Ladies and gentlemen, good day, and welcome to Greenlam Industries Limited Q4 FY 2022 earnings conference call. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectations of the company as on the date of the call. The statements are not the guarantee of future performance and involve risk and uncertainties that are difficult to predict. 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 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 now hand the conference over to Mr. Saurabh Mittal, Managing Director and Chief Executive Officer, Greenlam Industries Limited. Thank you, and over to you, Mr. Mittal. Thank you, Diksha. Good afternoon, friends, and welcome to the call. I'm joined by Ashok, our CFO, Samarth, and by the SGA team, our relationship advisors. On the results, I'll give you a brief about the quarter and the year and an update about the new projects, and Ashok will take you through the exact math and the data. Q4 for us overall we think went quite well, and this was despite the challenges at the Behror plant in the month of January and a few days of February, where we nearly lost about INR 20-INR 25 crore worth of sales. We also had experienced certain unexpected cost increases, you know, in the month of February, for which we've undertaken price hikes again in the market, which have been passed and will be implemented in Q1 of FY 2023. In the last quarter, in Q4, we also had higher finished goods inventory at the plant and at the ports due to unavailability of containers and delays in vessels, which have actually dampened the revenue growth and is showing up on our inventory. Despite all the challenges, I think we put up a, you know, good performance from the company's side. If you look at the FY 2022, revenues went up by about 42%, slightly above INR 1,700 crore. This was again despite, you know, the COVID, two COVIDs, you know, Behror plant being, you know, under restricted production, where we lost nearly approximately anything between INR 80 crore-INR 100 crore of sales. The laminates industry and our company in particular, you know, in the entire wood paneling segment, you know, had one of the hardest, you know, year last year in terms of significant raw material cost increase across raw materials in the laminate and the wood and allied segment as nearly 80% of our raw materials are imported or pegged to imports. We have significant amount of containers moving into the plants, and we also have 50% revenues coming from exports, where too we face challenges of supply chain, freight increases, availability of vessels. Despite, I think, the challenges the industry faced, we probably ended up gaining market share as the laminates business grew nearly 46%. I think we added nearly about INR 500 crore of revenue in the laminates business. The cash flow management also was quite good considering the challenges the industry faced. You know, we were able to reduce debtors value, debtors days. Inventories were on the higher side because raw material costs went up. Lead times of decorative paper went up from three, four months to nine, 10 months. Really, the whole inventory management was challenged in our company. Despite all those challenges, I think the cash flow management was quite superior, and we've been always focused on the cash flow. I think that's where we stand on that front. On the flooring and door business, although revenues went up by about, you know, 12%-15% over on a smaller base, but we managed to reduce, you know, capital employment in that business. Capital employment reduced by about INR 25 odd crore or 15% of the total capital employed. We continue to work towards building the floor and the door business. The flooring business also, we were able to add new products to the range and also significantly improved the value mix and price realization in the floor business. We are hopeful that things will get better in this financial year. Of the two new projects in Tamil Nadu and Andhra Pradesh, you know, things are on schedule, as we talk. Civil construction has begun at the laminates plant in Andhra Pradesh and the plywood factory in Tamil Nadu. All major equipment of laminates, particle boards and ply have been finalized and orders have been placed to the vendors. Regarding the funding of the two projects, you know, with the investments already done and the cash flows of the company, you know, for FY 2023, FY 2024, the cash flow sitting on and with debt, you know, we are good for these two projects. Really, I think that seems to be under control. As far as FY 2023 is concerned, we believe that the shift from unorganized to organized, you know, will continue in our industry. We stand to, you know, benefit with that shift. Even in the exports business, we think we'll end up gaining more market share, although we have challenges on capacity. Till the new capacity comes up, there's only so much we can produce and sell. Till such time, if there are no more disruptions this year in terms of COVID or closures et cetera, we clearly believe revenues, margins will all be superior this year versus what we did in last financial year. Otherwise, you know, things on ground, as far as we are concerned, looks pretty okay with us. The demand side looks good. Opportunity for us to gain more market share is clearly visible. We are continuing on our growth path in FY 2023 too. That's it for my side at the moment. Ashok will take you through numbers, and then if you have any questions, queries, I'll be happy to talk to you again. Ashok, over to you. Thank you, sir. Let me take you through the financial performance. Consolidated net revenue for the quarter grew by 11.6% on YoY basis and grew by 3% on sequential basis. We stood at INR 463 crore as against INR 415 crore previous year. Gross margin was down by 380 basis points, to 44.9% in Q4 from 48.7% in Q4 last year. On a sequential basis, gross margin was up by 60 basis points. Gross margin in absolute terms grew by 2.7% to INR 208 crore in Q4 as compared to INR 202 crore in Q4 last year. EBITDA margin was down by 540 basis points at 10.7% in Q4 as compared to 16.1% in Q4 FY 2021. On a sequential basis, EBITDA margin was down by 120 basis points. EBITDA in absolute terms de-grew by 26% to INR 49.6 crore in Q4 as compared to INR 67 crore Q4 last year. Net profit for the quarter stood at INR 25.7 crore as against INR 30.9 crore Q4 previous year. For a year as a whole, consolidated net revenue grew by 42% and stood at INR 1,703 crore as against INR 1,200 crore last year. Gross margin was down by 520 basis points to 44.6% in this year as compared to 49.8% last year. This is primarily due to rising raw material costs and logistic challenges which we have. Gross margin in absolute terms grew by 26.9% to INR 759 crore this year as compared to INR 598 crore last year. EBITDA margin was down by 340 basis points to 11% as compared to 14.4% last year. EBITDA in absolute terms grew by 7.9% to INR 187 crore in comparison to INR 173 crore last year. Net profit this year grew by 23% to INR 90.6 crore as compared to INR 73.7 crore last year. Moving on to segmental performance. Laminate and Allied segment revenue grew by 15.9% this quarter on YoY basis, and it grew by 3.9% on sequential basis to INR 424 crore from INR 365 crore in Q4 FY 2021. Volume de-growth stood at 11.5% this quarter. Domestic laminate revenue grew by 23.9% on YoY basis and grew by 4.1% on sequential basis. Volume de-growth stood at 2.5% on YoY basis. International laminate revenue grew by 9% on year-over-year basis and grew by 3.6% on sequential basis in value terms. However, in volume terms, it is de-grown by 18.5%. EBITDA margins stood at 12.9%, a de-growth of 500 basis points on year-over-year basis and a de-growth of 40 basis points on quarter-over-quarter. Production volumes were at 4.14 million sheets at a utilization level of 106%. This is despite of temporary restriction at one of our plants in January. Sales volume for the quarter stood at 4 million sheets. It is lower than the production volume because of logistic side challenges which is there on a continuous basis. Our average realization for the quarter was at INR 1,012 per feet. For the year as a whole, laminate revenue grew by 46% to INR 1,156 crore as compared to INR 1,065 crore last year. Volume growth stood at 23%. Domestic laminate revenue grew by 56% in value terms and volume growth stood at 33%. International laminate revenue grew by 38% in value terms and 13.9% in volume terms. EBITDA margin stood at 12.7%, a de-growth of 400 basis points on year-on-year basis. Production volumes were at the highest level, 16.77 million feet this year and at a utilization level of 107%. Sales volume for FY 2022 stood at 16.53 million feet. An average realization for this year was INR 901 per feet. Moving on to another segment, Veneer and Allied segment, which consists of decorative wood veneers, engineered floors, and engineered doors. Revenue for the entire segment de-grew by 20.6% on year-on-year basis and de-grew by 5.2% on sequential basis this quarter to INR 39.5 crore. Revenue for the decorative segment grew by 9.5% this year to INR 147 crore. EBITDA for this segment was at INR 3.6 crore. EBITDA loss for this segment was INR 3.6 crore in Q4 as against a profit of INR 1.5 crore in Q4 last year. For the full year, EBITDA loss stood at INR 9 crore as against a loss of INR 4.86 crore last year. In this decorative veneer segment, there are three segments: decorative veneer segment, that's engineered floor, and engineered door. In the decorative veneer, the business grew by 6.5% to INR 83.7 crore as against INR 78.6 crore last year. Sales volume for quarter four stood at 0.29 million feet and for the year stood at 1.09 million sq m. Capacity utilization for this quarter was 28% and for the year as a whole was 26%. Average realization for this quarter was 750 per square meter and for the year as a whole, 764 per square meter. Engineered wood flooring. Revenue for this quarter de-grew by 3.1% on year-on-year basis and 2.5% de-grew on sequential basis and stood at INR 10.5 crore. For the year as a whole, revenue from the engineered wood flooring business was INR 36.7 crore as against INR 31.7 crore previous year. Capacity utilization for the quarter was 13% and for the year was 11%. Moving on to engineered doors. The revenue for this quarter was flat and grew by 6.5% on sequential basis to INR 6.9 crore. Revenue for the year was at INR 26.8 crore as compared to INR 24 crore previous year. Capacity utilization for this quarter was 12% and for the year stood at 18%. Net debt for the quarter stood at INR 169 crore as against INR 179 crore previous quarter. Net working capital days for the Q4 stood at 74 days and for the year stood at 81 days. That's all from our side. I would now like to open the floor for question and answers. Thank you. Thank you very much. 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 a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. We take the first question from the line of Rajesh Kumar Ravi from HDFC Securities. Go ahead. Yeah. Hi, sir. Hello. Good morning. Am I audible? Yes, you are. Yeah. Hi, sir. If I look at, you know, current year, it has been quite healthy in terms of both, you know, working capital margins and everything. Now, if I look into the numbers, what we understand is how your profitability is all being driven by the laminate segment. Your non-laminate businesses utilization remains low or margins are- Rajesh. You're echoing, please. You're echoing. I can't get you properly. Hello. Is this better now? Better. It's better now. Yes. Sorry. Okay. I see that the laminate business is what is driving the growth for the company, whereas the non-laminate business be it decoratives or the other, you know, wood and the wooden flooring, wood doors and flooring, all remain, you know, either in a lower utilization or weak profitability. What is the outlook for various sectors? Also in terms of the CapEx expenditure for next two years, could you guide on how that will impact your leverage ratios? On the third front, you know, on the third question would be the large particle board capacity that you are adding in South. You know, we also understand that there are multiple capacities which are coming up in South market in the particle board, Kerala and all, nearby markets over next one, two years. How do you see the competitive intensity? Yeah. Thank you. A lot of questions. We'll go one by one. One is, clearly laminates is our core business and, that is driving the growth and this is despite the, temporary, you know, reduced production or no production last year for maybe about 25, 30 days. Clearly, I think, laminates right now we are stressed from a capacity utilization perspective, and we need more capacity. In South we are adding, three lines of 3.5 million sheets, which is expected to get into commercial production by Q4 of FY 2023. That's one. Mm-hmm. On the wood and allied segment, yes, you know, we clearly are aware that the growth is not up to what we expect it to be. Like, really there were challenges in the industry with COVID and, you know, restriction of production, etc. That's one area we really want to expand and want to grow the business. It is a long-term, you know, attractive business to be in. It is just hard to set up the sales distribution, specification, demand creation for that. So that's on the wood and veneer segment. Like we said, this was true last year, although it was on a small base. Capacity utilization in the wood veneer business will not be like laminates where you can achieve 100% and all that. You know, so that I'll be just sure to say what the installed capacity is. Clearly, those are not the capacity utilization standards in the industry, so t hat's not really a fair comparison. Mm-hmm. On the CapEx of FY 2023-2024, the existing manufacturing plants will just need routine CapEx of about INR 20 crore-INR 25 crore annually. The major CapEx will be the two new plants in Andhra Pradesh and Tamil Nadu, where until now we've spent about INR 100 odd crore, slightly over INR 200 crore already. The CapEx of those two plants will be shy of INR 1,000 crore, which will be spent in 2023 and FY 2024, in two years. On your last question about capacities of South, et cetera. We are expanding into laminates, plywood and particle boards. As far as we are aware, there are no capacities of particle board coming up in any meaningful manner in South India. I think what you are referring to is mostly MDFs, where multiple players are, you know, coming into MDF capacities. As far as particle board is concerned, that does not seem to be correct, where multiple companies or capacities are not coming up. It's ourselves and another company who's putting up a similar-sized capacity in the state of Gujarat. That's where it is. If you happen to, you know, please see our investor presentation, we've put in a rationale of why particleboard, why are we entering that space, what value do we see, you know, et cetera. I think you can probably re-review that and you get a sense of, you know, we've put in a whole document there on why we are entering the board versus why we sell laminate. These are our responses, Rajesh. Yeah. Okay. Just a few follow-ups. First on the veneer side, if I see, you know, two, three years back you had relatively healthy revenues and this year you have seen a sharp decline in the revenue numbers. It is all because of this COVID impact from, you know, production. If I see you have peaked out at 1.7 lakh, 1.7 million sq m FY 2019. From there we have come down, you know, to almost 1 million sq m in FY 2021 and 2022. Do you see those numbers can be scaled back to, you know, 1.8 or 2 million sq m in near term? And on the particle board, how is the CapEx spread out? You know, I understand you'd be looking at this CapEx to be completed by end of FY 2024. Is it all in FY 2024 or will it be equally spread between 2023 and 2024? If you let me go one by one. Veneers, our value production has, roughly growth has come down in FY 2020– 2022 sorry. For the million meter square, FY 2021 we were 1.124 million. Right. 2020 we were 1.53 million. You're right on that. There has been a reduction of the veneer business from a pre-COVID year, you know, versus what's happening now. Mm-hmm. Clearly I think the objective is to, you know, bring back the value of veneer. Veneer is a more premium product largely used in premium residential market and hospitality industry. Clearly we think, you know, the numbers of veneers can be brought back. We've had issues on competition intensity. We've had issues on raw material costs, availability of the base ply and the veneer. Yes, the intention will be to scale back the business. Last year again, like we repeated ourselves. We had about 25 days of shut down the plant and that plant incidentally also produces veneer and with the COVID disturbance. There were issues. Yes it can be brought back to that. That's one. As far as particle board is concerned, the expenses will be spread over FY 2023 and 2024. Exact percent maybe Ashok can respond because the major equipment have been finalized and we've already paid out the initial advances, et cetera. Ashok. Particle board percent. How much percent in FY 2023, how much 2024? Peak debt you're looking at, sir? Pardon? Peak debt you're looking at? Peak debt, peak net debt, we are looking at somewhere around INR 750 crore-INR 800 crore. That might also come by like let's say towards end of FY 2024. In this we are not, as of now we are not taking into account any equity, if at all we raise kind of a thing. This is around INR 750 crore-INR 800 crore in that range. INR 800 crore peak debt. The particle board expense will be in two years, both the years will be slightly in the around 45%-50% in this year and remaining will be next year. Okay. Great, sir. I'll come back in the queue 20 to you. Thank you. Thank you. Thank you. We take the next question from the line of Udit Gajiwala from Yes Securities. Please go ahead. Yeah. Hi sir, thank you for taking up my question. Sir, can you guide that how is the demand scenario and what kind of industry growth and company growth in laminates are we looking for 2023, 2024? Demand scenario, you know, in our industry, as you're aware, there's still a large portion of unorganized share. The way we are operating right now is clearly trying to expand our market share with the capacities we currently have. As far as we are concerned, you know, the previous month, this month is by and large looking okay with us, and we also have, you know, significant international presence. I think from that side, you know, we are looking pretty okay with the demand side. As far as FY 2023. You asked FY 2023, FY 2024, right? Yeah. Two years, yeah. FY 2023, which is going on, I think, because our new capacity will only come in Q4 of FY 2023, and considering that last year in the same period we had lost production, I think we should be able to, you know, grow the business, you know, 15%-18% kind of a, you know, ratio this year. In FY 2024, we've got three lines coming up, so I think next year with newer capacity, and they are of three different sizes. Clearly, I think we, our endeavor would be to bring those new capacities to, you know, a meaningful utilization at the earliest. Probably the growth percent, you know, probably would be slightly or maybe the similar range because the base will go up. I think that'll also be in the band of 15%-20% rise. Understood. Sir, just a clarification, like the realization as compared to our peers, like we are far ahead in terms of realization. Do we see any kind of, you know, losing market share because of this? Because we might have a limited capacity for this year, so there might be incremental demand which may go to the peers or kind of a thing. Our realization being higher is a function of the product mix, constantly working towards value addition and premiumizing the brand in both domestic and international business. We are already end of May. Matter of few months, you know, maybe eight months or seven, eight months, right, we should be getting capacity. I don't think that's a huge matter of concern. In laminates, it just takes time to go and build sales and revenue. It is not a commodity that you can just go and put into everybody. I don't think that's a matter of concern. Sir, lastly, on any guidance or any point you would like to put on the laminates margin front going ahead, because we are seeing constant pressure on that front in quarters. We are taking price hikes, but you know. Yeah. Unfortunately, you know, each time we take a price hike and, you know, like in Q3, you know, we were hoping that further RM costs won't go up, and by that time we had passed on most of the RM cost increase, which does not mean, you know, necessarily that margins can be maintained because we are only passing on the RM cost increase. The value of margin gets maintained, but the percentage does come down. Q4 increases again has been passed on to the market, which probably will be visible in this time, this quarter's, you know, per sheet realization, et cetera. If RM costs don't go up any further, you know, and we have no disruption at the plants for COVID or any other matter, clearly margins should improve in both percentage and value. Got it. I'll come back in the queue. Thank you so much. Sure. Thank you. We take the next question from the line of Sneha Talreja from Edelweiss Securities. Please go ahead. Hi. Thanks a lot for the opportunity, sir. Just, two questions from my end. Sir, with regard to demand, Neha, this is the operator here. Your audio is not clear. Sure. I will take it from here. Yeah. Is it better now? Much, much better. Yes. For sure. Yeah. Thanks, and, sorry for the delay. Just two questions from my end. One, so in the first part of it, just to answer somebody, you mentioned that demand is good. My question was more relating to Q4 volumes. Although I understand there's a container availability issues, and because of which your export growth was impacted, what I see is your domestic volume both in the laminates business, veneer business, and even other parts of the business has not grown. We look at it as a YoY decline. Could you describe the reasons why we have seen fall in terms of volumes even in the domestic market? Yeah. We lost, number one, production at the Behror plant, right, for, I think, about 10 days of production, which is nearly 250,000 sheets, right? Which is nearly about INR 25 crore of value. I think loss of production was there. What we produced, we could not ship out completely because of containers availability, et cetera. We've also improved the value mix, and that's why you also see a significant realization improvement in domestic business YoY. Domestic realization gone up by about 27.6%. Our core sheet value is INR 952. If you look at the overall realization between Q4 2021 and 2022 in laminates, the price realization improvement is about 30%, which is a function of price increases, value mix improvement, also, right? I think it's a factor of loss of production, change in the value mix improvement realization, and inability to, you know, convert production or inventory to sales because of containers availability in exports. Right. Given that we have been able to pass on the raw material costs, fair to assume that inflation or the competition has not been able to take similar kind of price increase because of which maybe we've got the volumes, but, you know, margins for us is better now. Is that safe to assume? No, we haven't lost volumes. I think, probably, maybe I'm not able to explain or understand it properly because we've lost production. We couldn't produce at the factory over a five-day working model for all of January and partly February. We haven't, like, lost volumes or lost market share. Then we couldn't invoice because we have high finished goods inventory lying in the factory at the end of March and at the port, which could not be, you know, get shipped because vessels did not come in. We've not lost market share or volumes. We've moved the value mix. There has been production of more premium items to mitigate, you know, cost increases, et cetera, which anyway is a constant effort we always take. That resulted in the value mix improvement also. Anyway, the plants ran full capacity for the days they were supposed to run. We could not produce more. Got that. Could you also quantify. I think you mentioned the volume number also, the lost volume. INR 25 crore is the absolute amount that we lost. In terms of laminates volumes, what would be that amount that we lost because of the plant shutdown? Loss of production about 250,000 sheets loss of production was there. Mm. If you see in terms of production and dispatched volume or sales volume, number is close to around 1.5 lakh sheets. Those are the things which could have been built or converted into sales, but because of challenges, logistic challenges, these were delayed. Understood, sir. That actually means that since these plant issues are sorted, we'll be able to see at least volume run rate coming back from Q1 itself. Yeah, surely. It's already, you know, it was sorted in February only. You know, so yes. The answer is yes. Sure. Just to get a perspective from the raw material front, you mentioned that, you know, of course, you took the price hike in Q3, and based on that, you were confident that, you know, there will be no further price increase, but there was, and eventually margins fell. How is the scenario right now? Are we seeing some stability in terms of prices? Is everything passed on, or are you seeing constant price increases even now? We were not confident the RM costs wouldn't go up. We were hoping it wouldn't go up, right? It did, and some RM costs went up. As we talk right now... In this also there are again, it's moving up and down here and there. Some weeks it is down and some weeks it's up. As of now, there are stability in most of the raw materials except that one raw material, phenol. This is again because of again crude has again touched $120. Then the benzene has gone up. We are constantly reviewing the entire scenario. On the other side, there is some downwards in some other raw material, especially in paper and other things. We are constantly keeping a watch on this. What sir has said that as on quarter four, whatever was the increase in the increase which we have passed on into the and which was effective from April onwards. We are keeping a close watch on this. As of now, nobody with a certainty can say that whether price will go up or down. We are keeping a watch on this, and we'll take action if it is, if at all anything is required. Sure. Understood. So that is helpful. Last one, if at all you can give some update on the particle board unit and plywood unit too. We understand laminates is coming by Q4 FY 2023. Just wanted to understand about the particle board and plywood unit too. The timelines are same as we mentioned earlier. Plywood in Q4 FY 2023 and particleboard by Q4 FY 2024. The major equipments, like I said earlier, for all the three businesses have been finalized and placed orders with. Balancing equipment and other things. Those discussions with technical and commercial discussions are going on. Civil construction of laminates and plywood has commenced, so there we are. Understood, sir. Thanks. Thanks a lot, sir. All good. Thank you. Thank you. We take the next question from the line of Ronak Vora from AUM Advisors. Please go ahead. As the line is on hold, we take the next question from the line of Nikhil Agrawal from VT Capital. Please go ahead. Yeah. Good afternoon, sir, and thank you for the opportunity. I wanted to understand, like one of your competitors is venturing into acrylic solid surfaces, and they say that it is kind of a replacement for laminates, like, you know, a good quality. It is a superior product compared to laminate. What is your take on this, and are you also considering to step into this? Acrylic solid surface and laminate are two different products, and the usage of both the products are not necessarily, in our view, you know, replaceable. Saying one is better and one is worse off, you know, I don't think it's the right comparison. As far as we are concerned, that's not an area we are currently, you know, looking at in acrylic solid surface, yeah. Okay, sir. We want to stick to our wood panel segment and to adjacent spaces. You know, that's not something we are looking at right now. Okay, sir. Perfect. What the growth guidance, the revenue guidance that you gave for FY 2023, if you could just repeat that one? We said that considering the capacity, you know, challenges we had last year, if things go, you know, well this year with no major disruptions, we should be able to grow the business about 15-18%. 15%-18%. Okay. What was the price hike you had taken in Q4 and in FY 2022? In the Q4, we will take the price hike is implemented from April onwards in the Q1. We have taken around 3% in domestic market and around 5% in export market. Okay, in FY 2022? FY 2022 as a whole, we have taken around 10% price hike in both. In both the markets. Yeah, both the markets. Oh, okay. Thank you so much. That's it from me. Thank you. Thank you. We take the next question from the line of Ronald from Sharekhan. Please go ahead. Yeah. Good afternoon, sir. I had query regarding the you know passing of raw material prices. I suppose there would be, I think, one to three months lag in those passing of costs. You know, is it true that is it one month or you know three months price like to pass on the raw material prices? I think both are true. For domestic, it's like, you know, one to two months. For exports, international market, at times it takes up to three months also. Okay. I think that. Yeah. That's in the system. It just takes time to, you know. By the time we communicate price increases, we conclude that we already have backlog, you know, at the plant of orders and, you know, in the system actually. Yes. I suppose there was some kind of, you know, easing of container availability during Q4. You said that there were issues. Can you detail out something? Whether, you know, the export markets did factor in the freight rates or we have to bear the freight rates? When we say container issues, because we ship to many destinations. Sometimes for certain routes, certain destinations, you know, they might have been easing out. But for certain destinations, we still have availabilities of boxes and vessels. As far as the freight rates are concerned, although our contracts are CIF, but since January 2021, incremental freight costs have been passed on to the market, so to our customers. Actually, if you add that to the price hike, the price increases are far higher. You know, this is the way we operate. When you say 15%-18% business growth means you would mean a higher realization driven by value mix and price increase. Because I think capacity-wise we are well utilized during FY 2022. This will be mix of, you know, we lost some production days last year. You know, it'll be mix of volume, price improvements, and value mix improvements. Okay. If you can break out this CapEx, you know, you said that you spent INR 100 crore till date, right, on CapEx? Yes. On the new projects. Among the two new projects of Andhra, Puducherry and Tamil Nadu. On this INR 1,000 crore CapEx, you know, how you'll be doing that 80% will be debt or what kind of debt equity you are planning? Are you know, planning to raise some equity from the market? Yeah. Debt equity, we have planned is 65/35. 65% debt and 35% from internal accrual. Even though we have taken enabling resolution for fundraise, but for these two projects, this is internal approval will be enough. We already spent INR 100 crore from our internal accrual. We have some cash on the books and INR 250 crore, which we need to fund in next two years. We believe that is enough for this project. As regards fundraising, we are reviewing this entire scenario, and we will take a call at an appropriate time. Okay, great. Last one was that this container issues got resolved in February onwards, right? Or is it still, you know, logistics issues you are facing? Oh, well, there are still issues. Since we ship to so many countries, you know, like I was saying earlier, at times certain destinations are fine, certain are not okay. It's still not, you know, what it was pre-COVID. Yes, so we still have availability challenges, vessels moving on time challenges. That still persists. Okay. Thank you very much, sir. Thank you very much. Thank you. Thank you. We take the next question from the line of Rajesh Kumar Ravi from HDFC Securities. Please go ahead. Mr. Rajesh Kumar Ravi, your line is unmuted. Request you to please go ahead with your question. As there is no response, we take the next question from the line of Mohit Agrawal from IIFL. Please go ahead, sir. Thanks for the opportunity. Couple of clarifications. You know, in your laminate business, you're already running at more than 100% capacity utilization, about 106%. How much capacity utilization can you target? You know, what is the maximum limit? Can you go up to 110, 120%? In the past, it's gone up to like 115%, 118% types, you know, in individual factories. We can go up to, let's say 115% types. Would you be, you know, would you be outsourcing the production or will it be purely this, you know, all the production will be through your own factories only? We don't outsource. All our production is in-house, and I think that's the route we'll follow. Okay. On the margins, you know, you've mentioned that you've been able to pass on the input cost in you know inflation till fourth quarter. Assuming no more further increases in input cost, should the margins revert back to you know 13%-15% range in FY 2023? Yeah, we said this earlier. Since we lost volume of production last year, so with improved volume, price increases being accepted in the market, volume mix improvement, you know, strategy which we have adopted and towards prioritizing the brand, so margins should improve. Okay. The last one, you've mentioned that your CapEx, you know, is on, you know, there's no change in the timeline. Any change in the CapEx numbers, like, because of, the entire input cost inflation, has the CapEx number changed or does that also remain the same? There could be certain CapEx numbers related to civil construction, you know, which could change. Although we have kept contingency in the announcements we've done. That's something we're keeping a watch on. As far as the machinery sector is concerned, we don't expect much changes there. Okay. Thanks a lot. That's all from my side. Thank you. We have Mr. Rajesh Kumar Ravi from HDFC Securities connected back. Sir, you may go ahead. Yeah. Hi, sir. Sorry, my voice was not clear. Two questions. First, only in terms of the plywood business, what sort of revenue traction you're looking in the first year of operations, FY 2024? By when you expect this to ramp up, closer to the full utilization? Yeah. In the first year of operation, we have taken around 50% utilization, so close to around INR 200 odd crore, INR 175 crore-INR 200 odd crore we are projecting. We have taken the full utilization or the 100% level in the third year of operation. Okay. Is it like a high operating leverage business and hence only when you achieve, you know, to deliver a 20% sort of plus EBITDA margin, what sort of utilization would be required, sir? Where did you get the 20% figure from? Supply is not going to be a 20% operating margin business. Mm-hmm. I think we discussed this in the call. I think it was more like a 13%-15% kind of an operating margin. You know, 13%-14% kind of a operating margin, but it is not 20%. Okay. What utilization would bring you close to that, sir? For sure, you know, 100% we'll bring us to that because it also comes from, you know, branding, distribution, you know, you know, et cetera. You know, because we have to get the product out in the market, get the physical distribution in place to bring the right price points. It's not only a function of capacity price. Sure. It's also a function in the branding, marketing, distribution price. It will be, you know, after two to three years you will be looking close to those sort of numbers. Yes, that's right. Okay. In terms of cost of debt, what sort of, what will be your borrowing cost, sir, for the debt you're planning to raise? Yeah, Rajesh. It will be a mix of ECA, which is the equipment for particle board. Equipment for particle board will be coming from Europe. Mm-hmm. There is long-term borrowing which is available, which comes at a very competitive cost, and remaining will be from the domestic. For the external borrowing that in this scenario it's difficult to comment because the interest rates are going up. We expect that within around 2-3% will be for the external borrowing. For the domestic, it'll all depend upon what the rate at that moment of time. As of now, it's in the range of around 7% or so. Okay. Sir, this 2%-3% would be, like, what portion of your loan, that 2%-3% rate? It will be around 1/3. Okay. Super. Great, sir. Thank you. I'll come back in queue. Okay. Thank you. Thank you. We take the next question from the line of Ronin Dalal from Museum Capital. Please go ahead. Yeah. Hi, good afternoon. I had a few questions around your plywood business. You'd mentioned you had INR 100 crore CapEx in Andhra Pradesh and Tamil Nadu. What portion of that would be dedicated towards the Tamil Nadu or the ply business? This INR 100 crore is not the CapEx. Total CapEx is around INR 950 crore, and INR 100 crore is the CapEx which we have already spent till March. Out of this INR 950 crore which we have announced is around INR 125 crore in the plywood and INR 225 crore in the third laminate plant and around INR 600 crore in particle board. Right. I think you had mentioned some civil construction and all have started. So far, what would be incurred, CapEx in Tamil Nadu? Tamil Nadu. This is started in this month only. Construction is started in this month only. Not much of the expenditure has been done in Tamil Nadu as of now. This is starting now in this month. Now this, from this month onwards, the business started. Right. Because I was actually checking your subsidiary balance sheets and the current work in progress is not yet moved. That's why I wanted to just check. By the March it will be done. Right. Okay. Sir, my next question is that, you know that in Tamil Nadu you all have had operations before your acquisition. What would be, say, the existing plant and machinery which is there at within Tamil Nadu state? Or maybe what revenue would be coming from that? No, this is a new plant. There is no plant and machinery there in the Tamil Nadu. Okay, it was just a land and there was no plant and machinery. Yeah. Only the land was there. As far as the revenue is concerned of ply, on a full capacity it'll be more like INR 400 crore revenue per annum. Right. There was nothing in any other business also. There was no plant and machinery or anything else was at the location of Tamil Nadu? No, no. That was used as a warehousing facility. Okay. Right. That was used as a warehousing facility. Yeah. There was some. Okay, that will continue to serve for the warehousing as well as your new CapEx, right? No, no. We have moved the warehousing out of that location because we are gonna build a plant and there's not enough space to do both the things. Warehousing is moved, you know, close to that plant, about 30 km-40 km away. This site will be used fully as a plywood manufacturing unit only. Right. Final question is that, you know, I mean, it's for Greenlam, I mean, only 75% of that business is owned, so why not 100%? This is a listed company in terms of that only. 75% of the shareholding only was there with the promoter, which has been bought by Greenlam. Remaining is there with the general public. Right. This particular site had some advantage or maybe you all were already familiar with it, that's why it made sense to buy this? That's correct. Yes. Because land was ready and, you know, the tools were in place. We put this out on the next profit presentation on why we've chosen this site in terms of raw materials, market, et cetera. Right. Now the CapEx which comes up will show in Greenlam books or, I mean, of course it will show in the consolidated balance sheet, but. Or will it then reflect in the subsidiary as well? It will reflect in subsidiary because subsidiary is going to spend all the money, so it will be in the books of subsidiary. On consolidated, yes, it will be a part of Greenlam. Okay. Sure, sir. Thank you so much for answering the question. Thank you. Thank you. We take the next question from the line of Nikhil Agrawal from VT Capital. Please go ahead. Yeah. Yes, thank you, sir, for the follow-up. Sir, this was on the raw materials front. Like, your main raw materials are, on the chemical side, melamine and phenol, I think, and they've been on a downtrend. What is the trajectory of the paper costs right now? The kraft paper that you purchase, what is the price trajectory? What has been the price trajectory for that? First of all, the chemical, there are three chemicals. Phenol and melamine you said correctly. There is one more, methanol. In terms of that, the price of phenol is not softened, rather it has firm up. Melamine price, you are correct, melamine and methanol price has corrected from what it was there in the peak. The price of phenol is not reduced or not, rather it has firm up post this Russia war, Ukraine war. This has firm up from what it was there previously. In terms of paper, we use different type of paper. For the domestic paper, kraft paper which we use, the prices has come down by around 10%-12% from what it is there in the peak. From what it is there in the? At the peak. Yeah. Like you correctly said, one part of the domestic paper price has come down. At the same time, the other part of paper which typically uses, you know, wood pulp and 100% virgin grade kraft paper, their costs have come down. Net-net, you know, there's a minor reduction overall. Okay. Sir, your chemical costs account for about 35% of the cost of production, right? 3%% of the RM cost. Okay. I mean, I understand that raw prices have gone up and even your kraft paper prices have remained stable. Do we see the realizations going down after the price hike you have taken for the full year, do we see the realizations being at this level or is there any chance of going down as well? We haven't reduced any prices and realization is a function of pricing and the, you know, product mix and value mix. Oh, yes. Got you. I don't see it coming down, you know, at the moment. Our endeavor is to, you know, constantly keep improving the value mix and the product mix. We have the tools and we are working in a certain direction, you know, on that front. Okay. Thank you. That's it from me. Thank you so much. Thank you very much. Thank you. We take the last question from the line of Vipin Taneja, an individual investor. Please go ahead. Hi, sir. Good afternoon. I just wanted to understand what is exactly driving the growth in laminates. Is it the pent-up demand due to COVID which was, you know, subdued earlier? Second is how are we placed with the competitors like Merino and Century? Please if you can explain that. Thank you, sir. As far as demand of laminate is concerned, I think it's general growth in both domestic and export market. In domestic we believe, since there was significant supply chain disruption in our industry, we believe a lot of unorganized companies have, you know, cut down, curtailed their production and they've had challenges with availability of raw material, capital, et cetera. I think we've ended up taking some market share in the domestic space. As far as export market is concerned, you know, we've been constantly expanding that space and we are restricted in terms of capacity, there. Clearly, I think it's a function of market situation, our working in the market, products, you know, distribution reach, et cetera, et cetera. As far as competition is concerned, in laminate clearly our closest competitor is Merino and, yeah. How are they doing? Because I was checking their distribution channel and like they are targeting mainly architects and that's why they are having a bit of a higher margin and they are the leaders. Any in terms of new strategies in terms of our marketing and sales which we have for the current year, sir? As far as the numbers are concerned, you know, in terms of revenue we don't have their FY 2022 results. If you look at the last few years' revenues, then we do more than them laminates on laminates. In domestic market they do slightly more than us, exports we do more than them. That's on the revenues which are similar. How are they doing? I think they're doing fairly good also. I don't have access to their numbers because they haven't come to the public domain. This is where. As far as the targeting of architects, IDs are concerned, I think as normal course of business, architects, IDs, contractors, OEMs they play a large part in terms of influencing and specifying the product. I think that's. It's a routine effort of working with the influencers to create demand, working with contractors and carpenters and with the channel to, you know, create the physical network. We also work with e-com furniture players and also there's a lot of marketing activity and sales activity which we do. As a margin, sir, like, why are they having a higher margin compared to the industry standards? I haven't seen their numbers of FY 2022, so can't comment much on that. As far as the previous year's numbers are there in the public domain, I think maybe that can be a separate dialogue and we can discuss that. You know, maybe you can have a conversation with Ashok and we can see do they really have higher margins, and what is the ROC we have, what is the ROC they have. At the end we have to see what is the denominator, you know, and which stage of business are we in versus them. I think that's a dialogue maybe you can have with Ashok. Ashok, just pull the sheet one second. Sure. In the FY 2021 overall margin, if you see they are at around 16.2% margin. We are at around 14.4% margin and there are reasons for this decline. ROCs? Yeah. There are reasons for this decline in terms of our marketing spending higher than them and employee costs are higher than them because our more of a professional setup. They have a lot of family members working there. Okay. If you look at the ROCs, I don't know, Ashok, maybe you can have a separate dialogue with them, but that will be very similar. Sir, just on the laminates industry, is it just that the laminates per house or laminates, you know, per unit house, is that increasing significantly versus, you know, the previous trend because of the aesthetic looks, which it provides to the house? Is that the change which we are seeing post-COVID, sir? I don't think that's changed post-COVID but clearly, you know, laminates is a preferred material or increasingly preferred material for in the decorative paneling space in kitchens, wardrobes, door shutters. With the lot of choices, you know, customers have and at the price point and with the ease of maintenance, you know, to keep the laminate. So we believe, you know, market share of laminates will gradually keep increasing. Also, then there is laminates which is being used inside the furniture, right? Which is called liners, commodity products in kitchens and wardrobes and, you know. I think that's also going on. Right. COVID, tough to say that post-COVID laminates will increase. I can't put that together. You're not seeing that. That is because of aesthetic looks and people are more conscious about how their house looks now versus, you know, earlier trend two years back. Yes, obviously, you know, if people are staying more at home, then they want to do, you know, better interiors. I'm sure people have started moving out. Really, I think that's more of a momentary thing. Yes, clearly as a material, at the price point with the, you know, amount of choices the customers have in terms of colors, textures, wood grains, stone patterns, it's quite a useful material at that price point, you know, for the consumers or for the users. Right. It's easy to apply, and there's some maintenance to be done actually. Okay. Sir, one last question. Although you have mentioned two suites in the report, the future of plywood, I just wanted to hear from you, sir. Just couple of points would be enough, sir. The future of plywood is it? Plyboard, because you are expanding in there. Yes, correct. Yes. I would probably you're well informed that it's about a INR 30,000 crore market, you know, and we put that in the presentation of why we're doing plywood. We're just two tiny players across the country. Again, same story, unorganized to organized movement. It's an essential product, and we have products for the retail markets, carpenters, contractors, homeowners in the form of veneers, flooring, and premium laminates. We believe this space and the possibility of a, you know, entry of a third player, you know, to step in because there is no meaningful third player in the market. There are players, regional players and certain other national players, but most of them are subscale, and they don't have much focus on marketing, sales, or they don't have the right manufacturing, you know, capacities and the capability. Really, we think it's a profitable business from a perspective of margins and ROC, et cetera. It's also adjacent to what we do. Most of the channel partners, architects, designers, influencers, people are pretty common for this. We've leveraged the synergy. Spending won't be much there, like sales and marketing. The marketing spend will be there, you know, because it'll be plywood. Clearly, the style of marketing, product development is a bit different from what we do currently in the sense that, there's not numerous ranges and launches and displays and all that. Okay. The sales channels will be the same or different profile? There will be overlap. There really will be overlap. In laminates the model is company, distributor, and then to number of dealers. In plywood is more company to direct dealer formats. I was talking about plyboards, right now, sir? Yes. Yeah, I was saying about plywood. In laminates it's more company, distributor, dealer. In plywood it's more company dealers. Sir, in plyboard, what would our margins, which we are looking at, sir? EBITDA margins? It'll be in the range of, like we said, on a full capacity, you know, like 14%-15%. Right. Sir, in that, particle board also we are targeting, sir? Pardon? Particle board? Yes, yes. Yeah. We've already announced that. Particle board we are putting up a plant in south and we'll be spending close to around INR 600 crore on that. Sir, in particle board, would we be directly tying up with OEMs? Because a lot of new furnitures which I was reading is, maybe or Nilkamal has also opened a branch. They are primarily coming up with that particle board furniture these days. Will we be going directly to the OEMs as well for particle board? Larger OEMs, you know, will be served directly and, you know, like you mentioned Nilkamal or some other larger players. There will also be, as you probably are so well informed, there are many smaller OEMs doing, you know, fabrication, kitchens, home improvement, wardrobes, you know, students' furniture. There'll be an element of distribution happening, to the smaller OEMs, to the stockists and, dealers or big distributors. Margins which we are looking at, sir, here in this particle board? Be in the range of around 25% I think. Achha 25%? Okay. Okay. It's because the purchase to sales revenue ratio is around 1: 1. That's how the margin. Okay. Actually, that was our next query, but you have already answered. Thank you so much, sir, and all the best because you're coming out with a huge CapEx, it is not easy. Thanks a lot, sir. Good luck to you and the company, sir. Thank you. Thank you so much. Thank you so much. Thank you so much. Yeah. Thank you. We take the next question from Jenish Karia from Antique Stock Broking Limited. Please go ahead. Yeah, thank you for the opportunity, sir. Am I audible? Yes, you are. Yeah. Go ahead. I understand that in a volatile environment regarding costs, it's difficult to comment on the margins. If you can give us any flavor about the EBITDA per sheet or something like that, whether it will stay at these levels or it will taper down or because of the value mix, it will increase or some flavor on that part, sir? In terms of EBITDA per sheet, this quarter it was at around INR 137 per sheet, and last quarter also it was at similar level. It was INR 136 per sheet. Going forward also we plan to maintain that or? As we have discussed in the call that price hike what was there in the Q4, we have taken that price hike and it is implemented from April. There was some disruption on the production side which was also get resolved. If there is no other disruption which we don't know as of now, then probably the margin should improve. In case that improves, then obviously that will have a positive impact on the EBITDA per sheet. Okay, got it, sir. Thank you. Thank you. That's all from my end. All the best. Thank you. Thank you. We take the next question from the line of Abhishek Vora from Ambit Asset Management. Please go ahead. Hi. Thanks for the opportunity. Quickly just a clarification on the numbers of domestic exports volume and value numbers, could you please repeat on that? Yeah, Abhishek, we will, when we come to income statement. Sure. You had mentioned the numbers in the start of the commentary. I think exports volume declined by 19%. Is that number correct? Is that the number? Sure. Before that. Yeah. Domestic volume decline would be? 4.5%. Sure. The value growth in domestic would be? Volume growth in domestic was 22%. Sure. The exports value growth was 4%. Is that correct? 15.3% was domestic and, sorry, 23%. In laminates you are talking? Yes, sir. 23.9% in the domestic and 8.9% in the export segment value growth. Sure. 23.9% and 8.9% are the domestic and exports value growth respectively on a YoY basis. Right? Yes. Quickly also, if you can please give a sequential growth number of domestic and exports, it will be helpful. It was around 4% in both. 4% each, right? Great. Thanks a lot, Ashok. All the best. Thank you. We take the next question from the line of Rajesh Kumar Ravi from HDFC Securities. Please go ahead. Yeah, hi sir. Just wanted to understand again on the leverage side. You know, you said that you would be comfortable with the, you know, current internal accruals to fund this CapEx and the borrowing, in terms of your leverage ratios. Yeah. Okay. Because, if I look at your net debt numbers, which you said it would be close to INR 800 crore, right? INR 750 crore-INR 800 crore, yes. INR 800 crore. Your EBITDA would be close to INR 2,500 odd crore or less than 300 crore sort of a number. Are we not looking at a debt to EBITDA ratio of almost 3x or more than 3x type of a number? Given that if there is some volatility and ramp-up delays that would have a bearing on your overall performance. What is your thought on this? First of all, yeah, this debt which you are talking, this will be towards the end of FY 2024. Net debt, as I said that INR 750 crore-800 crore is there, and if we divide that 300, then it will be well below the three. As you know that we have already taken the approval for the QIP. As of now, that is not yet finalized. We are reviewing the situation. Great. We think we have in terms of that. Understood. You know, if at all you go for that will have, you know, strengthening factor for you. That's it. Yeah. Thanks, sir. That's all from my end.