Ladies and gentlemen, good day and welcome to the Greenpanel Industries Ltd. Greenpanel Industries Ltd. Q3 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. I now hand the conference over to Mr. Gavin Desa of CDR India. Thank you, and over to you, sir. Thank you, Roy. Good day, everyone. Thank you for joining us on Greenpanel Industries Ltd. Q3 and nine-month FY25 earnings call. We have with us today Mr. Shobhan Mittal, the Managing Director, and Mr. V. Venkatramani as CFO. Before we begin, I would like to state that some statements in this discussion may be forward-looking in nature and may involve risk and uncertainties. A detailed statement in this regard is available in the result 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, Shobhan. Thank you, Gavin. Good afternoon, everyone, and thank you for joining us to discuss Greenpanel's operating and financial performance for Q3 FY25. MDF domestic sales volumes were flat year-on-year and grew by 11% quarter-on-quarter. Export volumes were lower by 7.6% year-on-year since we consciously stopped exports to those customers who were not prepared to compensate us for the steep increase in wood prices. MDF domestic realizations were lower by 5% year-on-year at INR 29,867 per cubic meter. Export realizations were higher by 2% year-on-year at INR 19,479 per cubic meter. MDF EBITDA margins at 5.1% were impacted by steep increase in wood prices. Plywood volumes were lower by 17% year-on-year. EBITDA margins at 3.1% were impacted by lower volumes. Plywood realizations at INR 252 per square meter were higher by 1.2% year-on-year. Post-tax profits for the quarter were lower by 75% at INR 8.5 crores as compared to INR 34.61 crores in corresponding quarter for reasons mentioned earlier. Net working capital at 36 days has shown an increase of 11 days year-on-year due to increase in wood inventories. Net debt stands at INR 104 crores as of 31st December 2024. Investments were INR 219 crores for the expansion project. Work is progressing on the expansion project, and we estimate commercial production towards the end of Q4 FY25. Mr. Venkatramani will now run you through the financials in greater detail, post which we will have a Q&A session. Thank you. Good afternoon, everyone, and thank you for joining us to discuss the Q3 FY25 financial performance of Greenpanel Industries. Net sales during the quarter were lower by 7% at INR 358.12 crores compared to INR 384.99 crores during the corresponding period due to fall in domestic realizations and lower price volume. MDF sales fell by 6% at INR 325.93 crores and contributed 91% of the top line. MDF domestic volumes were flat year-on-year, while export volumes were also lower due to pricing issues. MDF domestic revenues were INR 87.01 crores while exports contributed INR 38.92 crores. Domestic realizations were lower by 5.5% year-on-year at INR 29,867 per cubic meter, while export realizations were higher by 2.2% at INR 19,479 per cubic meter. Blended MDF realizations were lower by 4.2% at INR 28,079 per cubic meter. Uttarakhand plant operated at 82% and Andhra plant operated at 58% with blended capacity utilization at 66%. Plywood sales were decreased by 16.1% at INR 32.19 crores. Plywood sales volumes were lower by 16.9% at 1.38 million square meters, and the unit operated at 44% during the quarter. Plywood sales realizations were up by 1.2% at INR 262 per square meter. In Q3 FY25, gross margins were lower by 1,285 basis points year-on-year at 43.2% due to fall in domestic realizations by 5.5% year-on-year and steep increase of 25% in wood prices year-on-year. EBITDA margins were down by 1,229 basis points at 5%. EBITDA in larger terms stood at INR 17.78 crores and post-tax profit at INR 8.50 crores for reasons mentioned earlier. That concludes my presentation. We will now start the Q&A session. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on their 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. To ask questions, please press star and one. First question is from the line of Parth Bhavsar from Investec. Please go ahead. Hi, sir. So thank you for the opportunity. So I believe, sir, in your remarks you mentioned that this quarter was largely impacted by raw material cost and prices, lower prices, both in exports as well as domestic market. So I wanted to understand what was the timber procurement cost both in North and South for the quarter and how do we see it going ahead? Okay. So timber procurement prices were INR 7.15 per kg in North India and INR 6.23 per kg in South India with a blended rate of INR 6.66 per kilogram for both the plants put together. Okay. Sir, how do we see this going ahead? Is this the peak for us because there was a sudden jump on quarter-on-quarter basis in raw material cost? So how do we see it going ahead? I would say we are probably towards the end of the cycle, but I won't completely rule out a few percentage points increase in the next couple of quarters. Okay. Okay. And sir, a few data points, sir. What was the share of value-added products during the quarter? Just 49% in volume terms and 61% in value terms. Okay. Alright. Okay. Sir, besides this, how has the competition been in the domestic market as well as the imports? So I wanted to understand in the domestic markets, are companies going aggressive and taking price cuts and even we are following suit? And imports, or is it because of the imports, the pressure because of imports since BIS normally would kick in any time and there's a pressure from imports since everyone would want to sell it off, whatever the inventory is left? There was some pressure from imports. If you look at quarter two, we had imports of approximately 10,000 cubic meters per month during quarter two. During quarter three, it was between 20,000-22,000 cubic meters per month. It was such a big increase in quarter two, and I think you rightly mentioned possibly before BIS came into effect. As far as domestic realizations are concerned, we have not taken any price cuts in the current quarter, but if you remember, we had taken a 4% price cut towards the middle of August. So part of that price cut, in fact, happened in this quarter because in the previous quarter, it was effective for only 45 days, so the full impact did not come in the previous quarter. So part of it was impacted during the current quarter. Got it. Got it. Got it. Sir, one last question. What was the profitability for exports in margin terms or whatever you can help me with? So I would say low single digits because the volume of exports was very low. So we were only taking orders which were making a positive contribution to the fixed cost. Right. So roughly any number, rough numbers as well would do. Yeah, so the total exports for the quarter were 19,978 cubic meters. Right. And then average realization was INR 19,479. So the realization is low because majority of the consignments were on FOB basis. That is, the freight cost was paid by the customer. Okay. Okay. And sir, profitability-wise, EBITDA margins or something? Sorry to interrupt, but may we request you to rejoin the queue as there are several? Like I mentioned, it was in low single digits. Okay, sir. Done. Thank you. Thank you. Before we take the next question, a request to participants to please limit your questions to two per participant. Should you have a follow-up question, we request you to rejoin the queue. The next question is from Keshav Lahoti from HDFC Securities. Please go ahead. Hi. Thank you for the opportunity. So firstly, I want to understand the volume guidance which you have given earlier for H2 and FY26. I want to understand one more thing. As you are eyeing very strong growth of 35% in FY26 because your new plants will be coming up, but is really capacity a constraint or demand is a challenge for you? So coming up with new capacity, whether will speed up the growth rate of the company? Okay. So as far as the current year, I don't think we will be able to meet the guidance which you have given in the last phone call. So I think at the moment, our efforts are to ensure that we know that domestic volumes at least reach the level which we did in FY24. So that's for the current year. And as for FY26, I think we will be targeting an 8%-10% volume growth on the existing capacity and capacity utilization of between 40%-60% for the new plants. Okay. Got it. And sir, what is the outlook on the timber prices? So even if we take the exact rate of timber prices, whether the timber cost will increase in next quarter and what is the outlook for this year? There will definitely be an impact as far as the consumption is concerned because there will be some inventory effect of the price rise which happened during the current quarter. So yeah, unless we see a significant fall in timber prices in February or March, I think consumption cost will be higher in Q4 as compared to Q3. Okay. So what sort of increase we should expect in Q4 if timber prices stay stable from here? That's a very difficult question because timber prices are volatile. Like I mentioned during the opening comments, that we have seen a 25% increase in wood prices year-on-year. So it's very difficult to forecast that trend. And since the new crop comes around July, I think there could be some increase in wood prices. But it's very difficult to forecast that trend. Okay. Got it. That's it. Thank you. Okay. Thank you. Next question is from Shraddha Kapadia from Share India. Please go ahead. Thank you so much for the opportunity. And I joined the call a bit late. So if there is any interpretation, then sorry. But I wanted to understand the major industry demand scenario. Also, region-wise, if we are seeing any green shoots which is visible? And also in terms of the demand supply, if you could give a basic understanding about the same? Okay. In terms of capacity, we are currently at about 4.2 million cubic meters. If we add our capacity, which is expected to be operational in Q4, we should be around 4.5 million cubic meters for the country as a whole in terms of capacity. I expect that market demand will probably be somewhere between 2.7-2.8 million cubic meters for the current year. There will still be a significant gap between supply and demand, which will probably be greater over the next two years. Okay. Okay. Thank you so much. Also, sir, any update on the BIS norms? Do we expect it to be implemented this month itself? And any update from? The date has been announced as 11th February. Although there has been no official announcement recently, we expect it to be implemented from that date. Okay, sir. Okay, sir. Thank you so much for the update. Thank you. Thank you. Next question is from Utkarsh Nopany from BOB Capital Markets. Please go ahead. Yeah. Hi. Good evening, sir. My first question is on the pricing side. What we have seen is that the rupee has weakened quite a lot in the past few weeks. I wanted to understand from you whether this is likely to help the industry to take some price hike in the current March quarter, even in an oversupplied situation. Yeah. So let me finish this question. Yeah. I'll take that. So you see, the only silver lining with the increased dollar cost is that imports are going to get more expensive. And the segment where that affects us the most is the OEM segment. So in any ways, with the hope that the QCO, the BIS norms come into place, imports will start getting restricted from February. So in that segment, I think, yes, there may be some opportunity for a price increase. But the retail segment, primarily today, pricing is sort of defined by the domestic competition. And the increase in the dollar rate was not going to affect the domestic competition pricing or costing in any which manner. So at the moment, I don't see a possibility of price increase in the regular retail segment. Okay. And sir, what is the share of our OEM sales volume in December quarter? Lakhaji, you have the number? Yeah. Yes, sir. Yeah. It was 21% for the quarter. Okay. And sir, lastly. That's domestic volume. Okay. And sir, lastly, by when are MDF projects likely to be commissioned? They are likely to be commissioned in March. Towards the end of March. Okay. Thanks a lot, sir. Thank you. Next question is from Shivkumar Prajapati from Ambit Investment Advisors. Please go ahead. Yeah. My audience? Yes. Yeah. Thanks for having my question. Excuse me, even I joined a bit late due to some technical issues. So my first question is, how is the demand outlook in the U.S. and Europe region? Hello? You're muted. We can't really catch the demand situation in Europe and the U.S. because we are not supplying to those markets. So our exports are primarily to the Middle East and to the neighboring countries. So the idea was to understand once the U.S. and Europe demand picks up, the Vietnamese and other Indonesian players supplying in India would start supplying to those regions. That's the reason I quoted this question. So my next question is the sales, sorry, interrupting you, not necessarily because transportation of plain boards is a challenge to Europe and U.S. from Asia in general. So it's not like the Thai or the Malaysians or the Vietnamese are dependent on these markets for the plain boards. Yes, if furniture exports increase, then the internal consumption will increase. That's for sure. But it's not going to affect the plain board exports. Okay. Okay. Understood. My next question is the sales promotion expenses are quite low as compared to previous quarters. I think it's just 0.7% discount. Is my understanding correct, or? Can you please repeat that? Hello? Yeah. Can you please repeat the question? Yes. Yes. Yes. So the sales promotion expenses for this quarter seems quite low. It's just 0.7%. And earlier, it was 2.2%. So it seems too low. Yeah. So demand conditions have been impacted. We have reduced our promotional expenditure during the current year. Okay, sir. Got it. Thank you. Thank you. Next question is from Sneha Talreja from Nuvama Wealth Management. Please go ahead. Hi, team. Thanks a lot for the opportunity. I'm sorry I'm a bit late due to some technical reason. Just wanted to gauge the reason for such a sharp drop in MDF margins. I overheard timber prices going up. If at all, we could quantify that. Along with that, is there any other reason because of which margins have come down to around 5-odd%? Yeah, so I would say there are three reasons. So, first, there's been a steep increase in timber prices. So, quarter on quarter, there's been a 17% increase in wood prices, primarily due to an increase of 22% in South India, and year-on-year, there's been a 25% increase in wood prices. Secondly, we had introduced a new scheme towards the middle of August, which had an impact of about 4% on realization, so that was only effective for a part of the quarter in quarter two, so the balance impact of that is reflected in this quarter, and third, because of the increase in wood prices, there's been a significant increase in fuel costs, which were also impacted by the monsoon because during the wet period, you require more wood to get the necessary heat. Lastly, in quarter two, there were some one-off items in the other income, like insurance claim and interest on income tax refund. The other income for this quarter is lower by almost 2.5% as compared to quarter two. These are the primary reasons for the fall in the MDF margins. Understood, sir. So secondly, what I wanted to understand is we also have taken some price hikes, which we have spoken about. When can we see the impact of that in terms of realization growth and henceforth margin? No. We have not taken any price increase or price cut during the current quarter. So I think what was being said is that some of the competition was planning for a price increase from around the 5th of November. But I don't know whether it has been implemented or whether it has been implemented partially or fully. I'm not really aware of that. But are you seeing discounts continuing? No. So the discounts which were there till quarter two are still continuing. Understood, sir. You mean quarter two, the discounts were continuing, right? Quarter three? Yeah. It's continuing in quarter three as well as in the current quarter four. Understood. Got that. That's helpful, sir. Thank you so much. Thank you. Next question is from Resha Mehta from GreenEdge Wealth. Please go ahead. Yeah. Firstly, just a few clarifications. So one is, you said the MDF imports in India on an average per month in Q3 were to the tune of 20,000-22,000. Is that number correct? Yeah. Between 20,000-22,000 per month. You would attribute this steep rise to any specific reason? I think it's one of the reasons. I'm not aware of any specific reasons. But there's a possibility that it could be because of the expectation of BIS implementation from February. So it could be that OEM clients who are the primary importers have stocked up before BIS implementation. It also happened last year when BIS implementation was expected that imports went up significantly just before BIS was expected to be implemented. And on the MDF realizations, right, so both if we look at the domestic as well as the export realizations, they have declined quarter on quarter. And the decline has been much more steeper on the export side. So what would be the reasons for decline in realizations in both domestic as well as export for MDF? Okay. Exports, I think probably we might have gone a bit lower. Exports, I explained this, primarily because most of the exports during the current quarter, I would say almost 80% of the exports during the current quarter were on FOB basis where the freight was paid by the customer. Hence, our realizations were lower as compared to earlier quarters. And on the domestic side, we had introduced a new 4% scheme for our dealers during the middle of August. So part of that impact is reflected in the current quarter. But exports, we were always largely FOB, right? Or has there any? No. We were largely CNF. Okay. Okay. Got it. And when was the last price hike taken in MDF in the domestic market? I think probably around November 2022. 2022. As far as I remember. Okay. Okay. And the reason for stocking high wood inventory would be in anticipation of the rainy season or the further expectation in terms of the investment? Yeah. To some extent, the monsoon can also come January. Because the harvesting season starts, there are not many labor available to cut the trees because they are engaged in other activities like harvesting rice, etc. So there's a shortage of labor to cut trees. So hence, we stock up before the harvesting season. But would it have anything to do with the inflationary expectations? Not really. Because overall, we had to keep about three weeks of wood inventory. And if you maintain too large an inventory, the wood also tends to crack and deteriorate in condition. Right. Right. And the next question is on the ply segment. So for nine months, we have seen a volume degrowth of almost 16%. So when is it that we stopped seeing this kind of volume degrowth? Because I understand that we have done some kind of restructuring in the ply segment, right? And the other sub-question to this is that the margins have been improving over the last two, three quarters, right? So we've moved to a positive trajectory despite the realizations being flatish and the utilization levels have also gone down, right? So two questions here. When do we see at least the volume degrowth stopping? And second, what is the reason for improvement in margins despite weak realizations and lower utilization? Yeah. The reason for the margin improvement is because we have been reducing the admin costs, so we are economizing on costs. That helps to improve the margins because there's not been too much inflation in wood prices on the plywood side because a lot of wood imports are happening from Africa. Hence, wood prices have been relatively stable on the plywood side. Those margins have remained stable, and it's primarily because of low volumes that the plywood margins have been significantly affected, but some cost reductions have helped to improve the plywood margins to a very small extent. When do we see these declines in volume degrowth? So this is going to take the second part of the question. When do we expect to see improvement in volume? Yeah. We've taken some very drastic, let's say, measures and changes within the plywood business model. Initially, there were internal changes within the sales team. Now we are in the process of completely revamping our dealer and distribution network as well. Hence, it's taking a longer period because we're sort of consolidating the dealer base, appointing larger-sized dealers and distributors. So there have been major changes in the plywood business model, and we've relooked at it as a completely fresh page. So I think that starting next financial year, we will start seeing the impact and the benefit of that. So for next year, we are hoping anywhere between 15%-20% volume improvement, if not more. Which is from Q1 onwards, right? Yes. And also, we now have a common sales team across ply and MDF. So are we seeing any synergies? Because actually, one would expect that we should be able to penetrate more into our existing MDF dealers with a common sales team and at least start seeing some kind of at least we should stop seeing volume decline, right? So can you just? So a lot of the MDF dealers are already sort of married to more sort of established plywood brands from before. So it's a bit of a challenge to sort of convince them to move away. And they don't like to carry multiple brands in the same sort of segment. So where they might be my MDF dealer, they might already be associated with another branded company in the plywood segment. So it's a bit of a challenge to convince them. But yes, we are trying to leverage our existing network to a large extent and convincing them. And that is why things are taking a bit longer than expected. But as I mentioned earlier, hopefully, quarter one onwards, we will start seeing the gains in this. Right. As we all said, we've been consolidating our dealers here on the ply side. So any numbers that you would like to share here that we were at X dealers and now we have reduced to Y dealers or something of that? No. I think it's a bit too premature to do that at this point of time. So we will have more clarity on that towards the end of the financial year as to where we stand. Many are in process. Many are being reviewed. Right. Right. All right. Thank you so much. Thank you. Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Parth Bhavsar from Investec. Please go ahead. Yeah. Hi, sir. Thank you for the opportunity to give me the opportunity again. Sir, I have two sets of questions. One is in Q3, how has the industry grown? Any idea in the domestic market? Rough estimate. Somebody, do you have any idea? Sorry, I couldn't hear the question very clearly. Can you please repeat that? Yeah. There was a lot of degrowth in the MDF industry during quarter two. It's hard to say because demand has been a bit muted. Yeah. October started off quite well, but since Diwali, we are seeing a muted demand. Okay. Fair enough. And sir, you mentioned that your base capacity would grow at eight to 10%, and you look to operate the new capacity at 40%-45% utilization. Now, sir, how do we so obviously, the 40%-45% utilization won't directly come from quarter one, right? It would gradually ramp up to 40%-45% in Q4 maybe. So what sort of profitability do you see for FY26 on EBITDA or CBM terms? Because there would be higher fixed costs in the first two quarters as well for the new plant. Okay. I won't give guidance to the margins, but the new plants will help to improve the margins substantially because the incremental fixed costs will be very low. Apart from the power and fuel costs and some addition of manpower on the plant side, there are no significant increases in fixed costs for the new plant. So I think once we start the new plant and we achieve that capacity utilization of around 40%, I think we will see a significant improvement in the margins. Okay. So sir, when do you expect this facility to break even? At what utilization would it roughly break even? Yeah. I think it will definitely be break even if you achieve a 40% capacity utilization. Okay. Fair enough. Thank you so much, sir. Those are my questions. Thank you. Thank you. That Thank you. That was the last question in queue. I would now like to hand the conference back to the management team for closing comments. Thank you, everyone, for joining this call, and we look forward to speaking to everyone again post the next quarter and at the end of the financial year. If anyone has any further questions, please feel free to reach out to us. Thank you. Thank you, everyone, and have a good day. Thank you very much. On behalf of Greenpanel Industries Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.