Ladies and gentlemen, good day and welcome to the Greenpanel Industries Limited Q1 FY 2027 earnings conference call. As a reminder, all participant lines will remain in the listen-only mode, and there will be an opportunity for you to ask questions after the management's opening remarks. Should you need assistance during the conference call, please signal the operator by pressing star then zero on your touchtone telephone. Please note that this conference is being recorded. I will now hand the conference over to Mr. Gavin Desa from CDR India. Thank you, and over to you. Thank you. A good day, everyone, and thank you for joining us on Greenpanel Industries Q1 FY 2027 Earnings Conference Call. We have with us today Mr. Shobhan Mittal, the Managing Director, and Mr. Himanshu Jindal, the CFO. Before we begin, I would like to state that some statements made in today's discussions may be forward-looking in nature and may involve risks and uncertainties. A detailed statement in this regard is available in the result presentation, which was shared with you earlier. I would now like to invite Mr. Shobhan Mittal to begin the call. Over to you, Shobhan. Thank you. Good afternoon, ladies and gentlemen, and welcome to our Q1 FY 2027 earnings call. As you are all aware, the quarter commenced amidst increased volatility post the war in Middle East. The chemical costs increased significantly, forcing us and the industry to implement price hikes of around 15% in a phased manner in April to safeguard our margins. In between, there were rollbacks by some of our peers, and we had no option but to react as well. Despite these challenges, we continue to focus on expanding our more sustainable and value-accretive revenue stream, which is retail MDF, which grew by around 20% YoY. In continuation with our drive on new products and trade engagements, we stepped up investments to further strengthen our brand during Q1. We participated at Bharat Buildcon, relaunched our new website to deliver a premium digital experience for our customers, and also entered into strategic television partnerships with six leading news channels of the country to improve our retail connect. However, the high volatility on cost, both chemicals and container freight, on account of the geopolitical developments in Middle East, did impact our OEM and export sales. OEM de grew by 14% YoY, while the exports reduced to zero in the quarter. These, as you know, are largely opportunistic low margin sales driven by pricing and credit decisions we choose to stay cautious on, especially in the initial half of the quarter, given the overall macro situation. As a result, our domestic MDF volumes grew by 12% YoY, something we have demonstrated consistently for the last four quarters now. Counting in the absence of exports this time, our total MDF volumes degrew by 2.3% year-on-year, but the price hikes coming into play, our total MDF revenue still grew by 8% year-on-year. On the ply side, our volumes increased by 10.4% year-on-year, while revenues increased by 5% year-on-year. On a combined basis, revenues for the quarter grew to INR 350 crore, a growth of 8.5% over the last year, while the consolidated operating EBITDA, excluding the impact of currency movement on the euro borrowing for the new plant, was INR 33.5 crore or 9.6% of revenues in Q1. MDF operating EBITDA margin expanded to 10.3% versus 4.4% for quarter one last year. Moving to the current scenario on what to expect here on. On the raw material side, while the timber costs are largely stable, chemical costs have corrected from the peak but are still higher than pre-war levels, and they are still volatile. On the other hand, competition continues to stay aggressive on offering discounts. We are continuously monitoring this and are realigning our discounts wherever needed to protect and grow volumes. Thus, we are simultaneously treading two moving grounds currently, both costs and discounts, which change daily basis based on news flows from the Middle East. Given the overall situation, providing figurative guidance continues to be challenging. However, we would continue to ramp up domestic volumes over the remaining nine months of this fiscal to improve our relative market share over our peers for the full year. Once the condition in the Middle East returns to normal, we can also expect the export flow to gradually improve as well. With this, I request our CFO, Himanshu Jindal, for the financial and other updates. Thank you. Thank you, Shobhanji. Good evening to you all. We have already covered revenues in detail. On the margin side, our gross margins improved both sequentially and on a YoY basis as well, between 5%-6%. Now in the quarter at 52.7%, and this is on account of multiple factors. The first one very clearly was the timely implementation of the price hikes, post the escalation on the chemical cost front. As Shobhanji mentioned, our OEMs segment degrew, and even our exports was zero. So there is a change in distribution product salience also, which is coming into play. The third reason was basically lower timber cost. As you know, we worked on the wood species that we use. So there is a reduction on a YoY basis, and there is also improvement in our production efficiencies versus quarter one last year. Beyond that, there was also availability of the low-cost inventory coming in from the last fiscal year. Despite the increase in marketing investments, our reported EBITDA expanded to INR 32.5 crore versus a loss of INR 12.4 crore last year same period, while the PBT was INR 2.1 crore and PAT was INR 1.2 crore. On the balance sheet side, our working capital requirements, they increased slightly by four days. Primarily more inventory now, both on account of finished goods and timber to factor seasonality. Despite this, we are still five days leaner versus the same period last year. We continue to use our cash flows to deleverage, so our gross debt reduced further to INR 317 crore versus INR 353 crore at the beginning of the quarter. Also, our credit ratings from ICRA were recently reaffirmed as A+. I think we can now request the moderator to open the Q&A, please. Thank you. Ladies and gentlemen, we will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Shubhi Gupta from Trinetra Asset Managers. Please go ahead. Thank you so much for the opportunity. My first question is, since we are seeing such a drop in exports due to this ongoing war, do we plan to diversify into other international markets to mitigate all of this? Sure. Shubhi, we are looking at alternate options for exports. Unfortunately, the freight volatility continues to be present in most parts of the country. Middle East is a unique situation where they do not have their own manufacturing, but most of the other foreign markets already have their own MDF manufacturing. With the freight volatility in place, it is also difficult to be competitive factoring in. I would say about 80%-85% of our exports earlier used to be Middle East. We are exploring other options. We are trying to expand supplies to the other markets. Of course, to make up for the lost volume from the Middle East, that is not going to be enough. But we are in the process of exploring other markets. Sure. My second question is, sir, if you would like to give some guidance regarding the margins for the full year and capacity also. Shubhi, at this point of time, because of the uncertainties, we would like to refrain from it. We are not in control of what is happening with regards to the chemical costs. It is moving on a day-to-day basis. Pricing is also quite challenging with many of the competition actively passing on discounts on a regular basis. At this point in time, we are not in a position to give you a long-term sort of guidance. And sir, the capacity utilization, do we expect it to maintain at about 51% or any color on that? No. The plan is to definitely enhance capacity utilization this year, subject to market volume- Yeah. ...but again, because exports is uncertain, so we are not in a position to give you an accurate number on that, when exports would restart and what the whole year's utilization would look like. Sure. Okay. Understandable. Thank you. Thank you. We take the next question from the line of Praveen Sahay from PL Capital. Please go ahead. Yeah. Hi, sir. Thank you for the opportunity. My first question is related to the price hike, which you had mentioned that the rollback by the P/S and as you also had. This 7.4% of ASP increase is largely due to a channel mix change towards the retail? Well, in the first quarter, we did have some benefit of the price hikes as well. A large part of that was also because of the change. We had removed any additional discounts that we were giving to the OEMs because of the costs going up. We had bought them at par, which resulted in whatever OEM sales did happen were almost at retail levels. You can say that because of the movement of the consumer sector from OEM to retail price levels, we saw this ASP going up as well. So this rollback is because of our over capacity we have as an industry. Is that the main reason? Well, yes. In principle, yes. There was also some amount of corrections on account of the chemical costs, which were immediately passed on by some of our competitors. Yes, I think the primary reason for that is overcapacity and lack of enough orders for various companies, which is resulting in them reacting in this manner. Second question is related to the OEM, because as you have mentioned, the 14%, 15% growth. If you can give some color, how much is the OEM contribution to your business right now versus the others on here? Himanshu, do you have some accurate numbers? I mean, last year's historical, yeah. Yeah. Praveen, we do something like 75%, 80% retail, and the balance is OEMs. This obviously fluctuates with the way things happen in the market space. Right? But historically, this is how we have been doing retail versus OEM. Okay. Still we are facing challenges related to OEM demand. No. Now that the prices have been corrected, Praveen, the OEM demand should come back into play this quarter. Okay. If you can- Because what is happening with OEMs is imports always remain an option, right? If we outprice ourselves with imports then the OEMs find an alternate source by importing materials. But now the majority of the price hikes have been rolled back, so we are again back to competitive levels and we should see the OEM demand coming back in. Mm-hmm. Just to comparison to some peers related to the realization. On the sequential basis, if I look at the peers also have taken some realization benefit. So when this price, whatever the taken, has a rollback, when it happened in the quarter? It happened over multiple phases. Firstly, there was a delay on account of certain peers in implementing. It was supposed to be implemented in April, but a lot of people did not implement it fully till May. Then there were certain rollbacks taken towards the end of May, June, and then again some rollbacks were taken in July as well. Got it, sir. Last question on the numbers. Forex loss, how much is that? That is INR 2.5. Only for the ECBs, that INR 1.8. Which is part of either other expenses or as part of the interest income. Interest expenses, my bad. It is a INR 1.8 you said. On the ECB, overall INR 2.5. Thank you, sir. All the best. Thank you. Thank you. We take the next question from the line of Resha Mehta from Green Edge Wealth. Please go ahead. Yeah, thank you. The first question is on the price hike. I think, at the very outset, when we increased, we had taken somewhere around 15% price hikes in MDF. Sorry, Resha. You are cutting out a little bit. Can you try to speak a little louder, please? Yeah. Is this better? Am I audible? Yeah. Yeah. I think we had taken around 15% price hikes in MDF. But effectively, because we were offering trade discounts due to competitive pressure, which used to be effectively 7%-8% kind of price hike that had transmitted in the market. But now we are seeing that with all the rollbacks, basically, we are back to the old level. There is no price hike, effectively- In place. Yes. ..., right? Yes, we can say that. Maybe in certain segments, 1%-2% of certain markets because rollbacks have been sort of modified geographically as well given the market condition and competition. So certain places the rollbacks have been higher. So certain places we have tried to keep some of the price hikes in place. So it is a mix. But yeah, almost all of it has been rolled back, I would say. The channel destocking scenario would have also played out because of these rollbacks. Do we see that on ground? Sorry, what destocking? Can you repeat that? Channel destocking. Do we see that- It seems like because of these sort of rapid rollbacks, market sentiments have also come to a point where no one is willing to hold material. Because everyone has sort of gotten this impression, the channel has gotten this impression that there may be further price hikes. So let's keep stocks on a hand-to-mouth level because, of course, if someone's holding stocks and the companies choose to roll back prices, not necessarily they pass on the benefit on the stocks that are being held by the channel partners. Even the channel partners are not buying to stock, but they're sort of only buying on a hand-to-mouth kind of a situation to continue supplies to their customers. Understood. With these rollbacks, do we see demand kind of coming back with the- Resha, I'm sorry to interrupt you. Could you please stay connected? Ladies and gentlemen, we have lost the line of Mr. Shobhan Mittal. Please stay connected while I reconnect. Hello. Ladies and gentlemen, we have the line of Mr. Mittal connected. Resha, if you please repeat your question. Sorry. I don't know how the line was dropped off. Yes. I was asking that, now with the rollbacks happening, are we seeing the OEM demand kind of coming back? Yes. As I mentioned in my previous answer, we are expecting the OEM demand to come back this quarter, hopefully, with active discussions with all OEMs and trying to get back our supply agreements with them. With this inflation, the raw material is pretty volatile. Let's say if we were on an index of 100 pre-war, what would we be at a blended raw material inflation level for the company? This is so volatile, Resha, on a daily basis, this is moving. In fact, it is safe to say that if this moves further, there might again be a price hike that might come into play. We are monitoring this quite closely. Chemical price hikes are also being negated by certain corrections by us on the timber side, where we are playing with the mix, we are using more of mixed wood compared to eucalyptus, trying to negate the effect because price hikes are not singularly in our control. Cost controls are definitely more singularly in our control. We are monitoring this on a regular basis. I would say on a raw mat side, at this point of time, I think there is at least a, let's say, pre-war levels, 4%-5% upward trend on the chemical side. Got it. How much is timber cost reduced by for us YoY or maybe quarter-on-quarter? Himanshu, can you answer that? Yeah. Because again, both plants vary. Hello. Yeah, Himanshu. Yeah. I was saying, see, you rightly said, Shobhanj i, I think it varies on the species, it varies on the mixes that we use, and it is very different on the product. It is a product to product alteration that we do. On a combined basis for quarter one, I can share with you that we saved, between timber and the efficiencies, we were able to save 6%-7% overall. Okay. Just the last one on the ply business. So ply, despite quarter-on-quarter us maintaining similar capacity utilization, why would the ply margins drop from 7.5%- 2.7% quarter-on-quarter? Should I answer this, Shobhanji? Yes. It is largely a play of product mixes this time. We maintained our volumes. We grew our volumes, more importantly, on a YoY basis. I think it is the product mixes which are playing against us on ply. This is why you are seeing the margins not really increasing. The fixed costs have obviously gone up. Therefore, on the EBITDA front, you see us doing a little less than what we were doing sequentially. But still on a YoY basis, Resha, you will see that our EBITDA levels have actually moved up with the volumes coming into play. What kind of price hikes we have taken in ply, and is there still gap versus the inflation there, or are we seeing deflation there as well in raw materials? We have taken around 5% price hike in plywood at this point of time, which we had taken in the quarter one. A very small percentage of that has been passed on as SKUs. We have some gain on the ply side on pricing. Okay. You said we've taken 5% price hike, but the transmission has been maybe much lesser, right? Correct. And that is also again due to the competitive pressures and us offering discounts? Yes. Correct. Got it. All right. Thank you so much. Thank you. Thank you. We take the next question from the line of Balaji Vaidyanath from NAFA Asset Managers Private Limited. Please go ahead. Yeah. Good afternoon. Thank you for the opportunity. In terms of this entire pricing situation that we are in currently, it seems like a lot of our action is dictated more by what the competitor is doing rather than ourselves. What I am trying to say is that being a market leader, I thought we should ideally be the price maker, but we seem to be like the price taker. Well, I think we as a company have never believed in cutting prices or undercutting prices because our experience of being in this industry for so long has always maintained that there is not any substantial gains because everyone reacts accordingly. India continuing to be a commodity type of business in India at this point of time and being very price sensitive, we also do not have an option that if our competition reacts with rolling back prices, we also have to do the same. When it comes to rolling back prices, I think we do not believe in being on the forefront. When it comes to taking price hikes in order to maintain margins, of course, we do take the lead. At the same time, have to monitor and confer with the industry before taking any new decisions. I think it's not safe to say that our actions alone will define what the market would do in today's scenario. In a hypothetical scenario, we did not export anything this quarter. Couldn't we have used that export volumes to be a little more aggressive to take that market share in domestic market itself? I mean, in terms of But that would have, had I averaged out the pricing, that would have resulted in further price cuts in the market, in the domestic market. And it's not that if I had averaged out the pricing and, let's say, passed on the benefit into the market, then that would have resulted in the other players also reducing prices further. Where do you see some kind of an end to this situation? I think as slowly demand catches up to the available supply in the market and not any substantial expansions are now projected anyways, barring one or two lines coming in, that's when we will see lesser kind of undercutting of pricing going forward. But at this point of time, the scenario remains. Okay. Sir, wanted to also ask you regarding the maintenance shutdown, which usually takes a fortnight or so. You've not done any kind of a maintenance shutdown, if I'm not mistaken in the- No. ...AP line. Before the market- Yeah. ...kind of recovers, would it be prudent to take the maintenance shutdown? No, see, the maintenance shutdown, it does not necessarily have to be 15 days at a stretch, is what you are saying. It can be planned out over four or five days and broken up into parts as well. For example, this quarter, we have already taken a five, seven-day shutdown of the line due to lack of orders, and then we carried out majority of the works at that point of time. So we find the right opportunity to do it so that we do not necessarily have to take a 15-day shutdown. Okay. Thank you and wish you all the very best. Thank you. Thank you. We take the next question from the line of Jayesh Gandhi from Harshad H. Gandhi Securities Private Limited. Please go ahead. Continuing from the earlier caller's question, I just want to understand the competitive landscape which the industry is undergoing. You said that somewhere when the oversupply reduces, probably that is the time when the prices will rationalize. In which year do you see maybe the increasing demand catching up with maybe 80% or 85% of the capacity of the industry? Very hard to say, Jayesh, honestly. Competitive landscape wise, you see players, in today's scenario, of course, the larger players like Century, Action, Neelkanth is also a branded player, everyone is running at not complete full capacity utilizations. At the same time, Action has a new line coming in the south of India. There is another continuous press coming up in Madhya Pradesh. It would be fair to say that we cannot disregard the sort of Tier Two players as well who are actually cumulatively making an impact on demand for us because pricing, of course, remains aggressive from them as well. That is how the current scenario is competitively. I would say this pricing pressure or let's say demand pressure will remain this financial year, and we should hopefully start seeing some improvements coming in the next financial year. Okay. Last question is, I understand that the price hikes are being completely rolled back, but due to, say, raw material cost coming off, is it possible for you to maintain the margin which we did in this current quarter? Well, as I said earlier also that price hikes have been rolled back because there were rollbacks on the raw mat costs also. At the same time, now chemical costs are again on the upward trend, and I think it is not wrong to say that if they do go back on the upward trend, the competition may look at or the industry may look at taking another price hike to account for that. So yes, the objective would be to maintain these margins although maybe there will be some lag in implementing price hikes. But the objective would be to maintain these margins at least. And sir, if I may squeeze one more. Have we done any exports in this June, July, I mean until last few months? Have you done any exports? Sorry, in July and this time. A very small quantity. Almost a negligible quantity, I would say. Because Middle East continues to remain shut off for us. Freight costs, which were generally about $400- $500 a container, are currently at $5,500- $6,000 level. So that makes it unviable to sell material to the Middle East. I get it. That is my question. Thank you. Thank you so much. Thank you. We take the next question from the line of Arun Baid from ICICI Securities. Please go ahead. Hi, Shobhanji. Yeah, Arun. Two things, Shobhanji. What do you think about the industry growth in last quarter especially? Industry growth in the last quarter? Yes. I would say somewhere in the mid-teens. The question why I am asking this, Shobhanji, is when we look at our numbers, we have been- Yeah. ...losing market share, even this quarter- Yeah. ...last quarter, a quarter before that in India. I am not talking of export- Yeah. ...because export is something beyond our control right now. Yeah. When I look at margins, there is no signs of revival. Optically, yes, it has gone up in this quarter. Again, it comes down in next quarter. What is the game plan? Because we have been losing our number one position. Actually, for the last two quarters, Century is number one in the [glass] in India. You might say- Arun, see, our having a higher capacity in the south of India, of course, our focus on the OEMs has been much higher because there is a higher concentration of OEMs in the south of India compared to the north of India. Century still has a much higher, let us say, focus on north of India because of their higher production capacity utilizations in the north of India. At this point of time, the quarter one for us, we almost intentionally chose not to sell to OEMs because of the raw material cost increases. Now that situation has gone back, we will bring our focus back. At this point of time, earlier we were priced at a premium to Century. We have now taken a decision that we are going to be price competitive against all the players in the market and price ourselves at par with them. The focus will be at enhancing volumes and the capacity utilization. There has been a strategy shift, I would say, and that is why I think, as Himanshu also mentioned, that we have seen domestic volume growth for the past few quarters. We will continue to pursue this. For us to have the industry leading growth back, because in this quarter, on number base, just for the record, we have the lowest growth in industry. Yes, correct. Lowest growth. I am talking only India business. Yeah, I appreciate that. I think that's what we said, that the OEMs went completely out of our picture, and to a certain extent, that was intentional. There was a shortage of chemicals in the market, and we didn't want to supply to OEMs at the cost of not being able to supply to the retail segment. Yeah. If I price OEMs the same level at retail, then in a way, I'm giving them an option of take it or leave it kind of a scenario. Yeah. That's keeping in mind that if it goes at retail prices, then we lose the business. So we were willing to accept that. Yeah, sure. But also, I think, Arun, there was a delay on our competitors' part in implementing the pricing fees. We were very disciplined in implementing the pricing fees from the very first point where we had decided to. However, the others had accumulated large orders on old prices and continued to supply in the market, which also resulted in us losing some volume. That was also result of that. No. So Shobhan, from now on, I am trying to understand. I appreciate what has happened because of their doings. But incrementally, can we expect us from Q2 onwards at Greenpanel Industries to have the industry leading growth in the domestic market? Can we expect that? Yeah. But Arun, you see, do keep in mind that there is a, let's say, a play of a smaller base and a larger base also, that will also come into play. I mean, Shobhanji, market share-wise- No. Yeah. The idea is that we maintain our market share or try to take away market share, and that's why we are now pricing ourselves so aggressively to the market that we don't want to lose any option for volumes. Okay. Thank you, Shobhanji. Thank you. Thank you. Participants who wish to ask a question, please press star and 1. We take the next question from the line of Utkarsh Nopany from Anand Rathi Shares and Stock Brokers Limited. Please go ahead. Yeah. Hi, good afternoon. My first question is regarding the channel inventory. You have mentioned that before the price rollback, we had seen destocking of channel inventory. Wanted to know whether the inventory level has now come down to the normal level at the end of June, or we are likely to see a further destocking of inventory in September quarter? I would say during the quarter, I think people have already come to sort of a minimal inventory point. But, at the same time, the market sentiment continues to remain that Ladies and gentlemen, we have lost the line of Mr. Mittal. Please stay connected while I reconnect. Ladies and gentlemen, we have the line of Mr. Mittal connected. Sir, please go ahead. Yeah. I will continue with the last question. The market sentiment continues to remain that prices will remain volatile, and there could be further reductions. Hence, people are wary, the channel partners are wary of holding inventory. Orders are on a sort of hand-to-mouth situation with the channel partners not willing to hold inventory at this point of time. We still have that effect in play. Okay. On the margin side, if we see for the MDF segment, our margin in the last four quarters has been relatively stable at around 8.5%-9%. Historically we have delivered around 18%-20% margin. You have also mentioned that it would be difficult to give any guidance how the margin trajectory would be going forward. But directionally, to some sense, do you see the margin going at least to more than double-digit level over the next couple of quarter periods? Or do you see challenges because of the competition in the market, that the margin may not go back to the double-digit level, even over the next couple of- See, again, it is all a matter of volumes and operating levels coming into play. Even with slightest of the improvements in volume and capacity utilizations, margins would go up substantially. Double-digit margins are not, let's say, a very tough ask, to be honest with you. The only thing that we need to focus on at this point of time are capacity utilizations, even at 50% to-- I would say as a company, with 50%-60% utilizations with the kind of product mix or the customer mix that we have, which is OEMs, exports, and retail put together, as opposed to others who don't have these mixes and much higher utilizations, I would say our margins are comparably much better. If we just simply bring up our volume utilizations, I think we should be at much better margin points than our competition. Okay. Lastly, do we have any growth we could plan over the next, say, 18- 24 month period? Are you talking about any, you mean to say CapEx plans? Yes, sir. At this point of time, on the MDF side, for the next 18- 24 months, we don't need to do any capital expenditure barring some maintenance expenditure. On the plywood side, our plan is to focus on utilizing our current capacities completely. At that point of time, we do want to see if we can do some addition of machinery in our existing facility with a very minimal investment to enhance our production volume by 30%- 40%. That again, would be a small investment, not anything substantial. On an immediate term, that's our plan. Okay. Thank you a lot, sir. Okay. Thank you. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the management for their closing comments. Thank you everyone for your time, and we look forward to speaking to everyone after the next quarter. If anyone has any further questions, feel free to reach out to us. Thank you, and have a good day. Thank you, sir. On behalf of Greenpanel Industries Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your line.