is an industry where the unorganized is probably the highest. So I was more trying to understand from that perspective, because the ability to take price hikes with the unorganized, unbranded, is far, far lower. So from that competitive lens, do you think- We are seeing that it's very difficult for them, but you see, we Indians are a very different breed. We Indians are so pakka that we will find some way out, because even the small manufacturers or the unorganized manufacturers, they all are there themselves in the market and in the factory, so they find some way out to survive. Few of them may stop production, those who have something else to do or something very big to do, they will stop getting into plywood. So new people coming into plywood and even MDF, I must say, will stop totally now. But those who are there will try their best. So I don't take Indian entrepreneur to be any weak at first. Fair, fair point. So my next question you partly answered. Given the profitability curve MDF has seen, how should we look at the capacity addition on MDF? How do you all see it over the next 12-18 months, in terms of the capacity addition in MDF, in the country? I don't think there's going to be any. Hi, Abhishek. Keshav here. Yeah. I don't think there's going to be any substantial increase in MDF capacity going forward. In fact, a number of the smaller players are under tremendous pressure, and quite a few of the smaller players, even the ones that have recently set up units are up for sale. So currently, in this scenario, I don't see much capacity addition happening in the next couple of years. I think one line is coming close to completion, but other than that, I don't see any new CapEx in the medium, short to medium term. Okay. Okay, that's helpful. Just in terms of the employee cost, we have seen a sharp increase on a sequential basis. Is it, is it just to do with the annual increments and other things getting reflected in the first quarter and then stabilizes over the next three, four quarters? Or is it to do with some other inflationary elements? We have actually increased our substantially. We are investing towards within MDF. As you know, we have a massive growth this year, so we are expanding our team to focus more on the south market. So I think there are a number of things. Yes, improvement has played a role, but other than that, we are also scaling up, and we are provisioning for a larger growth going forward. Okay. Okay. And one last other thing in terms of, I mean, if I look at your CapEx projections that you give, there is a sharp reduction in the CapEx program from FY 2026 onwards after you commission your particle board line. So FY 2026, one should see sharp deleveraging that should happen, for Century Ply, given healthy operating cash flows. At this point in time, yes, because currently we don't have any frozen CapEx, and I think that considering the current scenario, when, you know, we have already taken quite large CapEx hit, we are not going to go for any substantial CapEx for the next year, year and a half after. So there will be sharp decline in CapEx. Okay. Okay, sir. Thank you so much for answering my questions, and wish you all the best. Thank you. Thank you. Thank you. The next question is from Hrishikesh Bhagat, from Kotak Mahindra Mutual Fund. Please go ahead. Hi, Hrishikesh. Hi, hi. Good afternoon. So one question: see, when I look at your various segments, say, plywood, laminates, obviously the margin variability is fairly low across the longer cycles, in the sense plywood in the narrow range of 13%-15%. Laminates also fairly in that range. And that is also getting reflected in the segmental ROC for each segment, where the larger ones tend to earn fairly good ROC. Whereas same in case of MDF, the variability is fairly large on the margin front across the cycle. This has been the second cycle we are seeing margins coming fairly to low single digit. And for industry as a whole, not, need not be for you. So my question is: do you feel that MDF eventually could mature to that plywood or laminate kind of? Or do you think that this margin volatility will remain inherent and the cyclicality in this segment? Hi, Hrishikesh. This is Keshav here. I think that, you know, if you look at this as a product category, in any five-year horizon, we typically guide for 25%. The last cycle that we were talking about was in the year 2018, 2019, right? So in any five-year cycle, you'll be looking at close to 25%. But having said that, as you know, the market in MDF itself is premiumizing. Our value-added products percentage is increasing. As you know, Premium Plus, which is a higher category material, that material is now being sold in the form of a semi-branded product. So I would say that over the course of the next five to six years, what you are saying is correct. The margin variability should reduce, but even otherwise, any five-year time period, I think MDF would have close to 25% EBITDA margin. The volatility should go down over the course of time. Thank you. Thank you. Thank you. The next question is from Bhavin Rupani from Investec. Please go ahead. Hi, Mr. Rupani. Hi, sir. So you mentioned about raw material linkages. Can you please elaborate what proportion of linkage we have versus our total raw material requirement right now? Actually, it is difficult to tell you that, what percentage are linked, but yes, whatever we are importing, that one we have done wonderfully with, the biggest of the suppliers and the best of the suppliers. And it keeps on varying, very frankly. Even if I tell you that so much percentage has been linked, but it still, it keeps on varying on local availability. We still look for that. If we can do from the local, market, it is better for us. But... And it, it really does not matter where you get your raw material, but you get, you know, quantity and quality. All right. So is it possible to quantify what would be the landed prices of imported raw material versus existing domestic prices? Yeah, it's the imported raw material is a little higher. So about 3%, maybe 3.5% or 4%, it is higher than the local, but the quality is better. The imported raw material quality is much better. So that actually suffices for its higher price. Got it. And sir, as far as plywood is concerned, what would be our current utilizations? Just a second. So our capacity is now 339,000, about 340,000 cubic meters. And utilization in 2024-2025 is about 75%. And we are actually increasing our capacity across all our plants. We are adding maybe 5%-10% everywhere. So some of, some small, small capacities has been undertaken in most of the plants, especially the plants which are on ports. The Chennai plant, Kandla plant, Kolkata plant, all these we have taken up some additions. Right. So my next question is related to particle board. Sir, how should one understand the utilization levels in particle board in first year of commissioning? I think that currently, particle board is going through quite a difficult scenario, and because of this, the new line is prepared substantially. Because the EBITDA margin in the new line will be far higher, as this is a continuous line. Having said that, once we start the new line, at that point in time, temporarily, we may have to shut down the existing capacity. Like I said, the EBITDA margin in the new line are going to be higher than the existing line. So for the new capacity, I think by the end of year one, we will comfortably be at 50%+ capacity utilization. At what level should one assume your breakeven? Fifty percent. Sorry? Fifty percent. 50%. All right. And lastly, on the pricing of MDF and particle board, currently we are experiencing declining prices across all the, for all the industry players. So just wanted to understand how is, how are the prices decided? So it is decided by the association, or is it that each and every company decides when and how much price increase or decrease one should take? That will be no association, I think, you know. You cannot have a consortium, so it is usually by player. I mean, we study the competitive intensity of the market. We look at various factors, such as the current landed price of imports, such as our own brand strength and the premium we could charge over, and then we decide on pricing. And each company, I think, does it on their own. All right, perfect. Thank you so much. Thank you. Thank you. The next question is from Amit Purohit, from Elara Capital. Please go ahead. Yeah, sir, thank you for the opportunity. Hi, Amit. Hi. Hi. So just on, you highlighted the, the changes that you've taken. One, I understand the, fleet on the street was, kind of increased, and that's, yeah, visible in the employee cost. And second, I think, sometime few years back, you, started with this, order... And then you had this, influencer engagement, pro-program. Anything else, beyond this, which I, you would like to highlight? Maybe a separate team has been set up for B2B. Is that also, if you could just qualitatively, tell us what are the actions that you have taken? Yeah. So all those experiments, you see, various experiments we have done. We have done experiment in everything actually. Sorry? All... We have done experiment in every aspect of sales, and all those experiments have been now completed, and we have found out the best, which would really give us the best results. And they have been also, you know, earlier we were doing into some branches, and we are not—some branches were operating in a different way, some branches were operating in different way. Now, we have found that what is the way to operate, how to control at the central level, and that those, all those systems have been implemented across the country. It's not necessary that this will continue to give us this kind of a growth for all the time to come, but yes, presently, this, these are the reasons, and the quality seems to be the reason for the growth presently. Actually, we have not done anything very new. What we have done is all the old wine, new bottle, which actually we have organized working in all of the areas, actually. So they are now not, you know, in. Everybody knows what they are going to do. Okay. Okay. And, sir, you indicated that the smaller players, the cost of doing the business has probably increased. And so is that, I mean, broadly, that is resulting to them shutting down or, some of them shutting down of the business? The plywood, are you talking about plywood? Plywood. Plywood, yes, sir. You see, plywood, there are about 3,300 units across the country. Okay. Even if 100, 200 shut down, it makes no difference. Sure. Frankly, actually, it makes no difference. The smaller guys are also there in this, 3,000 people are there in this industry for long. They understand the industry. They have their own local market. Suppose somebody is operating in Siliguri. Mm-hmm. He's operating in Siliguri, he has got excellent connections with the dealers and all that, so the chances of totally closing down is going to take some time. The only thing which can do this is the consumer. If the consumer starts demanding a better quality, which is happening, which I can see now, that, yes, the from the lowest side of the quality, they are now shifting to the value of the market, which is the medium quality product, like Sainik or a little lower than Sainik. So that is happening in some ways, otherwise we would not have gained so much in Sainik in last five years. There was no, nothing known as Sainik actually or at that level in the markets. So I see that that change is happening, but India is a different country. We all are the smartest guys. Sir, regionally, if you see, where is this change you are seeing that consumers are moving up regionally? Anything, I mean, we understand south- Yes, I tell you, Eastern India is doing very, very well. Okay. Eastern India and South India, two regions, two zones are really doing very well in this. West, I am unable to understand West actually, because the maximum money, the maximum wealth lies in the West, but still that area still consumes lot of, you know, lower quality product, and same is true for the North. Okay. Okay, so this is helpful. And, sir, on the sourcing of raw material, you indicated import and domestic, you take a decision based on the pricing and whatever best suits you. But right now, what would be the mix like for import and domestic sourcing? Yeah. Very frankly, I avoided the question because I myself don't know the exact percentage. Okay. There is no problem, sir. No, no. Sir, on the new facility of AP, the overhead cost basically would be the fixed cost, right? So, that would remain- The facility of, at AP, yes. Yeah, AP. So you, that would remain fixed for both laminate, MDF, and whatever improvement we will see now is on the gross profit side, which is currently zero because we have factory overheads, which are pretty cheap, right? That's our mission. Yes. Yeah. Okay. Thanks. Thank you so much. Thank you. The next question is from Keshav Lahoti, from HDFC Securities. Please go ahead. Thank you for the follow-up. Just a clarification on the MDF side, the 15% guidance is including AP plant, right? No, the 15% guidance is not including AP plant. 15% we have quoted on steady state basis. However, the endeavor will be to reach as close to it as possible. Due to Andhra taking some time to scale up, it could be marginally more. Understood. Got it. Because the volume you are taking AP, so the clarification was in it. So that is standalone 15% you are guiding? Yes. Understood. Got it. And, what's the progress on the Sainik laminate? How is it shaping up? It has scaled up to a certain level, but it has not scaled up to the extent we want it. I think that within the next one year, now we have corrected strategy, and we are looking at certain course corrections further. Within a year, we'll be able to stabilize it to a far higher level. Okay, got it. And MDF guidance is including the AP, laminate guidance is including the AP one, 10%-12%? Yes. Yes. Okay, and are we seeing any sort of cost pressure in laminates on the kraft paper or something? And do the, do you have any plans to take a price hike? We have already taken a price hike as on the August 1st, and this is close to a 3% price hike. This is due to raw material cost. Okay, got it. What sort of raw material pressure we have seen in laminate side? There is an increase in the cost of both chemical and a slight increase in cost of kraft. Okay, got it. Thank you. That's it. Thanks. Thank you. The next question is from Udit Gajiwala from Yes Securities. Please go again. Hi, Udit. Hello, sir. Thank you for taking my question, and congratulations on great set of numbers on plywood specifically. So just to understand one bit, that the demand that you are witnessing in plywood, would it be largely from any specific region or a sector like metros specifically driving, or it would be tier II, tier III? Actually, the market for plywood and specifically for Century Ply, we have gone down to below even 75,000 population towns we have gone now. So then the... We are seeing pull from everywhere. This time for the whole of first quarter, for the month of July, and this has been happening for some time because we know that in metros, to grow in metros is much more difficult because there are so many. Everybody who starts a plywood brand or a manufacturing facility, he comes to all the 10 metros within the first 1 or 2 years. So for us to actually sustain and grow, the tier II, tier III towns are more important. So we have taken up many strategies so that we keep growing there. The metros are easier. Outside metros is a real challenge, where the smaller companies cannot reach, cannot even do their supply chain. Where a company like Century Ply, for us, it's very easy to have a supply chain which will supply across the country at the drop of a hat. We can supply anywhere in the country within, say, 12 hours' time, actually, or 24 hours' time. It is the kind of management we have now. Got it. Got it, sir. And so just last, so one, on the particle boards, I am mentioning a lot of pressure around. So but that's still, you are confident of, hitting that 50% utilization in FY 2026? In what type of situation that you feel would change any in terms of margin or pricing, I think? No, I said FY 2026 end, we'll be looking at a 50% utilization. Of course, ramp-up will take some time. And like I said, we should have a higher EBITDA margin than current margin. The situation is a little fluid, because one, BIS comes into play from February onwards. We'll be able to give a lot more clarity on margin in market. Got it, sir. That is helpful, sir. All the best. Thank you. Thank you. Thank you. The next question is from Praveen Sahay from PL India. Please go ahead. Hi, Praveen. Yeah, hi, sir. Thank you for follow-up question. Sir, related to the laminate, can you give how much is the export contribution for Q1? As I understand that because of container and all. We don't normally share those numbers. Basically, the last quarter you had given some indication is, less than 25% on the revenue contribution. We have said that we will increase our export percentage as Andhra scales up, but we normally refrain from giving a breakup. Okay. And how is the utilization on overall, laminate, facilities? On the existing laminate capacity in Q1, we'll be at a 75%+ utilization. For Andhra, as you know, scale-up is taking time. We'll be at less than 10%. Oh, okay. And also, on the realization front, so, especially in the laminate, how is the domestic realization? Because you had taken a price hike in August. So, last quarter, how is been the realization? Is that flat sequentially, or is there some deterioration because of product mix? Sorry, I did not get your question. So the realization in the laminate in the first quarter of FY 2025, how it has been on the sequential basis? On FY 2025, we've had a marginally lower realization, and that is due to a slight change in the product mix. I think in this quarter, with the price increases, we will see higher realization. Okay. This you are talking about excluding export? Pardon me? This you are talking about excluding export, the domestic realization you are talking about. The realization that we gave are including everything. But yes, because domestic is a larger contributor, and the increase in realization should be there, because domestic prices have been hiked. Okay, got it, sir. Thank you. Thank you. Thank you very much. That was the last question in queue. I would now like to hand the conference back to the management team for closing comments. I thank all of you for your interest in Century Ply and attending this call. We believe in India's story, and in spite of whatever happens across the world, we are very positive that the times to come will be very positive for interior industry and building, building products industry. With all the hopes and positive notes, see you again next quarter. Thank you. Thank you very much. On behalf of SKP Securities Limited, that concludes this conference. Thank you for joining us, ladies and gentlemen. You are now disconnected from the line.