Ladies and gentlemen, good day, and welcome to Greenply Industries Limited Q1 FY24 earnings conference call, hosted by Asian Market Securities Limited. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectation of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. Actual results may differ from such expectations, projections, et cetera, whether expressed or implied. Participants are requested to exercise caution while referring to such statements and remarks. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Karan Bhatelia from Asian Market Securities Limited. Thank you, and over to you, sir. Thanks, Hima. Hi, everyone. Good evening. On behalf of Asian Market Securities, we thank you all for joining us on the Greenply Industries 1Q FY24 conference call. In the panel today, we have Mr. Manoj Tulsian, Joint Managing Director and CEO, Mr. Sanidhya Mittal, Joint Managing Director, and Mr. Nitin Kalani, CFO, and Mr. Gautam Jain, EVP, Strategy and Investor Relations. May I now invite Manoj Ji to begin the proceedings of the call. Over to you. Thank you. Thank you, Karan. A very warm welcome to everyone, and thank you very much for joining us today to discuss Greenply's operating and financial performance for Q1 FY 2024. In our plywood business, we have achieved a marginal growth in sales volume and a 3% growth in realizations in the last quarter as compared to the corresponding quarter of last year. A better product mix and price hikes taken during the last year has supported in better realizations in the last quarter. On a full year basis, we still aim to achieve 10% volume growth. The gross contribution in the last quarter improved to 39.5% from 36.3% in the corresponding quarter, supported by better realizations and manufacturing cost efficiencies. However, the adjusted core EBITDA margin in our plywood business declined by 50 basis points to 8.7% in the last quarter as compared to the corresponding quarter. This is mainly due to enhanced branding and marketing activities during the quarter. This has led to advertisement and promotion expenses reaching 4.8% levels during the quarter, as compared to normalized spend of 3%-3.5% of sales, for the year. Our biggest challenge of cost escalations in timber prices are still persistent. With the objective of protecting our margins, we are planning to take some price hikes, during this current quarter. Although, the benefit of the same mostly would reflect in the second half. Assuming no further cost escalations and efficient price hikes, we should improve our margins to double digits, level for the full year. Our Gabon business continued to remain under pressure due to demand side challenges. However, the quarter's performance has slightly improved as compared to the previous quarter. On a consolidated basis, our debt levels are elevated due to investments in MDF business and the related working capital requirements, which has gone into the business. It should start reducing as the MDF business starts generating cash flows. To achieve higher scale and operations, we continue to invest in our brand, people, processes, and technology. As an industry leader, we have also undertaken plantation activities on a very big scale by planting over 27.8 million saplings in over 34,700 acres of land across the country. We have started our ESG journey and have voluntarily published our first sustainability report. We are the first in the wood panel industry in India to do so. With this, I would like to hand it over to Sanidhya to provide more insights on our MDF business. Thank you, Manoj Ji, and good evening to everyone on the call. I'm happy to inform you that we have started commercial operations of our MDF facility in the quarter under purview. We have successfully tested all the product thicknesses and categories in the plant. In our sincere effort towards sustainability, we have become the first and the only MDF and wood panel producing company in the country to have FSC-SM certification. From branding perspective, we have launched the MDF products with the brand name Greenply MDF. For efficient marketing and distribution, we have a full team on board across the regions. We have already successfully set up a core distribution network across the region. As a strategy, our focus is more on the western and central region of the country. However, we are distributing across the country. In the last quarter, we had a commercial operation started, started on the fifth May. During the quarter, MDF business clocked sales of INR 18.1 crores with a net loss of INR 14.8 crores. Since these are our first few days of operations, the financial performance does not reflect to the true potential of the business. We expect the financial performance to subsequently improve from here on. For the full year, we are confident on achieving INR 275-300 crores of sale. As a product set, as a product category, we are foresee the market expansion due to cost effectiveness, innovative product usage, and rapidly gaining acceptance by consumers. With this perspective, I would like to open the floor for Q&A session. Thank you. ...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 their touchtone 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 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 Mr. Keshav Lahoti from HDFC Securities. Please go ahead, sir. Hi. Thank you for the opportunity. So firstly, I want to understand about MDF. Is it possible to share, like, 6,000 CBM volume was for the quarter? What was the main volume and what sort of volume you target for FY 2024, and should we expect EBITDA breakeven in Q2? Sorry, can you repeat the first part of your question, please? Yeah. So just want to understand, what sort of volume was done in the June month for MDF, and what's the volume target for FY24, and should we expect EBITDA breakeven in Q2? Yes. So I think this INR 18.1 crore of sale, Gautam, what was the exact CBM number? 6,000 CBM. 6,000 CBM. We have achieved this over the, you know, over May and June, basically. 55 days of May and June. 55 days, you know, we've achieved this, and we've done lots of trials. The vendor has handed over the line to us, and they have left in quarter one itself. For the full year, we still stick to our commitment that we will be producing 100,000 CBM material, and we will be selling everything we produce, and we're typically trying to touch anything between INR 275 crore and INR 300 crore. Okay. Understood. So quarter two, EBITDA assumption is correct, right? EBITDA breakeven. Sorry? Quarter two, we should do EBITDA. Hopefully, yes, that's the target, definitely. Okay. 100,000 CBM, how should be the export and domestic mix look like? So we are assuming that in our case, Greenply has zero export liability, hence, export will not be an area of focus. However, just to fight with tough times, we might consider exporting 2-3% of our capacity. And we will only focus on certain value-added products which we get, because as a company, we have zero export liability. So we don't want to focus on export. The realizations are very low, and in India, our realizations for the quarter, for being at the first quarter and our product mix not being what it's supposed to be, we are quite satisfied. Okay. Understood. Understood. One last question from my side. If we see the ply performance, one, you have highlighted due to higher A&P spend, the EBITDA margin is looking less. But if I see Q on Q, your gross margin, there is a jump about more than you know- Sorry to interrupt you, Mr. Keshav. Ladies and gentlemen, thank you for being on hold. The line for the management is now reconnected. Thank you, and over to you, sir. Yeah. So my question is on ply segment. If we see the ply gross margin have increased by 320 BPS year-on-year, but still the EBITDA margin is down. I do understand you said one of the factor was A&P, which might be 100 or 150 BPS, but are there any other factors? Well, yes, you know, certain other costs also has gone up in terms of some selling and, you know, other sales-related costs have gone up during the quarter. Because, you know, today, if you really see, the market is slightly subdued at this point of time. Okay. So what is the idea behind increasing the A&P spend in a muted quarter? No, see, there are certain marketing activities which are planned during the year, okay? Like, the first quarter, we had already signed up for the IPL. So that is an event which will happen in quarter one only, irrespective, because we already signed on to the same. Yeah. So these type of aberrations during the year will happen. And you know clearly that the accounting standard now very clearly says that whenever you spend this money, you have to book it into that quarter, irrespective. So in a particular quarter, even if we spend around 5% or 6% for, of the sales for that particular quarter, we'll have to report all those numbers during that quarter only. Right. For the full year, however, we're still assuming that, you know, we have taken a budget of anything between 3%-3.5%, and we should try and maintain within that number. Okay. I'll come back in queue. Thank you. Sure. Thank you, sir. We take the next question from the line of Ms. Neha Talreja from Novama. Please go ahead. Ms. Neha, your line is in talk mode. Please go ahead with your question. Thanks. Thanks a lot for the opportunity. Just two things, just two questions from my end. Firstly, just wanted to understand the pricing as of now. How are you pricing your MDF product in the market, and what is the raw material availability looking like? Are you getting it from west, or how many kilometers far you have to go for raw material availability of MDF? So some clarity there on the MDF side. Right. So I'll first answer on the raw material side. So, our more than 60% dependency is on local raw material, which typically means 200 kilometer radius of our factory, and the balance raw material is coming in practically from all parts. We are also, you know, maybe potentially we could also look at importing something in the middle of this year. As far as raw material cost is concerned, we are not at all worried because we are absolutely at par with any of our competitors sitting in north. Definitely, prices in south are slightly more advantaged than what it is in west. And what was the other question, other than the raw material? How have you placed the pricing? Right. So our pricing is pretty much at par with competition. In certain markets, however, we are priced anything between 1%-2% cheaper than competition in markets where there's too much competition. For example, NCR, and that is our intro, introductory price for, say, the first financial year, and by the end of the financial year or next year beginning, we will be at par with the competition. Sure. I just wanted to understand, you've also maintained your guidance of double-digit margins in plywood. So how do we see that happening? Because we have clearly, you know, low single digit right now. So where are we looking at margins going ahead? What are the plans in the plywood business which can take our margins forward from here? So two things. One, you know, I think, our performance in the quarter has not been as good as what we perceived at the beginning of the year, and I'm expecting a bounce back, you know, from quarter two onwards. The market has not been so supportive, I would say. I mean, that's at least what we felt in quarter one. So once, you know, if our run rate improves from quarter two, we'll get the benefit of operating leverage. And second, we are also taking a price increase in the coming month. So both these initiatives hopefully will help us to go back to double-digit margin. Understood. Lastly, if I may, we saw some bounce back happening in Gabon, with margins also improving, but again, suddenly I see even Gabon performance getting impacted back again. What's the status here? What is the demand scenario in Gabon at this point of time? Are there any green shoots in the market? So some clarity even there would be helpful. So, you know, as I mentioned in my opening speech also, that, you know, that is slightly a very uncertain market where we have not been able to do anything which gives us, you know, some very sizable visibility going forward. We are actually measuring quarter to quarter basis at this point of time, and, I mean, I've been maintaining this for last almost, you know, 6-8 quarters, that some challenges or other keep coming and, you know, hitting that business. So, we are not so bullish about it. I think, how I can place it at this point of time is we are looking at that, you know, how can we reach to a break-even level on a quarterly basis. That's the first target. The demand side is not so exciting even now for the Gabon business. Understood, sir. Thanks. Thanks a lot and all the best, team. Thank you. Thank you. The next question is from the line of Mr. Udit Gajiwala from Yes Securities. Please go ahead, sir. Yeah. Thank you for taking all my questions, sir. So firstly, on MDF, when you say that, from next year, your prices will be at par, but with the peers, but how do you see the overall industry prices shaping up from 2025, given that multiple capacities are coming up? I think it's very difficult to predict something like this. You know, you don't know what the government stance is going to be. You don't know in case of MDF, what the ocean rates will be, how the imports will be. So I think more capacities coming in is one problem, imports coming in is another problem, ocean freight is another issue. So I think a lot of these factors put together control how the pricing in India is going to be like. But however, in the value-added category, so interior grade for me is non-value added, everything else in my portfolio for me is value added. So however, the other products, they seem to be kind of unaffected, which is kind of insulating the industry and helping us to perform in times when importers opened up and ocean freight is low. So I don't see that as too much of a challenge. And, you know, given the capacity Greenply has, we don't have a very large capacity. So I'm very confident we'll be able to sail and move ahead. People who have multiple capacities should worry. I mean, we are not worried. Understood. Understood. Sir, are you hearing anything, I mean, given that, you know, anti-dumping duty is unlikely to come, but are there any developments on the CVD that you are hearing from the ministry or any update on that front? I think it's too early for us to apply. I think you have to be a manufacturer, two years old, to get into that process and, you know, appeal to the government. However, obviously, we keep in touch with the industry to know what others are applying, but no news on that front. And we are imagining that, you know, that's not going to happen. So we have to... In the given scenario, we need to size. So we are making all our calculations and working on that. If that happens, then it's additional tailwind we get. Yes, got it. And sir, lastly, if I may squeeze for, you know, do you maintain for 25 to, you know, I mean, basically to ramp up your MDF capacity in three years. So is that still on as what you had targeted earlier? Absolutely. Absolutely. We are looking at 100,000 CBM this year, slightly higher next year, and the third year, we are looking at a full capacity utilization. And definitely, like, you know, as our cash flow allows us, we'll keep adding value-added, you know, we'll add more short cycles, and we'll keep doing value addition in MDF to further improve the realization and make sure that we're profitable. Next year, we can do around 160-180 lakh CBM. Yeah. 160,000-180,000 CBM. So we should target. These annualized numbers for this year itself, you know, if you take the full first quarter, should be like, annualized rate of 120,000 CBM. That's what we are hoping. So next year, 160,000-170,000, something which for sure we will do. That's good to hear, sir. All the best. Thank you for taking up my question. Thank you. Thank you. We take the next question from the line of Mr. Karan from Asian Markets. Please go ahead, sir. Hi, thank you for the opportunity. Sir, we did send our first consignment from Gabon to USA, and we were slightly optimistic of a bigger order if it clicks. So any update on the same? No, Karan. Ladies and gentlemen, the line for the management is disconnected. Please hold while we reconnect the line. Ladies and gentlemen, the line for the management is reconnected. Please go ahead, sir. Yes, sir, and sorry, I don't know it's getting disconnected. Yeah, no worries. Karan, sir, you may go ahead with your question. Yeah. Sir, we did send our first consignment from Gabon to U.S., and we were slightly optimistic if it clicks. So any update on the sales? No, it actually didn't worked out. We didn't get any subsequent inquiry from them. Okay? So, at this point of time, you know, we, we don't see anything with US. Right. On our standalone plus Sandila, we've seen good inch up of the working capital days. So what explains that, and how do we see that shaping for, for the coming quarters? See, we are, we are somewhere around 40-41 days now, working capital, NWC? Yes. Yeah. So we are around 40 days, okay, and I think we should be in this range only. Maybe it can come down by around 2-3 days. Mainly, primarily also, quarter one, you know, we carry some extra inventory because of the rainy season, you know, carry some extra inventory on the raw material side also. Thank you. But otherwise, I think this is the level possibly where we will stabilize, 38-40 days. Right. And last from my side. Sir, you mentioned of 100,000 CBM of sales. So if you can give some breakup of to value-add and non, non-value-add for our MDF portfolio, and how you see that shaping for the next two years? Sorry? Sir, while we are targeting 100,000 CBM this year for MDF- Yeah, yeah. Yeah, yeah, you could- I think, I think it is, it'll be, it'll be like a speculation to kind of predict in advance what they're going to sell. We are committed to make that much material and sell, and obviously, anything other than interior is the preference to sell, you know, as that is a value-added. Okay. Oh- Preference is, preference is clearly value-added, but since it's a new facility and, you all know that, you know, there is a ramp-up also which takes place. So everything also depends on, you know, how well we are able to ramp up. Right. Right. Okay, okay. Mm. Thank you. By quarter four, I think you people will be able to, you know, understand the trend also, because by that time, we will almost be through. We'll be very, we're doing our sustained level of production. So, possibly quarter four will be a good reflection of the mix which we are able to sell. Sure. Right. Thank you. Yeah. Thank you, sir. We take the next question from the line of Mr. Bhavin Rupani from Investec. Please go ahead with your question. Hi, Sir. Thank you for the opportunity. Sir, my first question- Hi. -is related to MDF. Sir, can you tell us what is the import parity price of MDF right now? Hmm, so import landed cost for somebody else? The import of- No, no, import, import parity price, he's saying. It's something around, somewhere around INR 20,000. Yeah, should be. Around INR 20,000 per CBM. That is the landed price, right? Yes. Yeah. Can you just break it up between the cost and the freight? I think, you know, around 10% is what you can consider- Yeah. Out of that, so, you know, mon, actually 18 + 2, 2.5 type. Yeah. Sir, can you just repeat it? Could not get it, sir. It's around a base price of INR 18,000 plus, let's say, INR 2,000-INR 2,500 other components. INR 220, INR 280. Okay, sir. Yeah, somewhere around INR 18,000... Yeah, $220 per CBM is the price. So 18,000 will be the base price and then, you know, around INR 2,000-INR 2,500 as freight and other components. Okay, sir. Sir, Sir, my next question is related to plywood. Sir, with Sandila now up and running since last week. Yeah. The line for Mr. Rupani seems to be disconnected, sir. We move on to the next question from the line of Mr. Achal Lohade from JM Financial. Please go ahead, sir. Good evening, sir. Thank you for the opportunity. Good evening. Sir, my first question is with respect to plywood business. Mm-hmm. You know, in the conference call for fourth quarter, you had indicated we are confident about 10%-12% volume growth. We were in mid-May- Mm. Or probably end of May. We see that the volume growth is actually just 2%. Mm. So is it fair to say that June was extremely weak to have this kind of a number? Or... And when you say 10% for the full year, it implies a 13% kind of a volume growth for nine months.... So, you know, is it basis the macro improving alone? Or, yeah, you know, there are specific steps which you want to elaborate what you're doing, which will drive the volume growth from here on. So first thing, you are right, June was nowhere near the expectations, you know, what we thought. Okay? And, so that was clearly a dampener. And, going forward, yes, I said that, you know, we'll try to do a 10% volume. I agree with your numbers. It's not going to be easy, but we are prepared, right? We are prepared as a company. We have been doing a lot of things on the ground, and, we have also been doing some good activities on the branding side, despite, you know, like, the margins are slightly lower, but we are not going to stop some of those things, some of those initiatives now from here on going forward, because I think many other things we have already corrected in our system. I mean, I would say my team is prepared. We just need some level of push from the market, and I truly believe that the market is good, market will bounce back because you know, I mean, I don't see that there is any reason that the market should be subdued, though we have been hearing this from some other industry players also, and you know, even in the building material. But we are all optimistic that the market will bounce back, and if the market bounces back, plus the level of ground activity, what we have already done, the way we are doing things, I'm pretty confident that we should be very near to that number. You know, 10 for sure is difficult, 13%, you are rightly saying. But we are prepared, and we have taken that as an internal task also, how to make up, you know, in these balance nine months. Let's see. Got it. Sir, is it possible to get some clarity in terms of how the premium segment has done in the plywood versus non-premium? What has been the volume growth for the first quarter? Volume growth? Yeah. Just one second. We'll get back on this? Sure. Volume growth. Where I'm coming from is that, Yeah. You know, we have another equally large player who's been outperforming in terms of percentage growth. The difference between you two of you has widened quite significantly last four years. So I'm just trying to understand you know, the underperformance. Is it to do with the segment exposure, like we are focusing a lot more on premium, we are spending on the AMP, but the bulk of the growth is probably happening in the non-premium. Is it to do with that, or is it to do with simply the receivable tightening, what you have done? And if there is a rethink with respect to you know, being bit lenient, which should drive the volume growth? No, I don't think, you know, first of all, you know, receivable corrections and other things are still playing on the mind of our dealers. Okay. It's something which is already done and dusted. Okay, coming back to the difference, see, I would say that we have to look at our model, our business. We are different in terms of what we do things. Yes, in the last couple of years, I mentioned also in the last few calls that we suffered quite a bit in between on our capacity platform also. So especially when the price increase takes place consistently into the market, the trading model creates lots of challenges. Mm-hmm. You know, because it was like every month they will ask for a price increase, and they know that, you know, we have no other choice. So if we run after volume, we'll have to just agree to their prices. If we agree to their, you know, demand, then they continue to ask some crazy price increase month after month. So we passed through that difficult time. We also learned that, you know, this trading model is not something which really works in all type of situations. Our capacities at Bareilly actually never did so since for us, which we're expecting that our Bareilly plants will give us good additional capacity. So some of the line of products where we had good orders, we... Hello? Can we- we can start on this. Sir, I'm lost, you know, I'm not able to hear you after what you said. You were talking about Bareilly plant, but I couldn't follow after that. Yeah. So, you know, what I'm saying is that, you know, we had issues even in terms of, you know, capacity enhancements, because we were expecting a lot from our Bareilly plant to give us new capacities in certain product lines, but that never happened. Even, you know, while we speak, we had one full line for our doors business there, but till date also, we have not been able to even start that line, you know. So those are potential loss of business to us also, because we had orders, we were expecting every month that the line will be up and running, and that is somewhere we even lost customers. So we face these type of challenges, but I think many of the... Hello? Hello. Sir, I can hear you. I can hear you. Yeah, yeah, yeah. So, so, you know, we had these type of challenges. Some of these challenges still continues, like, Bareilly was a clear disappointment to us, and because of that, somewhere, our capacities in some product lines, still we are rethinking on how to gear up those capacities. So we had some of, these are challenges... Yeah. Can you elaborate on this? What is the exact challenge? Is it internal, external, availability of raw material or equipment? No, no, no, it is not, it is not about availability of raw material. It is about, the facility, you know, could not really produce, the product. Okay? And then, somewhere, again, this JV model on which we worked has not given us very successful, result. So we are also rethinking, that is, for because of that, only one of the step also was to put up a facility in Sandila. So one, let me summarize. Receivables issue, has not created any challenges. Second, yes, we have our way of looking at our business. Third, we had supply side issues also. Understood. Sir, just a couple of questions on the MDF. You mentioned the you don't expect any anti-dumping duty related, you know, measures. We're just curious to understand your thought. Is it that, you know, we are very, very competitive, and that's why, you know, you can't argue that you require any such measure? What is driving that thought, actually? I think we are too new to comment on this, honestly. I mentioned that we are not calculating in our margin that that is going to come in. Correct. We are imagining for our practical working, that this is going to be a scenario. Imports are going to be open and the market will be challenging. In this scenario, Greenply needs to thrive. So, you know, we are working on that. In case the industry or the government decides to put something like that, then it is an added tailwind to us. Fair point. Fair point. Just, you know, in terms of the new capacities, anything incremental in last 3, 4 months, you know, you have come across in terms of new players entering into MDF industry, or new capacities or something like that? Honestly, not at all. Honestly, not at all. The listed players, you know, I'm sure you guys are aware, and we are also very well aware, the big players, what and where they are putting up the capacity. And rest, we are actually working hard to sell MDF and focus on the ramping up rather than focusing on who's coming. So honestly, we don't have an answer on that. Understood. And if you could just quantify- I'm sorry to interrupt you, Mr. Achal. Yes, absolutely, ma'am. May we request you to join the question queue, sir. We have several participants waiting for their turn. All right. All right. Thank you. Thank you. We take the next question from the line of Mr. Hrishikesh Bhagat from Kotak. Please go ahead, sir. Hi. Good evening. Thank you for opportunity. Hi, Hrishikesh. Hi. So first question is related to the plywood. I think you did speak about the working capital, but clearly on the receivable days, part of working capital, that also has inched up, at least on plywood, when I look at both standalone plus Sandila capacity. So is it that we have again slightly loosened the terms of credit or is it something else? How should we read it? No, it is not. See, first of all, it is not anything significant. Second, there are two lines of business. You know, one is a trade business and second is an institutional business. Whenever we do institutional business, and that is where also we have a lot of focus, in the last 2-3 quarters, the institutional business receivable days are different compared to the trade days. So they are normally always higher by 30 days, you know, compared to the trade days. So it's not that we have any major, you know, deviation from our discipline. Okay. That's why I said that, you know, this looks like the new norm, because the institutional business is growing. Sure, sure. I think that's helpful. The second is, when I look at the consolidated interest cost, which is at INR 13 crore, clearly on the debt of INR 700-odd crore, looks fairly low in terms of annualized interest cost, works to less than 8%. So has some part of interest... Is the MDF interest fully reflected or it's some part is still capitalized on balance sheet? No. No, I- No, see, see, borrowings, first of all, the borrowings also has increased in this three months, over a period of time. You know, our opening borrowing was not around INR 750 crores. Okay. Okay, so quarter two will be a true reflection of our interest costs. Okay, so that will be somewhere around how much, if on the annualized basis, if not on the quarterly basis? I think MDF will be about INR 39 crore. MDF interest cost will be about INR 39 crore, and other interest costs will be about, I would say, INR 6 crore, roughly. So INR 45 crore on annualized basis for overall business. 45 crore annualized number. Yeah. So, you will have a- Annual number. Uh. Yeah, annualized. Yeah. Yeah. Sorry, it was not clear. Annualized interest. Yeah. The annualized interest cost is saying, our CFO is saying, would be somewhere around INR 45 crore-INR 46 crore. This is ICAP. Yeah. Then, in addition, there will be a given interest cost, which will be around- I'm asking console. On the console level, it would be helpful. 52-53, 53 crores, let's say. Oh. crore-INR 53 crore. Okay, so effectively on the same run rate, what we have on the Q1, effectively. Yeah. That's what it seems. Okay. Slightly more than that. It can be slightly more, also depends on the, you know, interest cost rates, how it goes. Sure. Sure. But yes, in this range only. Okay. The last is on the... In from here on, I think clearly the, I believe the MDF CapEx is now over with this commissioning capacities. Now, what will be the next leg of CapEx or growth venture, the growth avenues that we are looking at? ... I think obviously considering, say, one or two years down the line, post that stable MDF capacity is stabilized. See, I think, you know, we have also declared one more venture, a 50/50 JV venture on hardware. That is not going to be a major investment in terms of the equity side. Can be to the tune of these are very initial numbers which I'm saying, but can be to the tune of around INR 30 crore-INR 40 crore over a period of, you know, 2 years to 2.5 years. And of course, we'll have regular CapEx both for the plywood business and even MDF also. There would be some level of, you know, regular CapEx, which would be there. So at this point of time, you know, these are the things which we are looking at. Okay. Then maybe, you know, rest we can comment after a year or so. Okay. Thank you. Thank you. Yeah. Thank you, sir. The next question is from the line of Mr. Abhishek Maheshwari from Skyrich Wealth Management. Please go ahead, sir. Hi. Thank you for taking my questions. Hi. Sir, could you throw some light on... Hi, could you throw some light on your debt repayment schedule? Debt repayment schedule? Yeah. This year, this year, we don't have any major repayments. What is the amount? If I can reply. Yeah. This year, I'll just tell you one second. This year will be, so this year our debt repayment will be about INR 41-INR 42 crore. Next year it will be INR 56 crore. The following year it will be INR 64 crore. Okay. Giving you visibility for next three years. Thank you very much for that. Sir, secondly, when you say- This is the consolidated. Sorry? This is at consolidated level. Thank you. So secondly, sir, when you say that your advertisement cost would be at around 3%, do you mean on consolidated basis or only for plywood? Because I would have thought that- This is on the India business, which is, you know, plywood plus MDF together. Okay. Because I would have thought that, because we are a new player here, we would probably have to do more marketing and advertisement expenditure, you know, to gain that credibility and market share. No, I think, see, ultimately everything is under Greenply brand. Okay? So whatever architecture we have done is on a common platform. And so, so even if I am doing, let's say, around INR 300 crore on MDF, I have INR 9-INR 10 crore, which I spend on the MDF account also. So that is good enough. Understood. More than the industry standard. Yeah, yeah. Understood. And, sir, could you talk a little about, you know, how the demand is tier one versus tier two, tier three? Because as you said, the quarter was not as good as we had researched. So where is the pressure coming from? Is it the tier two, tier three, or tier one? No, I, I don't think, you know, we can differentiate at this point of time. Somehow, you know, except barring a few markets, which I, I would not like to mention on the call, but I have seen rest of the country almost behaving very similar. Slightly surprising, but, you know, the more or less the demand has been very similar, throughout the country, except a few markets. Okay. So do you think there's a seasonality element to it, or is it just something abnormal that had happened? No, not a seasonality, I would say, okay? Because as I said, we were prepared to do better numbers, but somehow the traction in the market was really poor. My own check in the trade, as well as, you know, with some other industry players also, including the building material segment overall, we found that, you know... And nobody is able to give a reason behind it. You know, that is the funniest part of it. So, but the demand, everyone is saying, you know, somehow that demand is missing. There've been people who have been mentioning, "Sir, the liquidity is missing, you know, we are not getting our payments." So our trade partners have been saying, "Sir, we are not getting our payments, but, you know, you guys take your payments on time." But ultimately, look, you know, it is all tertiary based. There's no point pushing the inventory to the trade, because if we just jam it there also, it is going to hit me at some point of time. So we have kept that discipline on, and. But you know, overall, I would say the market has remained slightly subdued. Okay. I don't know. You guys also must be, you know, talking to so many industry players. So what is that, is the information with you all? But this is what at least we found out when we were, slightly not able to do our numbers for the, I mean, the budget numbers for quarter one. We were also trying to find out from external sources and didn't get a very great response. Okay, understood, sir. One last question regarding timber availability. So, you know, I think, timber prices have gone up. It's been going up for a couple of quarters now. Do you think that, in coming quarters, it will start moderating? Because whenever the prices go up, plantations increase substantially, and then there is normalization. What are your thoughts on that? So at this point of time, yes, truly, it remains a challenge. We don't even see the prices coming down in the near future, which is like, you know, for sure another 6-9 months. Our expectation is that maybe after, you know, after 5 or 6 quarters, the prices should start coming down when the new crop starts coming and hitting the market. At this point of time, clearly, we see availability is a challenge, and then it is pushing the price upward. ... Okay. Sir, I have some more questions. I'll just get back to the queue, and later the questions. Sure, sure, sure. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please do limit your questions to one per participant. We take the next question from the line of Mr. Dhiresh Pathak from White Oak Capital. Please go ahead, sir. Yeah, thank you. In MDF, what is the distribution setup currently? Can you please explain on that? Distribution setup. So, as in the, like, what do you want to know about? Our format of distribution? Like, how, how do you want me to explain about the distribution, like? So what is the structure like? How many warehouses you set up, how many distributors, how many dealers, what kind of reach you got? Where are you focusing on? Just elaborate a little bit on how you're trying to reach the market. So I think, MDF, firstly, we have zero warehouses across the country. I don't think any brand is operating on the warehouse model in case of MDF, because freight here in MDF is a very, very critical component, because the end product is quite a low price product compared to plywood or compared to any other panel product in our industry. So there's no double handling or, you know, go down for that matter. We are mainly focusing on the western region, which is Gujarat, Maharashtra, MP, Rajasthan. However, we are very successful already in North India, which is one of the major markets of MDF. We have also started supplying to South. We have also started supplying to East and Northeast, so we are pretty much present all over. As of now, we already have more than 250 active, dealers/distributor/wholesaler who are already working with us and have done more than 2 or more transactions. Okay. So for a large company who's already established, this 250 would compare and contrast with how many numbers, let's say, you know, Greenpanel would have? I don't think they publish this data or I am aware of this data, but definitely my target for the year is to reach about 800-900 direct dealers/distributors. Okay. One last question: What is the investment in Gabon? Sorry to interrupt you, sir. May we request you to join the question queue, as we have several participants waiting for their turn. Okay. Thank you. Ladies and gentlemen, please limit your question to one per participant. The next question is from the line of Mr. Ritesh Shah from Investec. Please go ahead, sir. Yeah, hi. Sir, I'll just take the prior one first. Sir, what was the investment in Gabon that we have? Investment in Gabon? Gabon. I think Dhiresh was trying to- Our equity side, debt side, like what total, what are you asking? Exact number. The total capital employed for Gabon. It will be about INR 260 crores. It should be around INR 255-INR 260. Yes. 255-260 crores. Okay. Sir, my second question is specific to the plant in Baroda. In the presentation, we have indicated different type of boards, thin and thick board. I just wanted to have some clarity on what type of line is this, because one of our competitors, they have put on a new thin board line based on Sebiro equipped Everest. Now, this is thin board line, so I just wanted to get a context on what sort of technology have we put up at the Baroda plant. The reason I'm asking this is I wanted also some color on the type of MDF imports, whether it is thin board or thick board. So do we have something which is something different and it insulates us from imports? So I think, I would tell, like, for our line, I would comment that, you know, it's a very, a line which can produce everything, you know. So typically, globally, when a company has one line and you know they're starting and they're venturing into MDF, you need to have a plant which can produce across thicknesses, across grades, so that you can establish yourselves and, you know, set your market. And then going forward, as you set up more lines in the same location or multi-location, then you can opt for different lines, then, you know, you can divide as to what you're producing on which line, you know? But in our case, I think our line is capable of producing anything between 1.5 mm to 35 mm in thickness, and almost all sizes, with being 8 feet, width. So we can almost produce any size which the market demands. And as far as the grade is concerned, yes, our line is definitely capable of what others are making. It is also capable of making Boilo, which other than Action Tesa, nobody else is supplying in the market. So this is more than a 1,100 density board, you know. 1,050-1,100 is the density, and this is 100% fire retardant because of its density itself. So, you know, we have achieved trial production, and the trial production is very, very successful. Sometime in Q2, we will be launching the product in the market. All other grades have already been launched. And how would you qualify the imports? I'm sorry to interrupt you, Mr. Shah. May we request you to join the question queue, sir? Sure, ma'am. We take the next question from the line of Mr. Asim from DAM Capital. Please go ahead, sir. Yeah. Hi, thanks for the chance. So I just wanted to understand the value-added MDF segment and the reasons why that should not be affected by multiple capacities coming in the near future. So basically, what are these products? Are these unique to each player, and so competition is low, and hence no price competition? I can understand imports not being a factor, but from the other incumbent players, just wanted to understand your thoughts on that. So I mentioned that, you know, it's not a threat from import. And I did not mention that, you know, we are not worried about other players coming in, and my value added will continue as it is. We are not worried when imports come in, because value added is selling as it is without a change in the realization. What the challenge when imports open up is the interior grade, which becomes a challenge to solve. Sorry, sorry to interrupt. Imports I can understand. So I guess I missed the point. So, the domestic peers who are setting up, they would still be fair competition on the value added side, right? Absolutely. They will compete in every side, but all the, all the domestic players don't have capability of building everything, you know. For example, none of the big guys today have launched Boilo equivalent, which Action Tesa has, you know, kind of selling in a monopoly. He's the only guy who's selling it in the country. And in the third month of production, very proudly, I can say my team has already achieved and successfully done the production, trial production of that particular grade. So, you know, we'll keep innovating, we'll keep focusing on it. And obviously, the brand, Greenply, is going to get milked in the value-added segment, you know? So we already have a loyal base of consumer, architect, interiors, contractors, who otherwise are using our plywood or is associated with us or have a brand loyalty. Definitely over a year, that is the low-hanging fruit for us, which we are going to encash on. And I think, Sanjeev, also one more thing is, you know, one advantage which we have, which we have been speaking from day one, is that we have set up the plant in west. You know, so that gives us some amount of freedom and, and the type of response what we have got from the players in, you know, Maharashtra and Gujarat is, very, welcome, you know. So because for them, they have been able to now reduce the time of transportation and everything. For them, sourcing has become easy. It's like overnight supply for them. So some of these things will work as an advantage. But yes, you know, you are fair in your question that competition would be there. More and more players will come, there would be competition. Sure. Thank you. Thank you. The next question is from the line of Mr. Bhagwat from Prosperity Wealth Management. Please go ahead, sir. Hello, sir. My question is related to depreciation. Whether the Q1 number is reflecting the proportionate amount for the full year? Q1 number for MDF? No, I'm saying on the consolidated level, it's around INR 13 crore. So is that proportionate for the full year? No, I'll tell you. See, you know, the simple way of looking at it is that, you know, for the plywood, the full depreciation is charged. Even for Gabon, in the consolidated, the full depreciation is charged, the running rate. Only for MDF, the depreciation is for two months- Yes. because the commercial production started in the month of May. So, on a quarterly basis, I think your depreciation will increase by around, No, no. - INR 2.5 crores-INR 3 crores per month. Yeah. So full year, it will be about INR 31 crore for MDF this year. Next year, it will rise to say about INR 34 crores. No. So I think how he is to understand, whatever is our consolidated depreciation for this quarter, next quarter will be around INR 3 crore-INR 4 crore higher than this, and that- Yeah. Then that will be the normal level. Okay. So around INR 55+ crore in the range of that? On a consolidated basis... How much is the console depreciation? Yeah, consolidated depreciation would be, How much it is right now? For this year. No, how much it is for the quarter? Thirteen crores. So, 13, then, you know, you should assume quarter two will be somewhere around INR 15.5-16 crores. Yeah. So 16 into 3, 48, 13, so INR 62 crore-INR 63 crore for the full year. Okay. Understood, sir. And, regarding to our A&P spend, what was the amount for Q1, if you can say? A&P spend? Yes, sir, the amount for Q1. No, we said, we said it is 4.8% for the quarter. 4.8% for the quarter. So as per the estimated amount, so, is there any remaining amount that can be spent for the upcoming quarters, three more quarters in this year? Well, for the full year, we said that, you know, for the, for the India, part of the business, our, spend would be in the range of 3%-3.5%. Okay. So we can say this is the full amount for the entire years. So there will be no A&P spend for the remaining quarters for this years? No. No, no, there will be A&P spend in the remaining quarters also. For the full year, the average will land at somewhere around 3%-3.5%. For the first quarter itself, it was 4.8%. So in the remaining three quarters, it will be slightly lower than the first quarter spend percentage. Okay, okay. Understood, sir. Thank you, sir. Yeah, thanks. Thank you, sir. We take the next question from the line of Mr. Arun Baid from ICICI Securities. Please go ahead, sir. Hi, just one clarification, sir. Assuming we do that INR 275 crore-INR 300 crore of revenues from MDF, at the PBT level, will we break even? Sorry? Assuming we do that INR 275 crores-INR 300 crores of revenues, which you targeted for our MDF business, will we break even for the full year at the PBT level? I don't think we'll break even at that level for the full year at PBT. We will still have a small loss at the PBT level. But at the cash level, yes, we will be positive. We will have no cash loss. I think, Sanjeev, you know, Arun, Yeah. Quarter two is something where we will get a fair idea, because in quarter one, we just did around 50-55 days of operations. And right now, the plant is, you know, still stabilizing. So there are the additional costs also, which we have been bearing in the -- what we have seen in the first two months. Allow us quarter two. If in quarter two we are able to do somewhere around INR 90 crore-INR 100 crore of sales, we'll get a reasonable idea about our running costs. Sure. And then we will, we'll be able to give you a fair picture. Okay. Just if you can help us with the interest cost for MDF plant, which you expect for this year. Just for the MDF plant. For the full year, 39. Thirty-nine crores. For the full year, INR 39 crores. Okay, okay. Thanks a lot. Best of luck. Thank you. Thank you. Thank you. We'll take the next question from the line of Mr. Achal Lohade from JM Financial. Please go ahead, sir. Just wanted to know in terms of timber price, if you could give a sense, what is the extent of increase, QOQ and YOY for the company as a whole? Timber prices? Timber prices. Timber cost, how much has it gone up for, for us, on a YOY and QOQ basis for first quarter? In terms of rupees per kg, sir. Okay, so we don't have the exact number I'll tell you, but you know what I remember, between last quarter and this quarter, we have seen some extent of increase. But you know, this quarter, for sure, maybe, you know, we'll see an increase of around 10% on the timber prices compared to quarter one. Second quarter, you're saying? Yes, quarter two. That's why I also said that, you know, we are looking for a price increase also starting August. And, has the industry also taken some price increase, especially from the unorganized side? And what's the difference of the price as we speak, in terms of the selling price for the like-for-like product? No, see, like-to-like product again, you know, there will always be a difference between, a brand and unorganized, this. But, we have seen that that gap has somehow reduced now to around, you know, 11%-12%. This is, whatever, whatever level of, you know, research which we have done in the recent past. Got it. That's very helpful, sir. Thank you so much. Okay, bye. Thank you. Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to Mr. Karan from Asian Market Securities for closing comments. Thank you, and over to you, sir. Thanks, Hema. Sir, any closing remarks you want to make? Thank you all for taking time to participate in this call. In case of any further clarifications or query, please feel free to reach to Mr. Gautam Jain. Thanks again, and goodbye. Thank you. On behalf of Asian Market Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.