Ladies and gentlemen, good day and welcome to the Greenpanel Industries Limited Q1 FY25 Earnings 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 presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rishab Barar fr om CDR India. Thank you, and over to you, sir. Good day, everyone and thank you for joining us on the Greenpanel Industries Limited's Q1 FY25 Conference Call. We have with us today Mr. Shobhan Mittal, the Managing Director. Mr. V. Venkatramani, the CFO. Before we begin, I would like to state that some statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. A detailed statement in this regard is available in the results presentation that was sent to you earlier. I would now like to invite Mr. Shobhan Mittal to begin the proceedings of the call. Over to you, sir. Thank you. Good afternoon, everyone and thank you for joining us to discuss Greenpanel's Financial Performance for Q1 for Financial Year 2025. India's domestic volumes increased by 10.2% year-on-year for the quarter. Export volumes contracted by 21% due to logistics issues. India's EBITDA margins at 12.1% were impacted by steep increase in wood prices, 5.8% sequentially and 30.9% year-on-year. Lower domestic volumes on a sequential basis. Plywood volumes were lower both sequentially and year-on-year, and operating margins at negative 2.2% were impacted due to the same. Post-tax profits for the quarter were lower by 58% at INR 15.71 crore as compared to INR 37.26 crore in Q1 FY24. Net working capital at 36 days has shown a sequential increase of 8 days due to increase in wood inventory in preparation for the monsoon season. Net debt stood at INR 103 crore as of 30 June 2024. However, it stands at negative INR 111 crore excluding debt for expansion projects. Mr. Venkatramani will now run you through the financials in greater detail, after which we will have a Q&A session. Thank you. Good afternoon, everyone. I thank you for joining us to discuss the Q1 financial performance of Greenpanel. Net sales during Q1 were ₹364.15 crore compared to ₹385.16 crore during the year-on-year period. MDF sales fell by 2% at ₹331.78 crore and contributed 91% of the revenue. MDF domestic volumes stood at 97,400 cubic meters. Export volumes were 21,671 cubic meters, and overall volumes for the quarter were 119,071 cubic meters. MDF domestic revenues were ₹288.33 crores, while exports contributed ₹43.45 crore. Domestic realizations were lower by 10.01% at ₹29,603 per cubic meter, while export realizations were higher by 11.7% at ₹20,051 per cubic meter. Average MDF realizations were lower by 5.1% at ₹27,864 per cubic meter. Uttarakhand MDF plant operated at 76% and AP plant operated at 74%, with average capacity utilization at 75% for the quarter. Plywood sales had a degrowth of 28% at ₹32.37 crore. Plywood sales volumes were lower by 22.8% at 1.22 million square meter, and the unit operated at 52% during the quarter. Plywood sales realizations were lower by 6.7% at INR 266 per square meter since we have stopped sales of Decorative Veneers. In Q1, gross margins at 51% fell by 710 basis points year-on-year due to reduction in selling prices and increase in wood prices. EBITDA margins were down by 780 basis points at 10.9%. PAT was lower by 58% at INR 15.71 crores. Gross debt to equity ratio now stands at 0.21 as of 30 June 2024, compared to 0.13 as of 30 June 2023. Net debt as of 30 June stood at INR 103 crores, including debt of INR 214 crores for the expansion project. That concludes my presentation. Please open the floor for the Q&A session. Thank you. Certainly, sir. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Keshav Lahoti from HDFC Securities. Please go ahead. Hi. Thank you for the opportunity. So again, we have seen MDF margin is now pretty low at 12%. So what is the sense? Should we expect any types of pricing increase by the industry and timber prices, which continue to shoot up earlier? Because you have said it might possibly cool off from June or July onward. So what is the sense on the cost side? And lastly, on the import, as we are seeing, freight rates have sort of already doubled in the last few months. So is it leading to lower import in the country, and how is the import and domestic pricing gap now? Yeah. So on the timber cost front, I think we have maintained previously that it is still some time. It was next year when we will see that the prices starting to cool off when the new plantation material will start coming in circulation. So however, we do see that there is some stability on the timber prices. As a company, what we have also done is we have ventured into different species of timber, trying to source other cheaper species of timber, for which we are now trying to keep the timber prices in check. However, it's very hard to estimate that are we seeing a real reduction in timber prices. As of now, it's hard to say that. But with various different mixing of different species, et cetera. we're able to control our internal timber prices. On the pricing side, we foresee that we don't see any major further reduction in the market pricing coming in because the majority of the new capacities have already come in, and some of the smaller new capacities have already established themselves with a fair amount of volume in the market and a decent market share. So we don't foresee any major challenge coming on that side as well. Imports, yes. Freight prices continue to remain quite inflated, and we are not seeing a major increase in imports coming. In fact, there has been a reduction only. So we don't see imports being a major threat in the near future because of the freight remaining inflated at this point of time. So that is the current situation on the cost and pricing side. Got it. In case of no price increase or 12% margin, can possibly at best you can close this year, looks like a 15% margin. So what is the take on that? Because margin is pretty low, someone like capital-intensive business like MDF. So remember, we had guided in the last conference call after the Q4 results that we are expecting MDF margins to be around what we achieved in Q4 last year, which was, I think, around 16.4%. So that would be our target for the current year. Understood. Got it. One last question from my side. You maintain your 15% MDF volume growth guidance for FY25? Correct. Okay. That's it. I'll come back in queue. Thank you. Ladies and gentlemen, in order that the management is able to address questions from all participants in the queue, we request you to please restrict your questions to two per person. You may rejoin the queue for follow-up questions. We have the next question from the line of Sneha Talreja from Nuvama. Please go ahead. Thanks a lot. Thanks a lot Thanks a lot for the opportunity, sir. Just a couple of quick questions from my end. Of course, you've given all the reasoning right from domestic competition to timber prices going up. When do you see on timber pricing? I think on the last question you did mention a lot. When do you see the domestic competition easing? I think the last was done by Greenlam and then came CenturyPly. Do you see now the price pressure, at least on the competition side, has gone away? The question why I'm asking is even if, let's say, timber prices start to reduce, if the competition remains fierce, can there be passing on which can happen, or do you think that will not happen? So I think Century's new plant has recently started, and of course, I'm quite sure that they're looking to gain some market share, especially in the South Zone where they were not present operating out of the North plant, not present in a very substantial way. So I wouldn't say that the domestic competition has gone away. However, there is some relief on account of imports not coming in. I'm also quite hopeful and sure that the domestic industry has now realized where they stand in terms of margins, and I think we're almost hitting a bottom limit as to how much price cutting can happen. With the given current timber prices being on the increasing trend, even at current levels, margins have already become quite strained. A lot of the new companies have taken on substantial debt to fund their expansion projects. So I don't foresee any major reduction in market pricing per se. I think now the only challenge that remains is the increasing timber pricing, and I think collectively as an industry, there are chances that we may be able to pass it on in the coming few months, primarily if all the organized players see it that way and the imports remain muted, then there would be a possibility of passing on this cost onto the market as well. So should we say, is it safe to assume in Q2 we will see some price increase happening? I don't think we can make that assumption now. It's still a very competitive market, and there is a big gap between demand and supply. So I would wait for some time before we see whether we can implement the price increase in properties. Understood. So lastly, when you mentioned about demand supply, could you give us a number of supply additions happening in the industry, the major ones? If we look at it, current capacity would be around 3.5 million cubic meters, and including our own capacity of 230,000 cubic meters, we expect another 600,000 cubic meters to be added during the current year, so this will take overall capacity to about 4 million cubic meters, whereas the current demand is approximately 2.5-2.6 million cubic meters. Understood, and what would be the quantum of imports last? If you look at Q1, I think it has come down. If you look at the average for last year, it was around 35,000 cubic meters. So if you look at Q1, it has come down by approximately 50%. Understood. That was helpful. So all the best, and get back on the queue. Thank you. The next question is from the line of Praveen Sahay from PL India. Please go ahead. Yeah. Thank you for taking my question. Can you give the north and the south timber pricing? For the Q1? Yes, sir. Okay. It was INR 6.75 for the north plant and INR 5.50 for the south plant, and blended was approximately INR 6. Okay. And so if I look at the margin profile of 12%, and also sequentially, if I look at your realization, and especially in the domestic market, the realization has actually Q2 has gone up. So the 16.5% of margin to 12% is majorly because of timber pricing. That's correct. It's to a large extent the timber price. It's also sequentially, if you look at it, domestic volumes have come down from approximately 116,000 cubic meters in Q4- 97,000 cubic meters in Q1. So the fall in volumes has definitely contributed to the lower operating margin a nd there have been responses. And also if you look at it, the domestic export mix has changed compared to what it was in Q4. Q4, I think it was about 92% domestic and 8% exports. Whereas it's about, I think, 18% domestic and 18% exports in the current quarter. Okay. Next questions are related to the OEM. How much is the volume and value contribution for a quarter? The OEM contribution was 25% of the domestic volumes. In value terms? I don't have the figure right now. You can give me a call later. Okay. Thank you, sir. All the best. Thank you. Thank you. The next question is from the line of Udit Gajiwala from YES Securities. Please go ahead. Yes, sir. Thank you for taking up my question. So you mentioned that you will be ending FY25, you're targeting around 16%-16.5% margin for '25. So what would be those reasons, I mean, from 13% going back to 16%, where you are not seeing timber prices coming down? Okay. It comes primarily from the volume growth we are projecting for this year. We are projecting a volume growth of 15% in the MDF segment. Then that operational efficiency should give us the higher margins. Yes, sir. Understood. But sir, to achieve 15%, your ask rate for coming nine months is close to 19%-20% growth. And I believe imports could be lower in Q1 also because there was some confusion around BIS, so the orders were delayed and the container issues were there. But if imports start to come back, then 9 months, 19%-20% growth looks a bit challenging given the current scenario, but any light over there? Yeah. I think imports will continue to face challenges just as we are facing challenges on the export side. There's not only a steep increase in ocean trade rates, there's also a non-availability of containers and ships, and ship schedules are also getting deferred to a significant extent. So I don't think imports will grow significantly, at least for the next 2 quarters. Understood, sir. And sir, lastly, the CapEx that the new plant is expected to come into Q3, so that is as per schedule. And would it start to contribute from Q4 onwards, or is there some delay over there? That's correct. It will start production in Q3. Okay, sir. I'll fall back in the line. Thank you. Thank you. Thank you. The next question is from the line of Vinamra Hirawat from JM Financial. Please go ahead. Hi, sir. Am I audible? Yeah, you are. Please go ahead. My question was on wood prices. I just want to know, what is the expected quantum of reduction in wood prices in FY26 when the new crops start coming in, and the estimated impact it will have on your cost of goods sold? It's impossible to gauge that at this point of time. Being a natural product and being so fragmented in the hands of so many farmers, we will not be able to gauge what kind of supply would be coming in and what would be the expected demand at that point of time, which would result in the reduction. So it's quite impossible to gauge that at this point of time. Okay a nd I just want to know if this quarter had any election impact on your sales volumes? Yeah. I think to some extent, we also had the election impact, just as April is also a slow starter because dealers increased volumes in March to avail the highest flag of incentives. So all those factors definitely contributed to lower volumes in Q1, and we are confident that we'll start seeing the pickup from the current quarter. Okay. Thank you. Thank you. The next question is from the line of Nikhil Agrawal from Kotak AMC. Please go ahead. Good evening, sir, and thank you for the opportunity. So my question was related to the discounts and schemes. I believe it was in place till the end of June, but still our volumes fell down during the quarter. And so have you rolled back the schemes, or are they still in place? No, the schemes are very much in place because you see, I think our rollback, our schemes were a reaction to undercutting by other companies. So it was an answer to the other schemes that were launched by other companies. So at this point of time, the schemes continue to be in place. Okay. Do we see Q2 volumes going down further because, I mean, it's normally a kind of weak quarter? So what has been the performance for July? If you can just help on that. Yeah. I think we'll definitely see a volume improvement in Q2 because monsoons significantly impact demand since this is an interior product, primarily used for manufacturing furniture. The monsoon does not create any significant disturbances. So I think volumes will be significantly better in Q2 as compared to Q1. All right. And what about the margin front? Is this the bottom 12%? Is this kind of bottom? Have the margins bottomed out, or do we expect any further erosion? I think the margins have bottomed out. Since we are seeing volume improvement in Q2, I think margins will definitely be better in Q2 as compared to Q1. All right. And what about the plywood segment? When do we see performance improvement on that? So we are seeing volume improvement already in the plywood segment. We've taken some quite strong decisions in the plywood segment. We've combined and merged the plywood sales team. So what we've done is we've opened up the number of people selling plywood within the company to a much larger number base, and we've also started accessing our entire MDF network to try to put our plywood product into that segment. So we're already seeing improvement in terms of volumes. There has been cost optimization as well. We're also hopeful that in the next month, month and a half, we'll see some price improvement in plywood as well. We've already sent out a notice to the market for the same, and we're hopeful that within a month's time that we get implemented. With these different measures and the more sort of increased intensity of selling plywood within the company, I see volumes to improve and also some relief on the margin front with the improved pricing as well. All right. Great. That's it from me. Thank you so much. Thank you. Thank you. The next question comes from the line of Aditya Mehta from Antique Stock Broking. Please go ahead. Hi. Am I audible? Yes. Sir, I just wanted to ask, why has the annual capacity for plywood declined from 10.5 million square meters in Q1 FY24- 9 million square meters in Q1 FY25? That's correct. As we had mentioned earlier, we have shut down the Decorative Veneers segment. So that's why we see a reduction in capacity. Sorry, sir. Which segment? The Decorative Veneers. Okay. It's part of the plywood business. All right. As I mentioned in the earlier call also, we have closed down the Decorative Veneers business. So that's why we see a reduction in the overall Plywood capacity. All right, sir. That was my question. Thank you. Thank you. Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. So first, as a clarification, you indicated that after 600,000 of capacity addition at industry level, the total capacity we are looking at 4 million CBM is a number, right? That's correct. Right. And sir, the corresponding demand would be around 2.6 - 2.8. Did you mention that? Did I hear it right? Yeah. I said current, if you look at the last financial year, I estimate it's between 2.5-2.6. Okay. Perfect. And sir, imports, you indicated average was 35,000, and for the quarter, I could not pick up the number, sir? Quarter, I said it was approximately 50% of the last year's average of 35,000. So somewhere between 17,000-18,000 cubic meters per month. Okay. So this is helpful. Sir, my second question is on import parity pricing. Historically, you used to give us a number of what the FOB price is, what the freight price is, and effectively, we could calculate the landed price. You did indicate around container freight charges. Is it possible if you could please quantify that? As of now, what we are seeing, there's not too much imports coming in, so it's not very clear. But as of now, what we know is that from Southeast Asian countries, they're trying to maintain an FOB price of $190-$195. And on the freight side, I think today we're talking at least a number of $30-$35 per cubic meter to bring it into India. That would result in a price of $225-$230 C&F. Right. And sir, would that be import duty of around 10%? Is it something which is applicable right now? No, it's under the free trade. Most of the Southeast Asian countries fall under the free trade agreement, so there is no import duty on that. Perfect. So sir, if we look at this number factoring $35 of freight, $190, what you indicated on FOB basis, the landed price will be somewhere around INR 18,000-INR 19,000. How should we look at this versus our reported realization? I understand we do a lot of value-added products, but is it possible to get some comfort that the local pricing would not reduce only looking at import parity map? It would not because you see, I think what we need to compare firstly is the industrial-grade product against the import product, which is the segment that the imports compete in, number 1, and number 2, what also needs to be factored in is that this price is landed at the port. Even at the port location, there are various clearing charges and local transportation charges, and then overheads of the importer involved, I think, which adds around INR 2,500 per cubic meter to the cost to bring it to the importers. So the moment we further transport this to the users and the consumers, then the cost gets added up. So we don't foresee that in industrial grade because of imports, we will see any at these price levels, any pricing challenge. That is why you also see at this point of time that majority of the OEMs that we are catering to, who were completely dependent on imports in the earlier few months, have now moved to the domestic producers purely because imports are not really viable, and they're also happy to pay a small premium to the domestic producers because there is a lot of, they have lower working capital requirements dealing with domestic producers. LC limits are not required. Foreign exchange volatility goes out of the picture, so we don't see that to be a challenge with the current price levels. Right. So just to follow up, the implied realization based on our math, it comes to around INR 29,600 per CBM. If one had to bifurcate this into 2 parts, one is the basic grade and the value-added, would that be possible? A broad number would also help. Just again, trying to draw comfort on pricing. Sure. So our domestic blended realization is INR 29,603. So if you look at the basic products, which is the industrial and the commercial-grade products, so the average realization comes to INR 22,695, and those for the value-added segment comes to INR 37,482. Okay. So this is quite useful, and sir, just last question. You indicated there is another 600K of capacity which is expected. Sir, if you look at the current margin profile, it would be difficult to cover for the cost of capital for most of the players, so when you speak with the industry participants, what is the thought process? Is it like to look at market share push volumes, or is there some hope that there would be sanity in the marketplace and there will be some resilience on pricing that one can expect? It's hard to, I mean, I think everyone is hopeful that there will be some relief on the timber cost front. Everyone is quite upbeat about the fact that imports have been curtailed. But at the same time, cutthroat competition continues in the market. I'm just hopeful that people realize that it can't get any worse than that and start working towards margin improvement, whether it's on the pricing side or also, for example, additional efforts on the raw material side, whether it's reducing pricing or increasing plantation activities. Right. So this is very helpful. Sir, can I just squeeze in one question, if you permit? Sure. Sure. Right. Sir, basically, if you look at timber prices locally last 15 years, 20 years in India, have there been any tenures when the timber prices have actually reduced? And if yes, what were the reasons leading to that? No. So you see, in timber, it's always we always go through these cycles because demand goes up, plantations start, prices start going up, and plantations start happening. And then when plantations do become available and demand is sort of similar, then the prices will go down. We've seen this. There is always a 5-6-y ear cycle when this always happens. So it's quite common and expected. Of course, this time, it's been a bit more inflated because demand from the paper mills and the expansion in the MDF industry has been quite substantial. And for this grade of timber, the demand has drastically gone up, and plantation is taking time to catch up. But these cycles have been in the industry, for it always happens. It's quite common for this to happen. Sure. This is very helpful. Thank you so much. Thank you. Thank you. Thank you. Ladies and gentlemen, we request you to please restrict your questions to two questions per participant. You may rejoin the queue for follow-up questions. The next question is from the line of Rishab Bothra from Anand Rathi Institutional Equities. Please go ahead. Yes, sir. Good afternoon. 2 or 3 questions. Firstly, I just wanted to understand what things can we do in order to reach back to our profit levels? I mean, market scenario, we all know, understand how things have been, and I'm sure you would be doing the right steps or taking the right steps to move in a more profitable manner, but what, according to you, are key factors which are restricting the increase in profitability? So, I mean, you see, as I mentioned earlier, certain things are beyond our control. For example, timber pricing. The best we can do at this point of time is to try to mix different grades of species and different species and different grades of material to reduce our average timber consumption cost. We've taken a strong drive internally within the company to cut unnecessary costs during this difficult period. Like I said, we merged the plywood and the MDF teams, which has resulted in a fair amount of savings, a fair amount of savings on the sales operation side. We've also, for example, decided to centralize certain sales and commercial functions which were earlier divided in the respective branches to make it more efficient and reduce costs as well. So on the cost-cutting side, there has been a strong drive within the company to try to improve margins. Also, one thing that the company is focusing on is the increase in the value-added product mix because that is somewhere where we see that there is good opportunity for profitability to go up. There is no threat from the unorganized segment or the imports in that particular segment. So there is a strong focus on increasing the value-added segment for the company. So there are cost-cutting measures in place. There is, of course, a drive to improve the product mix. And hopefully, in the next coming few months, we can also see some opportunities to pass on cost increases to the market with price increases. So that would also result in an improvement in the margins of the company and the profitability. Okay. So why I was asking this question is if we recollect 2021-22, I mean, the run rate of revenue was around INR 450-470 crore, which has come down to around INR 397 crore. I'm sure realization would have improved, volumes would have improved quite a lot. I mean, there could be at times one would be up and one would be down b ut our margin contribution has come off sharply. 28-29% margin has come off to 13%. And this has been quite for a while. So since everything looks good on the demand front, input cost is a challenge which has been there for a while. And still, we don't know where we will be landing up in Q2 or Q3. So does diversification help to an extent from moving from MDF to other business segment? Because I guess non-compete clause is over. So do you intend to go? Non-compete clause, yeah. We don't have the non-compete only applies for us to the plywood segment at this point of time, but like I said, even that is no longer in place, but I mean, I think we are still very, very upbeat about the MDF segment. It is the demand side, I would say the challenge is of oversupply, not of the market demand or market growth. The reason why this problem has been created over the last year is because surplus supply has come, which I am quite sure given the current conditions, people are not going to very willingly invest into MDF plants or large MDF plants going forward because everyone knows the current situation, so we see that this situation is definitely going to improve. As a company, we are very, very cautious about the debt in our books. We've already undertaken an expansion project. Our current capacities are underutilized at this point of time. So the focus of the company at this point of time is to optimize existing capacity, bring the new project online, and bring it up to capacity, and streamline the plywood business to bring it to full capacity as well. So with these things on our hands at this point of time, diversification into another product line is definitely not on our minds. There is already a lot on our hands to do. And I think for the next 2 financial years, we're quite sure that this will keep us occupied. Got it a nd in terms of, you mentioned oversupply. So is it imports? Are we pressurizing the government, or are we lobbying with the government to have certain anti-dumping duties so that domestic industry is protected? Because. So at this point of time, you see, as I mentioned, imports are not really a major threat at this point of time because of the freight costs being very high. At the same time, we had plans for BIS being implemented, which unfortunately got deferred by a year. So this will get implemented next February, which would already create a barrier for imports coming into the country. And if the industry sees the need or the necessity for reinitiating the anti-dumping investigation, then they might do so. But at this point of time, with the increased rate and I think with BIS coming in, it doesn't seem like that may be immediately necessary to engage into another investigation for the time being. So your statement that there is ample supply coming in, so where is it domestic supply which is hurting the? It's about domestic, yes. Yes. So one is domestic supply, and the nature of an MDF plant being a continuous process is that the entire capacity comes into play the very first day you start the line. Yeah? Correct. Correct. So the day I set up my new plant, I have that 18-20 thousand cubic meters per month immediately available to me. Correct. Correct. Sorry. Go ahead, please. No, no. You can go ahead. I'll come again. So that is what I'm saying is that in the past year, year and a half, we have seen a few big lines come online, which has added to the supply side quite drastically. But with the market growing at 15%-20%, there is a lag of demand catching up with the available capacities. What I recall is when I spoke around 2 and a half years back, most of the industry players, including you and others, once mentioned that this situation will not arise because we have burned our fingers in history. Because we had the same question. I mean, the sell-side analyst had the same question that a lot of supply is coming up. How will you mitigate the risk? And there was a response from everyone that we had burned our fingers in the past, and this sort of situation or equation will not come up. And we are in the same case now as of now. So on one hand, wood cost is burning us. On the other hand, supply is burning us, and this situation will improve. To what timeframe do you think things will turn around? Okay. So it's not as bad as what. So if you recall when a similar situation occurred in 2019, realizations were down by 20%. Whereas if you see at this point of time, it's possibly down by about 7%-8% b ecause of cost increase, d efinitely different from what it was in the earlier example when we saw prices moving from 26,000 to about 20,000. Okay. Fine. I'll come back in a few, sir. Sure. Thank you. Thank you. The next question is from the line of Arul Selvan from Independent Advisors Private Limited. Please go ahead. Hi. Can you hear me? Yes. Hi. I just have a couple of questions. The first one is just a subjective thought. What do you think are the opportunities for consolidation in the industry, in your opinion? I don't see that any concrete opportunities there at this point of time. But is it predominantly because the increased supply that you were alluding to in the previous answer has come from organized players, or is it the case that there is a lot of supply coming from the unorganized players? Because I would presume that if. I think so you see, the unorganized players, of course, there is an increase in supply on that side as well. No doubt about that. And it won't be correct to say that we are completely insulated from the unorganized segment. But at the same time, large quantities have or large capacities have been added by the organized players as well. And unfortunately, being a commoditized product segment and product differentiation being very, very difficult in this particular segment, within the organized segment market, I think that the capacity increase has been much more drastic. Greenply came in less than a year ago, and Century has just started. So this, of course, has definitely affected the market conditions, especially in the organized segment. Okay. So your view is that this competition in the last 1-2 years, right, this sort of high amounts of competition and the consequent difficulties in the pricing environment has predominantly been caused by the organized players rather than the unorganized players. Is that the correct understanding? I think so. The organized segment competition is definitely of a bigger concern than the unorganized segment, and I could probably name the companies where we face challenges from. That would be Century. That would be Action. That would be Greenply. And to a certain extent, Rushil Decor. These are the 5 major organized players in the country where undercutting is happening. I don't have customers, or I don't have retail partners who are quoting me an unorganized player because they know that we don't compete with that segment, but if there is a consumer who's telling me that I'm being offered Greenply at this price or Century at this price, which generally happens to be the case, then that's where the concern arises for me. Okay. Okay. I understand. I would say this is quite similar to the plywood market, for example, where the established players like Greenply and Century have their, they don't talk about competition with the unorganized segment, to be honest with you. Okay. Now, one more question along these lines is that the proportion of the market being with organized players, have you seen any reduction in that in the last 1 or 2 years, both on the MDF side as well as on the plywood side? So you're saying in terms of supply for the unorganized players? Yes. Yes. I know for a fact that they are facing even bigger challenges than the organized segment is. At one time, they were refusing through the association to talk to the organized players. They were like, "We will do what we want to do, and you guys do what you want to do." But now the organized players are being approached that we should look at price increases, which is a clear sort of indication that they have challenges while we are able to withstand this situation. And this situation was bound to happen because when timber costs have gone up and they don't have the pricing levels like the organized players do, then it's a bigger challenge for them. I also know for a fact that certain plants are currently not even operating because they're unable to sustain the current timber prices. Okay b ut any number that you have in mind in terms of what the current market is with? No. Unfortunately, I don't. Okay. That's it from my side. Thank you very much. Thank you. Thank you. The next question is from the line of Hrishikesh Bhagat from Kotak Mutual Funds. Please go ahead. Good evening, sir. Can you help me understand on domestic? Sorry, Hrishikesh. Can you please speak a little louder? We can't hear you very clearly. Hello. I'm audible? Yeah. So can you help explain what explains this improvement in realization on sequential basis on domestic side? Small improvement, but somewhere from INR 29,000- INR 29,600 or what? Expenses on sequential basis compared to Q4? This would definitely be on account of the product mix, better value-added products. Okay a nd second is on roadmap to improvement of margin to 16%. How much will it become operating leverage, and how much do you think pricing will drive if there's anything you can guide on that front? At the moment, we are not looking at any price increases. We are rather looking at price stability for the current quarter. So basically, it will come from operational leverage and lower operating expenses. The last 2 questions are, timeline for new capacity remains same, or is there any change on the timeline? There's no change. Okay nd finally, on this, I know we spoke about timber cost, but in South, I believe we have imports option also. Do you feel that imported timber is still expensive, and largely it's a freight issue, or is that global timber prices are also on upside? No. So I don't think global timber prices are on the upside. Freight is, of course, a big challenge. Timber is a high. So there are 2 things. Firstly, the majority of the countries do not allow log exports unless you're bringing in logs from South America, which may be suitable for the plywood business, but it's definitely not suitable for the MDF business purely because of the cost. At the same time, if you start importing chips, then the volume that you can transport as chips goes down drastically. So if you take solid timber, let's say the per cubic meter density of timber is around 600-700 kilos, whereas when you start transporting chips, that falls down to 150-160 kilos per cubic meter. So there is a loss of efficiency of the cost of transportation increases because in the same volume, you're bringing in lesser weight. However, at this point of time, timber prices, sorry, imported timber prices, are still workable for the paper industry, but for the MDF industry, it's not workable at this point of time. We are exploring options from various countries. It's something that's constantly on our radar as a company. But as of now, we have not ventured into imported chips yet because domestic prices still remain competitive after factoring in the freight for the imported chips. Okay. That's it from my side. Thank you. Thank you. The next question is from the line of Kushagra from Old Bridge Asset Management. Please go ahead. Yeah. Hi. Thanks for the opportunity. Just 2 questions. One, on your volume growth expectation of 15%, I mean, so there are a couple of variables there, okay? Your new capacity will commercialize somewhere in 3Q. Peers are ramping up the capacity, and then you said 0.4 million CBM is coming in FY25 as well. So the question really is, to push that incremental 15% volumes, would you need to go for more sort of pricing cuts, which you're saying not? But who will absorb those volumes, or you will see that inventory buildup but won't go lower on pricing? There seems to be some mismatch. If you can sort of clarify that. We're fortunately domestic. On the domestic front, we are already seeing year-on-year improvements in volumes. We've also reinitiated the export model at this point of time, which we had consciously stopped towards in the last few quarters because of pricing pressure. We passed on some price cost increases on that side. What has come to benefit us is that freight costs from Southeast Asian countries to the Middle East increase has been much higher than what it has been from India. We're able to pass on, or let's say, get that benefit on our FOB pricing. We foresee that there will be some improvement on the export volumes as well. At this point of time, we are looking at the market scenario, looking at how the domestic volumes are panning out. We should be able to achieve that volume growth that we have initially projected. Right. So I mean, if the market overall is seeing capacities, how do you see who will be the guys who will absorb those incremental volumes? The incremental volumes are not only from your side, but your peers as well. So the thoughts were more around who will absorb those incremental volumes to sort of support without pricing going down. That was the question really. Yeah. So you see, one thing to keep in mind is that the new line that we have is going to be specialized for thin MDF production. It's a segment that we are not currently very actively present in, the 1.9 millimeter, 2.1 millimeter, 2.5 millimeter market, which is a huge market, and we don't actively participate in that market because it's not viable to produce it on larger lines. So that is something that will be an immediate added sort of benefit for us that we'll be able to liquidate a large quantity of that from our existing network, where at the moment, they go to other smaller players to source. At the same time, the growth that we are projecting is also in line with the current market growth that is happening, which is around 15%-20%. The market is also growing at that pace. Everyone is expecting that, okay, if the market is growing at that and based on the last year's level, that much growth should be available for everyone. All right. All right, so the second question is, it's more like a data question. If you can call out the profitability, either in margins or EBITDA per CBM for your basic, which you said industrial and commercial, and the international segment as well. Okay. It's not possible to give the margins per cubic meter for industrial and value-added products because there's no way we can apporti on the OpEx on those different product categories. So overall, if you look at our MDF business, EBITDA per cubic meter has been INR 3,379 per cubic meter for the current quarter. International, if you can call out? It's very, very marginal. I would say possibly we are doing somewhere between 1% to 2% EBITDA on the international business. All right. Thank you. Thank you. I'll get back. Thank you. Thank you. The next question is from the line of Balaji Vaidyanath from NAFA Asset Managers. Please go ahead. Balaji, the line for you has been unmuted. You may proceed with your question. Good evening. Good evening. Can you hear me? Yes. You are audible, sir. Yeah. Hi. Thanks for taking my question. Shobhan, if you could throw some light on how the international markets, especially the developed markets, are faring because a couple of conference calls before, you had mentioned that capacity is. Sorry, Balaji. Can you just speak a little slower? The line's not very clear. I was just mentioning that if you could throw some light on the international markets, especially the developed economies, because a couple of quarters back, you had mentioned that capacities that were to go to Europe and US got relocated to India because of the slowdown in those markets. So are we seeing some amount of improvement in those markets? It's something that I wanted to know from your side. No. So I think on the demand side, I think there has definitely been improvements. The biggest challenge today is on account of the sea trade. That's where the challenge lies that people are not freely selling to the more lucrative markets because the reason why people would import from Southeast Asia would be on a cheaper landed product. But because of the freight disturbance, we are not seeing a drastic increase of material being shifted to the developed markets because of the current freight scenario. But if you talk specifically on the demand in those developed markets, demand continues to remain quite robust. We are also getting inquiries from countries that we've not even reached at this point of time. But the unfortunate situation is that we're not able to cater to them because of the freight scenario. So this includes U.S. as well? Yes. In fact, surprisingly, we've gotten inquiries from the U.S. as well. But if we choose to transport the material from India to the U.S., I think the freight cost would be higher than the product cost. But it's an indication that the demand is good, and they're looking for material beyond their traditional sort of suppliers. Okay. So my second question is on the value-added products that we're talking about. So just wanted to understand that, if I'm not mistaken, I think more than 50% of the product portfolio is value-added products or some such very high number, if my memory serves me right. But it hasn't kind of helped us from the point of view of margins. So is there really sanctity towards these value-added products that we are talking about? Okay. So if you look at the current quarter, the proportion of value-added products was 47% of the domestic volumes a nd the value-added products have 2 advantages. One, the realization is higher, and the operating margins are also higher. So if you look at the plain category, whether it's industrial or commercial, we are possibly making a 12% margin or a slightly lower margin on a realization of approximately INR 22,700. Whereas if you look at the value-added category, there is an incremental EBITDA of 3% on a value which is higher by 50%. So the plain category is getting me a realization of around INR 22,700. My value-added category is getting me a realization of INR 37,500. So there's definitely significant advantage in increasing the proportion of value-added products. And it also insulates me from competition from imports. So those are the 2 significant advantages in trying to increase the proportion of value-added products. Okay. All right. Thank you so much. Wish you all the best. Thank you. Thank you. The next question is from the line of Kaustav Bubna from BMSPL Capital. Please go ahead. Hello, Shobhan. Thank you for taking my question. So I had a few questions on value addition. I think this is an important point because what I wanted to understand is, what are you exactly doing in value addition? And to the previous participant's question, I think a few questions ago, they're like, "How are you going to diversify away from MDF?" So my question to you is, in your value addition space, how do you plan to grow low-pressure laminates into this MDF division that you have? Because you already are making the MDF board, and does that come under value addition? Because that could probably provide less volatility and better margins. I think the primary products that fall into, let's say, our value-added basket would be the HDWR grade, which we call as Club Grade, the exterior grade to a certain extent. Then we have flooring, the wooden flooring. And then, of course, is the low-pressure laminate or pre-laminated MDF, as the industry calls it, in which we are very much already prevalent. We do close to about 100,000, 100,000, 120,000 sheets per month of that particular product. And of course, the idea is to bring these levels to a much higher number. I think our capacity is almost double of what we are currently selling on the low-pressure laminate segment. So when the thin material does become available, then there would be an added opportunity because thin MDF with the pre-laminated pre-lamination is also a very big market. So that would also be something of an added input to the value-added segment for us. Excellent. And this 47% mix of value add, where do you see it going in your domestic realizations? Where do you see it going in 3 years? So this segment for us is growing better than, I would say, the general market. So we think that this could go up to 60%-65% over the next one, one and a half years, 2 years. Yes. You said the realizations for value add was 37,000 or 47,000? 37,000, right? 37,000. 37, 37. Yeah. Okay. Excellent. Thank you so much, Shobhan. Look forward to seeing you soon sometime. Thank you so much. Thank you. Thank you. The next question is from the line of Aasim from DAM Capital. Please go ahead. Yeah. Hi, evening. This 15% volume growth expectation for FY25 that you mentioned earlier, does this also include exports? Yeah, it includes. Yes. Yes. Yes. It's a mix of both domestic and exports and OEMs. But if there are exports also, and you did talk about that you have reinitiated the export model because logistics costs were more competitive. But since EBITDA margins and exports are already at break-even levels, how would the 16% FY25 EBITDA margin come, the targeted margin? See, the majority of the volume growth would have to come from the domestic segment. We are targeting volume growth of around 3%-5% in the export segment, and most of the volume growth from the domestic segment. So exports still in the overall mix would be what, 15%-20% for the year? You probably want to restrict it to that level, is it? Yeah. I think it should be lower than 20%. Okay a nd second question on the MDF imports, you did talk about the freight cost is about $30-$35 per cubic meter. Can you just tell us what was this level say 2-3 months ago? Because other industries do tell us that freight costs have come up. But at least from your commentary, it looks like it is not the case. Or maybe it's not the case of Southeast Asia. So we are aware of what the pressure was earlier. I mean, I think we used to be around $10-$12 per cubic meter. That was at the lowest, right? But then in between, because freight costs jumped up because of the container issue, did it rise higher and then come down to $30, or did it rise to $30 and it has stayed there since in the MDF? I don't think there has been much correction on the freight in our product segment, at least. At least doubled in the last year. Yeah. Okay. Okay. Thank you. Thank you. Ladies and gentlemen, we request you to please restrict your questions to two per person. We have the next question from the line of Harsh K. Shah from Dalal & Broacha Stock Broking. Please go ahead. Yeah. Thanks for the opportunity. One question from my side. So assuming the current realization as well as the timber prices, so at what level of capacity utilization do we believe that for the newer plant we could be EBITDA positive? For the new plants, I think around 55% capacity utilization should be EBITDA positive. Okay. Okay. Yeah. That's it from me. Thank you. The next question is from the line of Keshav Lahoti from HDFC Securities. Please go ahead. Hi. Thank you for the follow-up. Just want to get a clarity on ply volume growth. Earlier, you have guided 8%, so this quarter has also been muted. You want to change it? How is it looking? And will this segment hit EBITDA positive in upcoming quarter? At this point of time, I think we'd like to maintain the 8% growth that we have initially projected, I think. So we should be EBITDA positive by the end of the year for sure. Okay. That's it from my side. Thank you. Thank you. The next question is from the line of Parth Bhavsar from Investec. Please go ahead. Yeah. Hi, sir. So thank you for the opportunity. I just had a few bookkeeping questions. So the first one is when you mentioned what is the share of value-added product in terms of value? I guess in terms of volume, it is 47. What is it in terms of value? Right. In terms of value, it would be, just give me one second, 59%. Okay and sir, the other thing you mentioned that your exports margin would be in the range of 1%-2%. Is that correct? Correct. Okay. Okay. Perfect, sir. Those are my questions. Thank you. Thank you. Ladies and gentlemen, we will take that as a last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir. We thank everyone for joining this call. We look forward to speaking to everyone in the next quarter. If anyone has any further queries or clarifications, please feel free to reach out to us, and we wish everyone a very good evening. Thank you. Thank you for your participation. Thank you. On behalf of Greenpanel Industries Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.