Ladies and gentlemen, good day and welcome to the Greenpanel Industries Ltd Q2 and H1 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 the call, please signal an operator by pressing star, 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 from CDR India. Thank you, and over to you, sir. Good day, everyone, and thank you for joining us on the Greenpanel Industries Ltd Q2 and H1 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, Rishab. Good afternoon, everyone, and thank you for joining us to discuss Greenpanel's operating and financial performance for Q2 FY25. Our domestic sales volume fell 4% year-on-year. Export volumes were impacted since we consciously stopped exports to those customers who were not prepared to compensate us for the steep increase in ocean freight rates and wood prices. Our domestic realizations were lower by 7.2% year-on-year at INR 30,404 per cubic meter. However, domestic realizations showed a sequential increase of 2.7% due to an increase in the mix of value-added products to 54% as compared to 47% in Q1. Export realizations were higher by 24.4% year-on-year at INR 21,822 per cubic meter. Our EBITDA margins at 13.1% were impacted by lower volumes in the domestic segment due to price action by competitors. Plywood volumes were higher by 21% quarter-on-quarter, although it was lower by 10.4% year-on-year. EBITDA margins at 2.5% were impacted by lower volumes and an increase in wood prices. Plywood realizations at INR 250 per square meter were lower by 6.7% year-on-year. This was due to our decision to exit the decorative veneers business on account of lower operating margins and high working capital intensity. We have restructured our plywood sales team to recover market share and reach optimum capacity over the next two quarters. Post-tax profits for the quarter were lower by 55% at INR 18.5 crores as compared to INR 41 crores in the corresponding quarter for reasons mentioned earlier. Net working capital at 40 days has shown an increase of 14 days year-on-year due to lower turnover and high inventory levels. We have also reduced the credit period of vendors to ensure that we receive wood supplies on a regular basis. Net debt stands at INR. 97 crores as of 30 September 2024, inclusive of the INR 228 crores for the new project. Work is progressing on the new project, and we estimate the commercial production toward the end of Q3 FY25. Mr. Venkatramani, we're now running through the financials in greater detail, post which we'll have the Q&A session. Good morning, everyone, and thank you for joining us to discuss Q2 FY25 financial performance of Greenpanel Industries. Yesterday's evening's quarter overall billings INR 32.67 crores compared to INR 97.70 crores during the last quarter. India sales fell by 6% at INR 295.81 crores and contributed 89% of the top line. India domestic volumes fell by 4%, while export volumes were also significantly lower due to a conscious decision by the management to accept orders only for struggling to place new orders at revised prices to compensate us for increases in ocean freight rates and wood prices. India domestic revenues were INR 262.91 crores, while exports contributed INR 32.89 crores. Domestic realizations were lower by 7.2% year-on-year at INR 5,404 per cubic meter, while export. I'm sorry to interrupt you, Mr. Ramani, but your line is not. The line's gone. If you're on a hands-free, request you to use the handset. Yes, I'm here. Blended India's realizations were higher by 1.6% at INR 130 per cubic meter. India's operate. 25%, and the AP plant operated at 55% with blended capacity utilization at 62% on capacity of 67,060,000 cubic meters. Plywood sales growth was 14.7% at. Plywood sales volumes were lower by 10.4% at 1.47 million sq m, and the unit operated at 50% during the quarter. Plywood sales realizations were lower by 9% at Rs. 250 per sq m due to change in mix as mentioned earlier. In Q2 FY25, gross margins were lower by 694 basis points year-on-year at 48.6%. They were down by 649 basis points at 11.9%. EBITDA in value stood at Rs. 39.56 crores, and PAT at Rs. 18.5 crores for reasons mentioned earlier. That concludes my presentation. Please start the Q&A session. Thank you. Sure. Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants who wish to ask questions, please press star and one. Ladies and gentlemen, to ask questions, please press star and one. The first question is from Praveen Sahay from PL India. Please go ahead. Yeah, hi, sir. Thank you for taking my question. So the first question is related to the domestic volume of MDF. So if I look at the domestic volume, even the sequentially, it is 11% down. And if I look at the competition, some competition also reported their number. So there we not see such kind of a fall in the volume, especially in the domestic. So can you give some indication why is it so, and will that continue for the quarters? Thank you. Getting that? Shobhan, I got disconnected, so I couldn't hear the question. Could you take that, please? Could I repeat, sir? Sorry, can you hear the question again? Yeah, sure, sure. So it's related to the domestic MDF volume because domestic volume were down YoY, even sequentially 11% down. And if I look at the peers also reported their numbers, their numbers is not so impacted, especially in the volume. So what are the reason for us for a decrease in the domestic volume on the higher side? So if you can give some indication. The line's not clear. Mr. Venkatramani, I'm sorry to interrupt, but your line is not very clear. Maybe you could. Yeah, Venkatji, we cut. Maybe step out or something like that? Yes, maybe you could try moving to an area that has a better network. Also, you called me on my other number. It's 98305. One moment. Just give me a moment. Yes, sir. Can you tell me the number? 98305. One moment. Participants, thank you for patiently holding your lines. Sorry for the inconvenience. We have Mr. V. Venkatramani connected. Over to you, sir. Hello. Impacted our volumes. And in fact, the improved market share will increase the volume, which helps availability. And we should start seeing the improvement in volume from the current quarter. Hello. Sorry, sir, you are not so audible. Yeah, Venkatji, please repeat your whole answer again, please. Okay. I've also moved to a different location. Still not helping. Is there a landline, Venkatji? Yeah, just a moment. I'll check it there. I can better you. Sorry, guys, about this. Me too. Landline call to number, then I have to call on some number, though. Number, but tell you. Hello? हां, बोलिए. हम्म? प्लीज, जल्दी बताइए. Yeah, please connect me on 0124. One moment, sir. Sorry, I got disconnected. To come back to your question, I said that domestic capacities have gone up considerably over the last two years, moving from 2.5 million cubic meters to 4 million cubic meters. And new companies that just started fresh capacities were keen to grab some market share from competition and started operating at lower prices. So this price action by competitors impacted our volumes. And in the latter half of the quarter, we introduced a new 4% scheme for our dealers to soften the impact of price action by competitors. So it was a one-off for the quarter. I think we'll start seeing improvement in the volumes from the current quarter. Okay, so basically, you have also taken a corrective action to improve your volume for the second half. That's correct. If you can give the OEM volume for a quarter for MDF, domestic MDF. It was 16% of the domestic volumes. Okay. And on the export side, now you're 100 for the MDF, reached to around 15,000 CBM. So in the coming quarters also, we will see the similar kind of numbers or any kind of improvement are you seeing? See, we are targeting about 12 to 15,000. Sorry, we are targeting about 6,000 to 8,000 cubic meters per month for the second half of the year, but to some extent, it will also depend upon movements in ocean freight rates and wood prices, because we do exports only if they are making a positive contribution to the fixed cost, so we don't accept orders which are below marginal costing. Okay. And can you help us with the timber pricing for the north and the south? Yeah. Timber prices have moved up by about 5% to 6% in the second quarter. But for us, on a blended basis, it came down by 1.5% because we reduced purchases from distant locations, which helped to lower the transportation cost. So basically, overall, for your costing, 1.5% decrease. Lower prices on a sequential basis. Okay. And if you're able to give the north and the south price, sir? Yeah. North price was 6.54. South was 5.35. Just a minute. North was 6.63. South was 5.32 and blended was 5.86. That is for a Q2 average. Quarter Q2, correct. How are the current prices moving? Currently, in October, prices have again. Prices in South India have moved up by about 5% to 6%. North about 4%. Okay. Or any price action have you taken in the MDF? We are in discussions with the sales team. So the working is on. So we'll possibly be considering that in the current quarter. Last, sir, on the new plant, which you already highlighted, commissioned by the Q3, can you give some more detail? Like your plant machineries are reached or how is the situation there? Yeah, so I think we're looking for a first board production towards the end of the quarter. Let's say by December, we should have the first board out. Okay. Thank you, sir. Just stepping here, in North India, we are seeing some correction in the timber pricing at the moment, which will also be beneficial. Correction in the month of October, you are saying? Well, it's starting now. So let's say we will see some impact in November for the north of India. Okay. Okay. Great, sir. Thank you, and all the best and happy Diwali. Thank you. Thank you very much. Before we take the next question, we'd like to request participants to please limit your questions to two per participant. For follow-up questions, we request you to rejoin the queue. We take the next question from Nikhil Agarwal from Kotak AMC. Please go ahead. Good morning, sir, and thanks for the opportunity, so my question was on the unorganized players, sorry. How are the unorganized players preparing for the implementation of the BIS norms? Have they already started aligning themselves with the BIS norms, or are they yet to start doing that? I think the BIS norms which will become applicable early next year, we are not foreseeing any further development on that. I think everyone is prepared to comply with the same. The industry has been working quite strongly with the Indian Standards Department to ensure that, because the norms were quite outdated. We've been working quite closely to update the norms in order to make sure that they are in line with the current times and that all the industries comply with the same. Because certain norms were almost picked up from plywood, which were not applicable to MDF to start with. We've worked with the department to correct that. Yes, going forward, everyone will have to comply. I'm quite sure everyone is already working towards that. Do we see any uptick in the pricing from the unorganized players as a result? Or do we expect? In fact, we've already seen some information being circulated that they are going to take a 6% price increase. There has been the unorganized segment. There is a separate association of theirs which had met in the month of October. And information is that in November, they're all going to take a 6% increase. How much of that actually gets passed on, how much of that gets implemented, we'll only get to know starting November. All right. And so you mentioned about some price correction that you had taken. It was a bit unclear. Could you just elaborate on that a bit more? Yeah. We introduced a new 4% scheme for our dealers around the middle of August. So it was applicable for a part of the quarter. All right. So this was in addition to the scheme that was already started? Yeah. This was in addition to the scheme, sir. Because like I mentioned, there was price action by competitors who had started new capacities during the current year. So to counter that, we introduced this new scheme. But since it was enforced for a part of the quarter, so the impact of that on realizations was around 2%. But sequentially, we saw a positive movement in realizations because the blend of value-added products improved from 47% to 54%. All right. All right. Understood. That's it from me. Thank you so much. Thank you. The next question is from Udit Gajiwala from YES SECURITIES. Please go ahead. Yeah. Thank you for taking up my question. So firstly, you mentioned that you might see volumes improving from coming quarter onwards. So given that H1, we have declined on overall volume by 8%. So what kind of should we see? 0% growth or it will be negative for 25? And what are you projecting for 26 in total volume terms? Okay. I'll answer the question in two parts. First, the domestic and then exports. We are targeting domestic volume growth of 15% to 18% year on year in the second half of the year. And that should give us a growth of around 10% in domestic for the full year. And on the export segment, we are targeting volumes of about 6,000 to 7,000 cubic meters per month. But to some extent, that will be dependent on ocean freight rates and wood prices since we do not accept orders which do not make a positive contribution to the fixed cost. That is, the orders must be at least above our marginal cost. Understood. Understood, and sir, I mean, similarly, could you also state that since you have taken price correction and the volumes could go up, could we see some further price correction that could happen? Because I believe unorganized comes with a lag since it's a very small portion of MDF. Yeah. Our sales team is working on the quantum of price increase, and we are also watching competitive action by competitors, so we'll be taking a decision on prices during the current quarter. Sorry, but just to clarify, I think the question was regarding price correction. I don't think there is any further intention of reducing prices any further. If anything, we will start looking at some price increase from maybe quarter four or even December, for that matter. We're in discussions with the sales team. So we're hoping for some improvement in the coming months. Got it. And so just lastly, if you can give the Capex number for 25 and 26, that would be. The bulk of the CapEx has already been completed. Currently, I think about Rs. 80-odd crores of CapEx spend is pending. Of which we estimate about Rs. 30 crores would happen in the current year. The balance, Rs. 40 to Rs. 50 crores in the next financial year. How much have we done in H1? I'll give you that figure separately. Sure. Thank you. Thank you. Next question is from Shraddha Kapadia from Share India. Please go ahead. Hello. Am I audible? Shraddha, you're on. Yes, I'm good. Yeah. Thank you so much for the opportunity. So I just wanted to have a basic understanding about the demand supply scenario for next one or two years? You are not audible. You'll have to speak louder. Yeah. Hello? Also, I wanted to understand the demand supply scenario for next two years, especially post the BIS implementation. Shobhanji, can you hear? It's not audible. Yeah, I can. I can. I think she's asking for the demand supply scenario for the next two years. So see, the market is definitely growing at a very healthy rate, anywhere between 13% to 16%. From a supply point, all the major capacities that were supposed to come in have already come in, have almost gone live. Ours is the next one. There are no major big lines in the pipeline anymore. What we are also seeing is a sharp decline in the imports already. And going forward, when BIS is implemented, we foresee that imports will further decline. So going forward, I think it would be for the larger players, I think the situation would be better because everyone will start enjoying a higher, let's say, growth and a market share percentage. Purely because the market will continue to grow, imports will decline, and no major additional supplies are going to come in. Although two years are very long with the current volatility in the market, it's a very long period to project. But this is what we foresee at this point of time. Okay, sir. Thank you so much. That was it from my side. Thank you. Next question is from Ritesh Shah from Investec. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. So first question, can you throw some light on each of the working capital variables, please? In the sense? Sir, on the credit days, on the payable days, and the inventory days, the movement and where do we see that stabilizing? Okay. So for the quarter ended 30th September, inventory days were 56, receivable days were 8, and creditors' days were 24. So we expect to see a moderation in inventory days during the next two quarters. But I think we are stable as far as the receivables and payable days are concerned. Okay. Sir, in the prepared remarks, you did make a comment that we also reduce the credit period of vendors to ensure that we receive good supplies on a regular basis. Just trying to understand that as well. Okay. So if you observe during the last quarter, the first quarter of the year, creditors' days were 30 days. And currently, they are at 24 days. So we mobilize faster payment to wood suppliers to ensure that there was regularity in supplies. Sure. And sir, you did give one of the numbers that the current capacity is 4.1 million CBM is the number. Did I hear it right? That's correct. Correct. And sir, corresponding to this, how much will be the consumption, broad ballpark, at country level? I'm just trying to understand the demand supply gap. Estimate currently, so probably it was around 2.7 million cubic meters at the end of FY24. I don't have any numbers for the current year. Okay. That's useful. And sir, lastly, in our prior calls, we have indicated that we are hopeful of the timber prices to actually decline. Are there any milestones or variables that we can actually look to monitor, basically, to understand it better? No. There's actually no organized data available on timber supplies. So I think we'll have to wait for the next crop, which is expected in June, July next year. But I think there would not be a substantial reduction in prices next year. I think we'll start seeing improvements in pricing. But I said we're not expecting major reduction because capacities have also moved up considerably over the last two years. So I think we can expect significant reductions to happen in FY 27. Some moderation in prices in FY 26 and significant reductions in FY 27. Sure. This is very helpful, and sir, last question for Shobhanji. Sir, you had indicated that we are rejigging our management structure and there were resigned exits at the top level. Can you please indicate basically where we are segment-wise and how is the business structured specifically from a marketing and sales standpoint? Yeah. So the major restructuring that is happening is the amalgamation of the plywood and the MDF sales team. So we've basically combined them and able to reduce the workforce size as well because of that. Because I think initially there were inefficiencies in the plywood sales team. We had a very high number of people dedicated to it with too little volumes. By doing that, we've been able to reduce our overall sales cost, sales team cost, operation cost. And what we're also noticing is that from quarter one to quarter two, we've seen a fairly decent improvement in the volumes. So majority of the restructuring is in place now. What we've also done is we've discontinued some of our physical branches and converted them to virtual branches, which has resulted in, again, a reduction in costs. We're not keeping physical offices in many of the branches anymore because it was primarily required for holding meetings, etc., which is majority of the sales team is most of the time in the field. So we've been able to do some cost reduction on that front as well. So that was a major restructuring that we did by combining the two sales teams. And we're seeing cost benefits of that. We've seen a fair bit of improvement on the sales numbers as well because of that. Thank you. Before we take the next question, a request to participants to please limit your questions to two per participant so that the management is able to address questions from all participants in the conference. The next question is from Pankaj Parab from Molecule. Please go ahead. Hello sir. Thank you for the opportunity. So we are expecting the new capacity to be operational by next quarter. And if the industry dynamics, I'm talking about demand and supply mismatch, remains the same. How are we planning to ramp up the new capacity and when will we be expecting to achieve maximum capacity utilization for the new plant of the MDF? Okay. We are targeting a 50% capacity utilization in the next financial year. And possibly around 75% to 80% in FY 27. And sir, in the realization front, so we see some improvement in Q2 on the realizations. So we can say Q1 realization was kind of bottom for the industry. And how do you see the realization in terms of value-added segment and non-value-added segment going forward? Okay. Yes, it does appear as if we have reached the bottom as far as sales prices are concerned, and regarding the value mix, we are targeting a mix of value-added products at 65% of domestic sales for the existing capacity. Obviously, for the new capacity, it will take time to improve the mix of value-added products. For the existing capacity, we are targeting 65% mix of value-added products by FY 27. Okay, sir, and last question, I am expecting that to ramp up the new capacity. Do we need to push our sales by reducing our realization or something kind of that to ramp up our new capacity? Shobhanji, can you please take that? Yeah. No, we don't need to. I don't think we need to do any price correction because the new line is specifically designed for the thin segment. Greenpanel currently is not very, very prevalent in the thin MDF segment because larger lines, especially in the south, it's not very efficient to produce thin panels. So it's a segment of the market that we're not really present in fully. So we will simply be entering at market pricing to gain market share. But it would not result in a price correction in our existing business. That's not foreseen at all. Okay, sir. And sir, can you please give us a broad realization from the thin side of MDF and our regular side of MDF? See, if you look at. Thick and thin. Oh, you are asking for difference between thick and thin? Yes, yes, yes. Okay. Shobhanji, please take that. No. So thin MDF realizations on our per cubic meter generally tend to be anywhere between 5 to 7% higher. Okay. Got it. Thank you for answering my question. Thank you. Thank you. Next question is from Sneha Talreja from Nuvama. Please go ahead. Good morning. And thanks a lot for the opportunity. Just two questions from my end. If I'm not wrong, you mentioned that you have introduced a scheme of about 4-odd% in August. Has that been continuing, or are you planning to withdraw it? That's one. And what's the basis of your assumption of 15% to 18% volume growth guidance that you've given for H2? So the scheme has been continuing at this point of time. So because the market pricing prevailing is factoring in that scheme also for the competitors. So we have been continuing that scheme at this point of time. What we are seeing, we're on track, especially in October with those kind of growth numbers. And we foresee the situation to continue to improve. So assuming that, I think it's safe to say that for the second half of the year, we should be in that growth percentage number, 15% to 18%. Understood. Sir, one last question. We understand in the first half, you were selling at a premium, and there was competition which had got prices much lower. At this point of time, with your scheme continuing, where does your pricing stand versus, let's say, the other two leading players in the industry? So I would say we are at about so when, let's say, for example, the major competitor in the south started the new plant, I think pricing that was launched in the market was about anywhere between 7% to 8% lower. And then we corrected our pricing by about 4%. So as of date, I would say the difference stands at about 3%-odd. So you're still at about 3% premium at this point of time with the scheme on? Correct. Correct. Correct. Understood. Understood. And the last one, if at all, I can just squeeze in, is related to the BIS implementation. Where are we seeing development happening in that particular front? Are we seeing players of other countries anywhere close to getting any BIS, or that's far away and nowhere being spoken about at this time? No. So I think at this point of time, even because of the freight element, there is, let's say, reduced interest in selling to India because domestic pricing is already so squeezed, reduced, and there's not a very large gap from imports. Hence, we are not seeing too much of imports coming into India at this point of time. I'm quite sure that certain companies going forward, no one is going to make the investment immediately because everyone is hoping the exporters will be hoping that there could be another deferral or something of that sort. So I think post-implementation, I'm quite sure certain larger companies will go ahead and comply with BIS, but it would reduce the number any which way. Many market dynamics at that time will be considered because it is the cost involved to comply with BIS on their part as well. So the cost automatically goes up around 5% to 6%-odd, or would you have some ballpark number there? No. So there is a one-time cost. And then, of course, what people have to consider as well is that if the BIS compliant material is of a different grade, then a certain amount of volume needs to be produced for it to be viable. And if the market demand is for that kind of volumes, then there will be certain cost. There's a one-time cost, and then, of course, the cost of production might go up to comply with BIS as well. So they'll have to factor in both the fixed cost as well as the variable cost. Thank you. Before we take the next question, a request to participants to please limit your questions to two per participant. For follow-up questions, you may rejoin the queue. The next question is from Rishikesh Chandrakant from Kotak Asset Management. Please go ahead. Hi. Just want your sense in terms of margin for this new plant in terms of, since we're targeting thin MDF, is it fair to say that at current prices or current margins, it will be lower at current prices of MDF? Margins will be dependent on a host of factors, like what will be the capacity utilization, the mix of domestic and export. Just an indication in the interim, it will be lower at the, say, stable. If they're operating at similar capacity utilizations, the mix of domestic and export is similar, the mix of value-added products is similar, then the margins will be similar. Shobhanji mentioned the sales realizations are higher by about 67%. But the costs are also slightly higher because in materials, the density will also have to be higher as compared to a thick MDF. So margins on a similar operating condition will be similar. Entire plant will be Thin MDF, or it will be mixed? Yes. Well, no. So the plant is capable to produce thick MDF as well. But because we have two lines which are already producing thin MDF, hence the new line will primarily be focused on producing thin MDF. Okay. The other question is, you spoke about that potentially not much capacity addition in industry. But say, incrementally, if anyone in the industry or say potentially for you, I know you guys have something coming up. But just if new capacity is to be planned by industry participant, what will be the lead time in sense assuming land is there for new capacity to come in system for MDF, whether from just large consumption? I'm not talking about Chinese. Yeah. So I think it's safe to assume a two-and-a-half- to three-year period from a point of conceiving to actually the start of first board. Okay, and Chinese will be shorter? Chinese is not that much shorter. It will be similar. Unless someone picks up a second-hand plant and chooses to move it, then it could go down by six months, for example. Okay. And those large part of the shipping freight issues are now behind, or still they persist in the industry from the exporter or from export as well as the import of machinery? No. I think there is still a challenge. In our business, we still face a challenge on the export side in terms of freight availability as well as cost still remain a challenge. Okay. Thank you. Thank you. Thank you. Next question is from Karan Bhatelia from Asian Market Securities. Please go ahead. Hi. Am I audible? Yeah. Please go ahead. Yeah. You did mention about the volume growth for 2025. How can we see the margin profile shaping for this year and maybe for next year? Okay. As compared to quarter two, the current quarter, we are estimating 150 to 200 basis points improvement in the margin for the second half of the year. And for the next financial year, I think depending on how much of exports we do, we are targeting a 35% growth in MDF domestic volumes, including the new capacity. So I think for that, we can see a further improvement of 150 to 200 basis points next year. We are targeting 35% plus volume growth for 2026. Is my understanding correct? That's correct, and for the domestic volumes, only for the domestic volumes. We don't have clarity on exports because, like I mentioned earlier, it will be dependent on wood prices and ocean freight rates, but for the next financial, we are targeting a 35% growth in domestic volumes, including the new line. Right. And while I believe the timber shortage is still on, are we also looking to import timber for continued operation? We are exploring options for import of chips. Currently, because of freight as well as but if the domestic prices, especially in the South India, if they keep going up, then it will become a viable option. We are keeping options in hand. We are exploring options. It is definitely a possibility for us in the future. Thank you. Next question is from JM Financial. Please go ahead with the question, Bhavani. Yeah. Sir, my question's a good answer. Thank you, sir. Thank you. We'll move to the next question. Next question is from Keshav Lahoti from HDFC Securities. Please go ahead. Hi. Thank you for the opportunity. Sir, how is the OEM margin right now? See, OEM prices are currently at a discount of about 5% to 6% as compared to retail. And there would be a saving of around 2% in material costs. So margin should be lower by around 350 to 400 basis points. So you are saying you are making the kind of 7% to 8% margin for OEM? Is it a fair understanding? It should be higher because we are hardly making any margins on exports. So the 13% margin is actually including exports. So if you remove exports, the domestic margins will be higher and OEM margins will be at a discount of about 4% compared to domestic retail. Because my understanding was OEM business was, what I understand earlier, you guided something like 3% to 4% or maybe 5% margin in OEM business. So margin is very tight. It is not that good. No. No. No. Earlier, our exports margin used to be at that level. But because of the movement in wood prices and increase in ocean freight, that has come down to around 1% to 2%. OEM margin should be about 400 basis points lower as compared to retail. Understood. Got it. And there is a sharp drop in OEM export strategy. Last quarter, it was 25% of mix. Now it is down to 16%. No. It was, like I mentioned, due to price action by competitors. But we are slowly recovering that. Thank you. Next question is from Parikshit Gupta from Fair Value Capital. Please go ahead. Hello. Am I audible? Yeah. Please go ahead. Thank you very much for the opportunity. And this question is a question that I've been asking across the board. It relates to the demand of MDF and the demand-supply scenario. So we all understand the structural shift to MDF. But we are based in New Delhi. So we had the opportunity to speak with a couple of multi-brand dealers and distributors of engineering wood products. And one synonymous feedback was the fact of customers being more budget-savvy instead of being brand-savvy, because of which when they come in, they ask, they tell us that, "Okay, I'm remodeling my house, and this is my budget." So it is at the sole discretion of the dealer which product to offer. And given that there is existence of the unorganized players, MDF in the market, although the difference in quality, be it in terms of longevity or water resistance, is absolutely clear. But since they are more budget-savvy, and currently, there is a significant price difference between the organized and the unorganized product, can you please comment on the medium to long-term evolution of this market scenario? So I think it's not fair to say that because of budget reasons, a client or a customer could shift from a branded to an unbranded. I think within the branded segment, it's a safe assumption that within the organized players, price becomes a very important factor. Within the unorganized players, price becomes a very important factor. But I don't see a situation where a customer who's in the market to buy a branded product, whether it is us, whether it is Greenply, whether it's Century, or Action for that matter, will move to an unbranded segment. I think in terms of competition within the unbranded segment, there is also very, very strong competition going on. So it is not also that the dealers are getting a higher margin when they're selling the unbranded segment product because there are a lot of players in that segment, and cutthroat competition is there. So I think it's not safe to assume that people will move from an organized to an unorganized brand because of pricing. I understand. That was helpful. Thank you very much. And best wishes for the season. Thank you. Thank you so much, sir. Thank you. The next question is from Utkarsh Nopany from BOBCAPS. Please go ahead. Yeah. Hi, sir. Sir, I have two questions. First, on the MDF pricing side. So you have mentioned that we had provided additional incentives of 4% in August month because of the competitive pricing action despite imports remaining weak. So if imports start catching up, then whether there is a possibility that the price hike in MDF sector looks difficult, at least for the next few quarters from here onward? I think the trend that we are seeing with imports, with the freight challenges remaining in place, and with BIS approaching. I think most of the, let's say, the segments where imports was largely being consumed, they've accepted the fact that it's a better option to buy from the domestic players. There is too much volatility in the import business. Lead times are higher. So that is why you see majority of the OEMs now, there's been a sharp reduction in imports in their segment. And I think most of the domestic players are now following we are exporting just to contribute towards our margins, right? Anything above marginal cost, we are exporting. To compete with imports, the prices will always be higher than exports. So it's not like we're not geared to compete with the imports coming into the country. The moment it starts picking up, we will be in a position to compete with them. Everyone has below optimal utilizations in their capacities right now. So we don't foresee a challenge of imports drastically picking up. We're very much ready to counter that. Okay, sir. Sir, my second question is on the growth CapEx part. We have a pretty strong balance sheet even at this stressed industry scenario. So wanted to know when we can expect to hear from you on our next growth CapEx plan and whether we would be looking forward to enter into any new product category to diversify our business risk profile going forward. So you see, our MDF line at the moment, the new one is just about to start. I'm quite certain that for the next two years, we will not be investing any further in the MDF line. The idea would be to optimize the existing business. The new line needs to settle down, and the volume and the product mix needs to come to optimal levels. I'm quite certain that for the next two years on the MDF side, there will be no further investment. The plywood business is something, as I mentioned in our earlier calls, that we are picking up quite strongly. We're too small a player, and we don't want to remain small in this business. We also want to have two established businesses generating cash flows for us. So we've always said that once the existing volumes of the plywood business comes to an optimal level, there is an option for us to increase our plywood capacities in which we may look at investing into the plywood business next year. But that, again, is not a very large investment because plywood, fortunately, asset-to-revenue ratios are quite lucrative. So that is the next investment that we may look at. So at this point in time, this is what our CapEx plans are for at least till the next financial year. Yeah. Okay. Got it, sir. Thank you. Thank you. Thank you. Next question is from Resha Mehta from GreenEdge Wealth. Please go ahead. Yeah. Thank you. So the first question is on the export volumes. So is the reason for decline in export volumes in MDF only the higher freight rates, or are there some other reasons also? And a related question is that also the decline for imports in MDF into India, again, the reason there is only freight rates, high freight rates, higher lead times, or are there some other reasons also? So firstly, with regards to the decline in our export volumes, as we noticed that our realization in exports have gone up because we took a price increase in exports. Now, primarily, our exports are going to the Middle East countries. And here, we are competing with countries like Thailand, Malaysia, Indonesia, who are exporting to these countries as well. So there are two reasons why exports have reduced. A, our timber prices have gone up. B, the freight element also has gone up. So what we calculate is on an FOB basis, we should be making a positive contribution towards our fixed cost, as Mr. Venkatramani has already mentioned, right? From a client's perspective, we have a baseline FOB price. The client, in turn, sees the freight cost from India and compares it with the landed cost from the other countries. There are certain customers who are still choosing to buy from us. They're willing to accept the price. But again, there is a segment of customers who are very, very price conscious and do not care where the product is from or what quality it is. So that is why export volumes have gone down because we've taken a price increase. That's number one. Sorry, can you repeat your second question again? Yeah. So it was a related one. Basically, is that also the reason for decline in imports of MDF into India, the higher freight rates and the higher freight price? I think, again, it's a mix of both. As I mentioned, today, companies are choosing to export. The OEM segment, where majority of the imports are coming in, is still a better business for us than exporting, right? Today, cost of imports have gone up because of freight, and the domestic producers have reduced the prices to this particular segment. They're trying to minimize the difference in pricing. If a customer can buy maybe at a 3%, 4%, or 5% premium as opposed to importing, then they much rather prefer to buy from the domestic producers. There are two reasons. We've reduced our prices to this segment, and the cost of exports have gone up. Hence, we see a decline in the imports. Okay. So just to summarize, basically, we as an industry have become less competitive in the overseas market, while at the same time, in the OEM space, we have tried to become more competitive versus the imports that are coming in, right? So. Yes. You can say that. Yes. Correct. Right. And the second question is, so again, sorry to harp on this again on the demand-supply scenario, right? If I were to look at the supply, which is 4 million CBM and 3.7 million sorry, 2.6 million CBM or thereabouts is the demand at an industry level. Again, here, if you could just break it down into what is the export demand versus what is the domestic demand. And if you can help me reconcile that all this new capacity that has come in, even for us which plans to come in, right, how is that going to be absorbed both in the domestic market and in the export market without any major destruction to the realizations? Excuse me. Will you cut off? Yeah. It's obviously going to take time because there's still about a 30% gap between capacities available and the demand situation. So probably it will take anywhere between two to three years for this gap to go off. So yes. But I think domestic players have come to the realization that reducing prices is not the way because you're already down to minimum margins. And in MDF, low margin is very negative because the asset turnover ratio is also very low as compared to other building material products. So I think now it will be a more structured competition. People will not try to gain market share by cutting prices. And as the demand situation is still healthy in the sense that we are going at about 14% to 16% per annum. So over a period of two to three years, this gap will narrow down considerably or completely evaporate. Got it. And how much of this demand would be from exports currently of the 2.7 million demand? So almost negligible because me and Rushil, who are based in South India, are the only exporters. Players from North India cannot export because the domestic transportation from plants in the north to the western ports, Mumbai or Gujarat, would be about 25% of realization. So it's not economical to export from Northern India. Thank you. Next question is from Yash Sonthalia from Buoyant Capital. Please go ahead. Hi. Thank you for the opportunity. So a few questions to better understand the MDF market. So how much of the domestic demand is catered by export and how much by domestic players? And what will be the realization difference between the export coming and the prices which we will be planning to sell from our new plant? So, when can you take the floor, please? Sorry. Please repeat that. Sorry. So wanted to understand better on the thin MDF market. So how much of the domestic demand is catered by export players and how much by the domestic players? And what will be the price difference between the exported products and what we will be planning to sell our products? Sorry. You're referring to the imports you mean to say, right? The imports coming into the country? Yeah. That's correct. Yeah. So as Mr. Venkat said, majority, I think the market size for imports today is not very large, primarily because domestic prices are already quite at a low point. And of the total market size, I would say about 30% to 35% is focused towards the thin panels. And majority of that is being catered to by the domestic players. There are certain unorganized players who are solely focusing on thin MDF as well. So from a pricing point, we will be at par with the domestic organized segment. We won't be any lower. And as I mentioned, imports are not really a very big factor to consider in that particular segment. Got it. So when we are saying we will be able to sweat our capacity to 50% next year, so how we are planning to do that by a lower realization from the domestic players or? It's not so at the moment. A lot of the, for example, in the South India, a lot of the thin panels are being catered to by the North players when they're not very competitive, for example. So we will be our pricing can be slightly better than them with a much better margin as opposed to the Northern players supplying to the south. So by also, our overall fixed cost in the plant will be much lower because we have two large lines running in the same location. So keeping that in mind, I think we will be able to have better margins as opposed to our competition. And we are known for a very high turnaround, very quick turnaround, serviceability, quality. So that will also give us an edge. Thank you. We move to the next question. Next question is from Yug Patel from Anand Rathi Institutional Equities. Please go ahead. Hello. Yeah. Please go ahead. Yeah. Most of my questions have been answered. Thank you. Thank you. We'll take the next question from Harshh Shah from Dalal & Broacha. Please go ahead. Yeah. Thanks for the opportunity. Just wanted a clarification. When you said 150 to 200 basis points of margin improvement, so that was H2 versus H1. Is that correct? No. H2 versus Quarter 2. H2 versus Quarter 2. Okay. So then for the full year, is the assumption correct that the existing capacity EBITDA margin would be somewhere around 14% to 15% for the full year? That's correct. That's correct. Okay. And just one thing on the gross margin, okay? So this quarter, we saw our timber pricing on a sequential basis going down by somewhere around 1% to 1.5%, right? And also, our product mix improved sequentially. So what explains the dip in the gross margin then? Could you please repeat that? Yeah. Sure. So what I'm asking is on the gross margin front, so two things happened this quarter. One was the timber sourcing for this quarter was lower by 1% to 1.5% on a sequential basis. And secondly, our product mix in terms of value-added products was much better on a QOQ basis. So what I'm trying to understand is what has led to a dip in the. Okay. I got your question. I got your question. See, the realization may have been higher because of a better product mix. But for the value-added products, the cost is also higher as compared to the normal industrial or commercial material. So that's the reason why, in spite of even higher realization, because for the mix of value-added products, the realization is almost 40% higher as compared to the normal product. But that 40% incremental realization does not flow to the margins, okay? So majority of that is also compensated by a higher cost for the value-added product. That is the reason why we saw a dip in the gross margin. Correct. So then the sourcing, the timber sourcing, so the benefits were not fully flowed down to the numbers. Is that correct then? Yeah. That's correct. Because remember, I mentioned during the call that although the realization has improved sequentially, but for the industrial and the commercial product, the realization has gone down by 2% quarter on quarter. Okay. Because we introduced the 4% scheme. Introduce the 4% scheme, it was operational for a part of the quarter. Okay. Sorry. I'm just going to step in here to clarify one more thing. Timber is one element of the cost. At the moment, to keep timber prices down, we are buying different species of timber. We're buying mango. We're buying cashew because availability of eucalyptus has gone down drastically. So when we mix different grades or different species of timbers, even though we're able to purchase the timber at a lower cost, it could also result in a higher, for example, resin consumption because different species react differently in terms of, so that could also be a reason why it's not a direct relation to timber cost and gross margins, for example. And also during the second quarter, which is monsoon-dominated, the wood which comes to our plants has a higher moisture content. So that also impacts the raw material because we are consuming more wood to get the same quantity of finished product because the moisture content is higher during the second quarter. Thank you. Next question is from Parth Bhavsar from Investec. Please go ahead. Hi, sir. Thank you for the opportunity. I have a few questions. So first one on competition. So we believe Infra.Market here has taken over the capacity of Shirdi Industries. So I wanted to understand what is Shirdi Industries' capacity. And the second thing, we highlighted that imports have gone down drastically over the last few quarters. So if you could throw some numbers from December to now, what is per month import number? What does it look like? Okay. The per month import number, I'll share with you separately to take time. So just to give you an indication, so if you look at the last financial year, imports on an average were about 35,000 cubic meters per month. During the first quarter of the year, they were about 18,000 cubic meters per month. And during the second quarter, they were approximately in a range of 8,000 to 10,000 cubic meters per month. And the second question regarding Shirdi Industries and Infra.Market, Shobhanji, can you please take that? So as far as I know, Shirdi's capacity was about 250 cubic meters per day on the MDF side. Okay. Perfect, and so just wanted to know. I'm not sure that it's currently being utilized. I don't know. That's fair. Just wanted to understand the capacity. And so the other thing related to imports, so wanted to understand the input parity math. So what would be the landed cost for MDF right now in dollar terms? Sorry. For imports? Landed cost for imports, yes. I would assume with the freight, it should be somewhere around $195 to $200 in India. So this is including freight. So how much if you could just help me with the freight cost separately, it would be really great. It would be like $40 to $50 per CBM? No. No. No. I don't think it will be that much. I think it would probably be about 25 to 30. 25 to 30. Okay. Okay. One other thing, just on the industry level, wanted to understand. So we operate at very low working capital days versus plywood. So if you could help me understand why is that the case? What are the variables that push down our working capital days versus plywood industry? So, I think. Sorry, was it Jay getting it? No, no. You take it. I think we managed to be disciplined as an early entry in the industry. Although we were still part of a plywood company, I think we were able to sort of define the terms at that point of time being one of the early players and having a separate marketing policy and marketing team, and fortunately, the industry has followed suit, at least the organized players have, so especially on the credit days, the industry has been quite disciplined. I think the fact that there are fewer large players in this industry has also resulted in a little bit more discipline in terms of the credit days, which has resulted in lower working capital investment in the business in general, and I think that's the reason. Okay. And. Because from a point of inventories, from a point of raw materials, from a point of finished goods inventories and raw materials, it's not very different. The major difference comes on the credit day side. Yeah. Got it, sir. Thank you so much for answering my questions. Thank you. Thank you. Thank you very much. We'll take that as the last question. I would now like to hand the conference back to the management team for closing comments. We thank everyone for joining us on this call. If anyone has any further follow-up questions, we please ask you to reach out to us, and we look forward to speaking to you again at the end of next quarter. Thank you. Thank you, everyone, and wish you all a very happy and prosperous Diwali in advance. Thank you. Yeah. Wish everyone a happy Diwali. Thank you. Thank you very much. On behalf of Greenpanel Industries Ltd, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.