Q1 2027 Greenpanel Industries Ltd Earnings Call

August 11, 2026

Speaker #1: Ladies and gentlemen, good day and welcome to the Greenpanel Industries Limited Q1 FY27 earnings conference call. As a reminder, all participant lines will remain on listen-only mode.

Operator 2: Ladies and gentlemen, good day, and welcome to the Greenpanel Industries Limited Q1 FY27 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 D'Sa from CDSL India. Thank you, and over to you.

Operator: Ladies and gentlemen, good day, and welcome to the Greenpanel Industries Limited Q1 FY27 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.

Speaker #1: There will be an opportunity for you to ask questions after management's opening remarks. Should you need assistance during the conference call, please signal the operator by pressing star, then zero, on your touch-tone telephone.

Speaker #1: Please note that this conference is being recorded. I will now hand the conference over to Mr. Gavin Deesa from CDR India. Thank you, and over to you.

Speaker #2: Thank you. Good day, everyone, and thank you for joining us on the Greenpanel Industries Q1 FY27 earnings conference call. We have with us today Mr. Shobham Mittal, the Managing Director, and Mr. Himanshu Jindal, the CFO.

Gavin D'Sa: Thank you. Good day, everyone, and thank you for joining us on Greenpanel Industries Q1 FY27 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 is shared with you earlier. I would now like to invite Mr. Shobhan Mittal to begin the call. Over to you, Shobhan.

Gavin Desa: Thank you. Good day, everyone, and thank you for joining us on Greenpanel Industries Q1 FY27 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 is shared with you earlier. I would now like to invite Mr. Shobhan Mittal to begin the call. Over to you, Shobhan.

Speaker #2: Before we begin, I would like to state that some statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties.

Speaker #2: A detailed statement in this regard is available in the results presentation, which was shared with you earlier. I would now like to invite Mr. Shobham Mittal to begin the call.

Speaker #2: Over to you, Shobham.

Speaker #3: Thank you. Good afternoon, ladies and gentlemen, and welcome to our Q1 FY27 earnings call. As you are all aware, the quarter commenced amidst increased volatility following the war in the Middle East.

Shobhan Mittal: Thank you. Good afternoon, ladies and gentlemen, and welcome to our Q1 FY27 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% year on year. In continuation with our drive on new products and trade engagements, we stepped up investments to further strengthen our brand during Q1.

Speaker #3: 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.

Speaker #3: 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 streams, which is retail MDF, which grew by around 20% year-on-year.

Speaker #3: 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 in the country to improve our retail connect.

Shobhan Mittal: 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 degrew by 14% year on year, 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% year on year, something we have demonstrated consistently for the last four quarters now.

Speaker #3: However, the high volatility in costs, both chemicals and container freight, on account of the geopolitical developments in the Middle East, did impact our OEM and export sales.

Speaker #3: OEM degrew by 14% year-on-year, while exports reduced to zero in the quarter. These, as you know, are largely opportunistic, low-margin sales driven by pricing and credit decisions. We chose to stay cautious on these, especially in the initial half of the quarter, given the overall macro situation.

Speaker #3: As a result, our domestic MDF volumes grew by 12% year-on-year, 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, while the price hikes coming into play are total MDF revenues still grew by 8% year-on-year.

Shobhan Mittal: Counting in the absence of exports this time, our total MDF volumes degrew by 2.3% year on year. While 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 crores, 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 crores 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.

Speaker #3: 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 Rs.

Speaker #3: 350 crores, a growth of 8.5% over last year, while the consolidated operating EBITDA, excluding the impact of currency movement on the EUR borrowing for the new plant, was Rs.

Speaker #3: ₹33.5 crores, or 9.6% of revenues, in Q1—MDF in Q1. MDF operating EBITDA margin expanded to 10.3% versus 4.4% for Q1 last year. Moving to the current scenario and what to expect hereon.

Speaker #3: On the raw materials side, while timber costs are largely stable, chemical costs have corrected from the peak but are still higher than pre-war levels, and they remain volatile.

Shobhan Mittal: 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 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 9 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 flows to gradually improve as well.

Speaker #3: On the other hand, competition continues to stay aggressive on offering discounts. We are continuously monitoring this and realigning our discounts wherever needed to protect and grow volumes.

Speaker #3: Thus, we are simultaneously trading two moving grounds currently—both costs and discounts—which change on a daily basis based on news flows from the Middle East.

Speaker #3: 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.

Speaker #3: Once the situation in the Middle East returns to normal, we can also expect export flows to gradually improve as well. With this, I request our CFO, Himanshu Jindal, to provide the financial and other updates.

Shobhan Mittal: With this, I request our CFO, Himanshu Jindal, for the financial and other updates. Thank you.

Speaker #3: Thank you.

Speaker #4: Thank you, Shobham ji. Good evening to you all. We've already covered revenues in detail. On the margin side, our gross margins improved both sequentially and on a YoY basis as well, by 5% to 6%.

Himanshu Jindal: 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% to 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 were zero. So there is a change in distribution product salience also, which is coming into play. The third reason was basically lower timber costs. 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 Q1 last year.

Speaker #4: Now, in the quarter, it is at 52.7%. And this is on account of multiple factors. So the first one, very clearly, was the timely implementation of the price hikes post the escalation on the chemical cost front.

Speaker #4: As Shobham ji mentioned, our OEMs segment de-grew, and even our exports were zero. So there's a change in distribution product salience also, which is coming into play.

Speaker #4: The third reason was basically lower timber costs. So, as you know, we worked on the wood species that we use, so there's a reduction on a year-over-year basis.

Speaker #4: And there's also improvement in our production efficiencies versus Q1 last year. Beyond that, there was also the availability of low-cost inventory coming in from the last fiscal year.

Himanshu Jindal: 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 4 days. Primarily more inventory now, both on account of finished goods and timber to factor seasonality. Despite this, we are still 5 days inner versus the same period last year. We continue to use our cash flows to deleverage. So our gross debt has 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+.

Speaker #4: Despite the increase in marketing investments, our reported EBITDA expanded to Rs. 32.5 crores, versus a loss of 12.4 crores last year same period. While the PBT was 2.1 crores and batch was 1.2 crores.

Speaker #4: On the balance sheet side, our working capital requirements increased slightly—by five days, by four days—primarily due to more inventory now, both on account of finished goods and timber, to factor in seasonality.

Speaker #4: 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 has reduced further to Rs.

Speaker #4: Rs. 317 crores, versus Rs. 353 crores 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.

Shobhan Mittal: I think we can now request the moderator to open the Q&A, please.

Speaker #2: 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 touch-tone telephone.

Operator 2: 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.

Operator: 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.

Speaker #2: 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.

Speaker #2: Ladies and gentlemen, we will wait for a moment while the question queue assembles. We will take the first question from the line of Shubhi Gupta from Srinetra Asset Managers.

Speaker #2: Please go ahead.

Shubhi Gupta: Thank you so much for the opportunity. My first question is, since we have seen such a drop in exports due to this ongoing war, do we plan to diversify into other international markets to mitigate all of this?

Speaker #1: Thank you so much for the opportunity. My first question is: since we are seeing such a drop in exports due to the ongoing war, do we plan to diversify into other international markets to mitigate this?

Speaker #3: Sure. So Shubhi, we are looking at alternate options for exports. Unfortunately, the freight volatility continues to be present in most parts of the country.

Shobhan Mittal: 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 don't have their own manufacturing. Most of the other foreign markets already have their own MDF manufacturing. With the freight volatility in place, it's also difficult to be competitive factoring in. I would say about 80% to 85% of our exports earlier used to be Middle East. We are exploring other options. We're trying to expand supplies to the other markets. Of course, to make up for the lost volumes from the Middle East, that's not going to be enough. We are in the process of exploring other markets.

Speaker #3: The Middle East is a unique situation where they don't have their own manufacturing, but most of the other foreign markets already have their own MDF manufacturing.

Speaker #3: And with the freight volatility in place, it's also difficult to be competitive, factoring in. So, I would say about 80% to 85% of our exports earlier used to be to the Middle East.

Speaker #3: We are exploring other options. We're trying to expand supplies to other markets. But of course, to make up for the lost volumes from the Middle East, that's not going to be enough.

Speaker #3: But we are in the process of exploring other markets.

Speaker #1: Sure. So, my second question is: if you could provide some guidance regarding the margins for the full year, and also about capacity.

Shubhi Gupta: Sure. My second question is, sir, if you would like to give some guidance regarding the margins for the full year and capacity also.

Speaker #3: So, Shubhi, it's two at this point of time. Because of the uncertainties, we'd like to refrain from it. We are not in control of what is happening with regards to the chemical costs.

Shobhan Mittal: 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.

Speaker #3: It's 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. So at this point in time, we're not in a position to give you a long-term sort of guidance.

Speaker #1: And so, capacity utilization—do we expect it to remain at about 51%, or any color on that?

Shubhi Gupta: And sir, the capacity utilization, do we expect it to maintain at about 51% or any color on that?

Speaker #3: No, the plan is definitely to enhance capacity utilization this year, subject to market volume. But again, because exports are uncertain, we're not in a position to give you an accurate number on that.

Shobhan Mittal: No, the plan is to definitely enhance capacity utilization this year, subject to market volumes. But again, because exports is uncertain.

Shubhi Gupta: Yeah

Shobhan Mittal: 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.

Speaker #3: When exports would restart, and what the whole year's utilization would look like.

Speaker #1: Sure. Okay. Understandable. Thank you.

Shubhi Gupta: Sure. Okay. Understandable. Thank you.

Speaker #2: Thank you. We will take the next question from the line of Praveen Sahay from PL Capital. Please go ahead.

Operator 2: Thank you. We take the next question from the line of Praveen Sahay from PL Capital. Please go ahead.

Operator: Thank you. We take the next question from the line of Praveen Sahay from PL Capital. Please go ahead.

Speaker #4: Yeah. Hi, sir. Thank you for the opportunity. My first question is related to the price hike, which you had mentioned, and the rollback by the peers, as you also had.

Praveen Sahay: 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 peers and as you also had. So this 7.4% of ASP increase is largely due to a channel mix change towards the retail?

Speaker #4: So, this 7.4% increase in ASP is largely due to a channel mix change towards retail.

Speaker #3: Well, in the first quarter, we did have some benefit from the price hikes as well. But a large part of that was also because we had removed any additional discounts that we were giving to the OEMs, due to the costs going up.

Shobhan Mittal: Well, in the first quarter, we did have some benefit of the price hikes as well. But 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. So 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.

Speaker #3: So we had bought them at par, which resulted in whatever OEM sales did happen were almost at retail levels. So, 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.

Speaker #4: So this rollback is because of our capacity we have as an industry. Is that the main reason?

Praveen Sahay: This rollback is because of our over capacity we have as an industry. Is that the main reason?

Speaker #3: Well, yes. I mean, 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.

Shobhan Mittal: 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. But 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.

Speaker #3: But yes, I mean, I think the primary reason for that is overcapacity and a lack of enough orders from various customers—various companies—which is resulting in them reacting in this manner.

Speaker #4: Second question is related to the OEM. Because as you highlighted, 14% reduction there. If you can give some color how much is the OEM contribution to your business right now versus the others?

Praveen Sahay: Second question is related to the OEM, because as you have mentioned, the 14% there. If you can give some color, how much is the OEM contribution to your business right now versus the others, earlier quarters?

Speaker #4: Earlier. Quarters.

Speaker #3: Himanshu, do you have some accurate numbers? I mean, last year's historicals. Yeah.

Shobhan Mittal: Himanshu, do you have some accurate numbers of

Himanshu Jindal: Sure

Himanshu Jindal: I mean, last year's historical? Yeah.

Speaker #4: Yeah, yeah, yeah. So, Praveen, we do something like 75% to 80% retail, and the balance is OEMs. This obviously fluctuates with the way things happen in the market space.

Himanshu Jindal: Yeah.

Himanshu Jindal: 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.

Shobhan Mittal: 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.

Speaker #4: Right? But historically, this is how we have been doing it: retail versus OEM. Okay. And still, we are facing a challenge related to OEM demand.

Praveen Sahay: Okay. And still we are facing challenges related to OEM demand.

Speaker #3: No, so now that the prices have been corrected, Praveen, the OEM demand should come back into play this quarter.

Shobhan Mittal: No. Now that the prices have been corrected, Praveen Sahay, the OEM demand should come back into play this quarter.

Speaker #4: Okay. Okay. And also, if you can.

Praveen Sahay: Okay. The industrial-

Speaker #3: You see, what is happening with OEMs is imports always remain an option, right? So if we outprice ourselves with imports, then the OEMs find an alternate source by importing materials.

Shobhan Mittal: Because you see what is happening with OEMs is imports always remain an option, right?

Shobhan Mittal: 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 hence we should see the OEM demand coming back in.

Speaker #3: But now that the majority of the price hikes have been rolled back, we're again back to competitive levels, and hence we should see the OEM demand coming back in.

Praveen Sahay: 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. When this price, whatever that they taken, has a rollback, when it happened in the quarter?

Speaker #4: Just for comparison to some peers related to the realization, on a sequential basis, if I look at the peers, they have also taken some realization benefit.

Praveen Sahay: 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. When this price, whatever that they taken, has a rollback, when it happened in the quarter?

Speaker #4: So when this price, whatever the taken, has a rollback, when it's happened in the quarter, it's happened.

Shobhan Mittal: 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.

Speaker #3: ...over multiple phases. So firstly, it was supposed to be implemented in April, but a lot of people did not implement it fully until May.

Speaker #3: Then there were certain rollbacks taken towards the end of May, June, and then again some rollbacks were taken in July as well.

Speaker #4: Okay. Okay, got it, sir. Last question on the numbers: Forex loss—how much is that?

Praveen Sahay: Okay. Got it, sir. Last question on the numbers. Forex loss, how much is that?

Speaker #5: That's two and a half. Only for the ECB, is that 1.8? Yeah, which is parked in either other expenses or as part of the interest income.

Shobhan Mittal: That's 2.5. Only for the ECBs, that 1.8. Which is parked in either other expenses or as part of the interest income. Interest expenses, my bad.

Himanshu Jindal: That's 2.5. Only for the ECBs, that 1.8. Which is parked in either other expenses or as part of the interest income. Interest expenses, my bad.

Speaker #5: Interest expenses, my bad. Yeah.

Speaker #4: So, it's a 1.8, you said.

Praveen Sahay: So it is a 1.8 you said.

Speaker #5: On the ECB, overall, two and a half. Yeah.

Shobhan Mittal: On the ECB. Overall, 2.5.

Himanshu Jindal: On the ECB. Overall, 2.5.

Speaker #4: Okay. Okay. Thank you, sir. All the best.

Praveen Sahay: Okay. Thank you, sir. All the best.

Speaker #2: Thank you. We will take the next question from the line of Risha Mehta from GreenEdge Wealth. Please go ahead.

Operator 2: Thank you. We take the next question from the line of Resha Mehta from GreenEdge Wealth Services. Please go ahead.

Operator: Thank you. We take the next question from the line of Resha Mehta from GreenEdge Wealth Services. Please go ahead.

Speaker #1: Yeah, thank you. So the first question is on the price hike. So I think at the very outset, when we had taken somewhere around 8% kind of price hikes in MDF.

Resha Mehta: Yeah, thank you. The first question is on the price hike. I think at the very outset when inflation kicked in, we had taken somewhere around 10% price hikes in MDF.

Speaker #3: Sorry, you're cutting out a little bit. Can you try speaking a little louder, please?

Shobhan Mittal: Sorry, Resha. You are cutting out a little bit. Can you try and speak a little louder, please?

Speaker #1: Yeah. Is this better? Am I audible?

Resha Mehta: Yeah. Is this better? Am I audible?

Speaker #3: Yeah. Yeah.

Shobhan Mittal: Yeah.

Resha Mehta: Yeah. I think we had taken around 15% price hikes in MDF. But effectively, because we were offering trade discounts due to competitive pressures, it used to be effectively 7% to 8% kind of price hike that had transmitted in the market. But now you are saying that with all the rollbacks, basically we are back to the old level. So there is no price hike effectively.

Speaker #1: Yeah, so I think we had taken around a 15% price hike in MDF. But effectively, because we were offering trade discounts due to competitive pressures, it used to be effectively a 7% to 8% kind of price hike that had transmitted in the market.

Speaker #1: But now you're saying that, with all the rollbacks, basically we are back to the old levels. So there's no price hike effectively in place.

Shobhan Mittal: In place. Yes.

Speaker #3: Yes, yes, we can say that. I mean, maybe in certain segments, 1% to 2% of certain markets, because rollbacks have been sort of modified geographically as well.

Resha Mehta: Right.

Shobhan Mittal: Yes, we can say that. Maybe in certain segments, 1% to 2% of certain markets because rollbacks have been sort of modified geographically as well given the market condition and competition. Certain places, the rollbacks have been higher. Certain places we have tried to keep some of the price hikes in place. It is a mix. But yeah, almost all of it has been rolled back, I would say.

Speaker #3: As you know, given the market conditions and competition, in certain places the rollbacks have been higher. In other places, we've tried to keep some of the price hikes in place.

Speaker #3: So, it's a mix. But yeah, almost all of it has been rolled back, I would say.

Speaker #1: And the final destocking scenario would have also played out because of these rollbacks? Do we see that on the ground?

Resha Mehta: This annual destocking scenario would have also played out because of these rollbacks. Do we see that on ground?

Speaker #3: Sorry, what destocking? Can you repeat that?

Shobhan Mittal: Sorry, what destocking? Can you repeat that?

Speaker #1: Final channel destocking. Do we see that?

Resha Mehta: Annual destocking of.

Speaker #3: So, it seems like because of these sort of rapid rollbacks, market sentiment has also come to a point where no one is willing to hold material.

Shobhan Mittal: 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. So 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 supply to their customers.

Speaker #3: 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 company chooses to roll back prices, not necessarily do they pass on the benefit on the stocks that are being held by the channel partners.

Speaker #3: So even the channel partners are not buying to stock, but they're sort of only buying on a hand-to-mouth kind of situation to continue supplies to their customers.

Speaker #1: Understood. And now, with these rollbacks, do we see demand kind of coming back?

Resha Mehta: Understood. Now with these rollbacks, do we see demand kind of coming back with the

Speaker #2: Risha, I'm sorry to interrupt you. Could you please stay connected? Ladies and gentlemen, we have lost the line with Mr. Shobham Mittal. Please stay connected while I reconnect.

Operator 2: Resha, I am 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 the question.

Operator: Resha, I am 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 the question.

Speaker #5: Hello?

Speaker #2: Ladies and gentlemen, we have Mr. Mittal on the line. Risha, if you could please repeat your question.

Shobhan Mittal: Sorry, my line just dropped off. Yeah.

Speaker #3: Yeah.

Speaker #1: Yeah, so I was asking, now with the rollbacks happening, are we seeing the OEM demand kind of coming back?

Resha Mehta: Yeah. I was asking that, now with the rollbacks happening, are we seeing the OEM demand kind of coming back?

Speaker #3: Yes, as I mentioned in my previous answer, we are expecting the OEM demand to come back this quarter. Hopefully, we are in active discussions with all OEMs.

Shobhan Mittal: Yes. As I mentioned in my previous answer, we are expecting the OEM demand to come back this quarter, hopefully, with active sort of discussions with all OEMs and trying to get back our supply agreements with them.

Speaker #3: And we are sort of trying to get back our supply agreements with them.

Speaker #1: And now, 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, at a blended raw material inflation level for the company?

Resha Mehta: Now with this inflation, the raw material is still 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?

Speaker #3: So, at this point in time, this is so volatile on a daily basis. This is moving. So, in fact, it’s safe to say that if this moves further, there might again be a price hike that might come into play.

Shobhan Mittal: At this point of time, this is so volatile, Risha, 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. But I would say on a raw mat side, at this point of time, I think there is at least, let us say pre-war levels, 4% to 5% upward trend on the chemical side.

Speaker #3: So, we're 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—using more mixed wood compared to eucalyptus.

Speaker #3: Trying to negate the effect, because price hikes are not singularly in our control. Cost controls are definitely more, sort of, singularly in our control.

Speaker #3: So we're monitoring this on a regular basis. But I would say on a rawmat side at this point of time, I think there's at least let's say pre-war levels, 4 to 5 percent upward trend on the chemical side.

Speaker #1: Got it. And how much have timber costs reduced for us, year on year or maybe quarter on quarter?

Resha Mehta: Got it. How much has timber cost reduced by for us year-on-year or maybe quarter-on-quarter?

Speaker #3: Himanshu, can you answer that?

Shobhan Mittal: Himanshu, can you answer that?

Speaker #5: Yeah. Yeah. Yeah. So if.

Himanshu Jindal: Yeah.

Speaker #3: Because, again, both plants—again, very... yeah, Himanshu.

Shobhan Mittal: Because again, both plants vary.

Himanshu Jindal: Hello.

Shobhan Mittal: Yeah, Himanshu.

Speaker #5: Yeah. So I was saying, see, you rightly said, Shubham ji, I think it varies on the species, it varies on the mixes that we use, and it's very different on the product, right?

Himanshu Jindal: Yeah. I was saying, you rightly said, Shobhanji, I think it varies on the species, it varies on the mixes that we use, and it is very different on the product, right? It is a product-to-product alteration that we do. On a combined basis for Q1, I can share with you that we saved between timber and the efficiencies, we were able to save 6% to 7% overall.

Speaker #5: It's a product-to-product alteration that we do. On a combined basis for 401, I can share with you that we saved—between timber and the efficiencies—we were able to save 6 to 7 percent.

Speaker #5: Overall.

Speaker #1: Okay. And just the last one on the apply business. So apply despite quarter on quarter us maintaining similar capacity utilization, why would the apply margins drop from 7 and a half percent to 2.7 percent quarter on quarter?

Resha Mehta: Okay. Just the last one on the ply business. Ply, despite quarter on quarter us maintaining similar capacity utilization, why would the ply margins drop from 7.5% to 2.7% quarter on quarter?

Himanshu Jindal: Should I answer this, Shobhanji?

Speaker #5: Should I answer this, Shobhamji?

Speaker #3: Yes. Yes.

Shobhan Mittal: Yes.

Speaker #5: Yeah, so it's largely a play of product mix this time. We maintained our volume, and we grew our volumes; more importantly, on a year-on-year basis.

Himanshu Jindal: Yeah. So it is largely a play of product mixes this time. So 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, Risha, you see that our EBITDA levels have actually moved up with the volumes coming into play.

Speaker #5: I think it's the product mix which is playing against us on apply. This is why you're seeing the margins not really increasing. The fixed costs have obviously gone up.

Speaker #5: So therefore, on the EBITDA front, you see us doing a little less than what we were doing sequentially. But still, on a year-on-year basis, Risha, you see that our EBITDA levels have actually moved up with the volumes coming into play.

Speaker #1: And what kind of price hikes have we taken in ply, and is there still a gap versus inflation there, or are we seeing deflation there as well in raw materials?

Resha Mehta: And 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?

Speaker #3: So we've taken around a 5 percent price hike in plywood at this point of time, which we had taken in Q1. A very small percentage of that has been passed on as schemes.

Shobhan Mittal: So we have taken around 5% price hike in plywood at this point of time, which we had taken in Q1. A very small percentage of that has been passed on as SKUs. So we have some gain on the ply side on pricing.

Speaker #3: So, we have seen some gain on the apply side and in pricing.

Speaker #1: Right. Sorry. So, you said we've taken a 5 percent price hike, but the transmission has maybe been much less, right?

Resha Mehta: Sorry. So you said we have taken 5% price hike, but the transmission has been maybe much lesser, right?

Speaker #3: Correct.

Shobhan Mittal: Correct.

Speaker #1: And that is also, again, due to the competitive pressures and us offering discounts?

Resha Mehta: That is also again due to the competitive pressures and us offering discounts?

Speaker #3: Yes. Correct.

Shobhan Mittal: Yes, correct.

Speaker #1: Got it. All right. Thank you so much.

Resha Mehta: Got it. All right. Thank you so much.

Speaker #3: Thank you.

Shobhan Mittal: Thank you.

Speaker #2: Thank you. We will take the next question from the line of Balaji Vaidyanath from NAFA Asset Managers Private Limited. Please go ahead.

Operator 2: Thank you. We take the next question from the line of Balaji Vaidyanath from NAFA Asset Managers Private Limited. Please go ahead.

Operator: Thank you. We take the next question from the line of Balaji Vaidyanath from NAFA Asset Managers Private Limited. Please go ahead.

Speaker #4: 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 by ourselves.

Balaji Vaidyanath: 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.

Speaker #4: What I'm trying to say is that, being a market leader, I thought we should ideally be the price maker, but we seem to be more like a price taker.

Speaker #4: So well, I think we

Shobhan Mittal: 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. But being in 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, but at the same time, have to monitor and confer with the industry before taking any decisions.

Speaker #3: As a company, we have never sort of believed in cutting prices or undercutting prices because our experience of being in this industry for so long has always maintained that there are not any substantial gains, because everyone reacts accordingly.

Speaker #3: So but being in NDF, being continuing to be a commodity sort of type of business in India at this point of time and being very price sensitive, we also don't have an option that if our competition reacts with rolling back prices, we also have to do the same.

Speaker #3: So, when it comes to rolling back prices, we are never—I think we don't believe in being at the forefront. When it comes to taking price hikes in order to maintain margins, of course, we do take the lead, but at the same time, we have to monitor and confer with the industry before taking any decisions.

Speaker #3: I think it’s not safe to say that our actions alone will define what the market would do in today’s scenario.

Shobhan Mittal: I think it is not safe to say that our actions alone will define what the market would do in today's scenario.

Speaker #4: So, in a hypothetical scenario where we did not export anything this quarter, couldn't we have used those export volumes to be a little more aggressive and take that market share in the domestic market itself?

Balaji Vaidyanath: 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-

Speaker #4: I mean, in terms of.

Speaker #3: But that would have resulted in—that would have—had I averaged out the pricing, that would have resulted in further price cuts in the market, in the domestic market.

Shobhan Mittal: But 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.

Speaker #3: And demand on the—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.

Speaker #4: So, where do you see some kind of an end to this situation?

Balaji Vaidyanath: Where do you see some kind of an end to this situation?

Speaker #3: I think as slowly sort of 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'll see lesser sort of undercutting of pricing going forward.

Shobhan Mittal: 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 a lesser sort of undercutting of pricing going forward. But at this point of time, the scenario remains.

Speaker #3: But at this point in time, the scenario remains.

Speaker #4: Okay. Sir, I also wanted to ask you regarding the maintenance shutdown, which usually takes a fortnight or so. We have not done any kind of maintenance shutdown, if I'm not mistaken, in the AP line.

Balaji Vaidyanath: Okay. Sir, wanted to also ask you regarding the maintenance shutdown, which usually takes a fortnight or so. We've not done any kind of a maintenance shutdown, if I'm not mistaken in the-

Shobhan Mittal: No

Balaji Vaidyanath: AP line. So before the market-

Speaker #4: So before the market kind of recovers, would it be prudent to take the maintenance shutdown?

Shobhan Mittal: Yeah

Balaji Vaidyanath: kind of recovers, would it be prudent to take the maintenance shutdown now?

Speaker #3: No, no. See, the maintenance shutdown doesn't necessarily have to be 15 days at a stretch, is what you're saying. It can be planned out over four or five days and broken up into parts as well.

Shobhan Mittal: No. See, the maintenance shutdown, it doesn't necessarily have to be 15 days at a stretch, is what you're saying. It can be planned out over four or five days and broken up into parts as well. So, for example, this quarter we've 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 don't necessarily have to take a 15-day shutdown.

Speaker #3: So, for example, this quarter we've already taken a five- to seven-day shutdown of the line due to lack of orders. And then we carried out the majority of the work at that point of time.

Speaker #3: So we find the right opportunity to do it, so that we don't necessarily have to take a 15-day shutdown.

Speaker #4: Okay, thank you, and wish you all the very best.

Balaji Vaidyanath: Okay. Thank you and wish you all the very best.

Speaker #3: Thank you.

Shobhan Mittal: Thank you.

Speaker #2: Thank you. We take the next question from the line of Jayesh Gandhi from Harshad H. Gandhi Securities Private Limited. Please go ahead.

Operator 2: Thank you. We take the next question from the line of Jayesh Gandhi from Harshad H. Gandhi Securities Private Limited. Please go ahead.

Operator: Thank you. We take the next question from the line of Jayesh Gandhi from Harshad H. Gandhi Securities Private Limited. Please go ahead.

Speaker #5: Continuing from the earlier caller's question, I just want to understand the competitive landscape the company is in. I mean, the industry is undergoing changes, and you said that when the oversupply reduces, probably that is the time when prices will rationalize.

Jayesh Gandhi: 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 increase in demand catching up with maybe 80% or 85% of the capacity of the industry?

Speaker #5: In which year do you see, maybe, the demand—the increase in demand—catching up with maybe 80 or 85 percent of the capacity of the industry?

Speaker #3: Very hard to say. Jayesh, honestly, I mean, competitive landscape-wise, you see players—in today’s scenario, of course, the larger players like Century, Action, I mean, Greenply is also a branded player.

Shobhan Mittal: Very hard to say, Jayesh, honestly. Competitive landscape-wise, we see players. In today's scenario, of course, the larger players like Century, Action, Greenply is also a branded player. Everyone is running at not complete full capacity utilizations. At the same time, Action TESA has a new line coming in the south of India. There is another continuous press coming up in Madhya Pradesh. It will be fair to say that we cannot disregard the sort of tier 2 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 us say demand pressure, will remain this financial year. We should see, hopefully, start seeing some improvements coming the next financial year.

Speaker #3: Everyone is running at not completely full capacity utilizations. At the same time, Action has a new line coming up in the south of India. There's another continuous press coming up in Madhya Pradesh.

Speaker #3: And it'll 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.

Speaker #3: And that is how the current scenario is competitively. And 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.

Speaker #5: Okay. And last question is, I understand that the price hikes are being completely rolled back, but due to, say, raw material costs coming off, is it possible for you to maintain the margin which we did in this current quarter?

Jayesh Gandhi: 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?

Speaker #3: Well, as I said earlier also, the price hikes have been rolled back, assuming because there was a rollback on the raw met cost also.

Shobhan Mittal: Well, as I said earlier also, 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. 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, the objective would be to maintain these margins at least.

Speaker #3: But at the same time, now chemical costs are again on the upward trend. And I think it's 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.

Speaker #3: So yes, the objective would be to maintain these margins. Although there may be some lag in implementing price hikes, the objective would be to maintain these margins at least.

Speaker #5: And sir, if I may ask one more question. Have we done any exports in, I mean, this June or July? I mean, in the last two months, have we done any exports?

Jayesh Gandhi: Sir, if I may squeeze one more. Have we done any exports in this June, July, until last 2 months? Have we done any exports? Sorry, in July and this time.

Speaker #5: Sorry, in July and this time.

Speaker #3: 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 to 500 dollars a container are currently at five and a half to six thousand dollars level.

Shobhan Mittal: 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 to $500 a container are currently at $5,500 to $6,000 a level. So that makes it unviable to sell material to the Middle East.

Speaker #3: So that makes it unviable to sell material to the Middle East.

Speaker #5: I get it, sir. Good luck for the future, sir. Thank you.

Jayesh Gandhi: I get it, sir. That is all we need to know, sir. Thank you.

Speaker #3: Thank you so much.

Shobhan Mittal: Thank you so much.

Speaker #2: Thank you. We take the next question from the line of Arun Bade from ICICI Securities. Please go ahead.

Operator 2: Thank you. We take the next question from the line of Arun Baid from ICICI Securities. Please go ahead.

Operator: Thank you. We take the next question from the line of Arun Baid from ICICI Securities. Please go ahead.

Speaker #6: Hi, Shravan ji.

Arun Baid: Hi, Shobhanji.

Shobhan Mittal: Yeah, hi Arun.

Speaker #3: Yeah, hi.

Speaker #6: Two things, Shravan ji. What do you think was the industry growth in the last quarter, as per you?

Arun Baid: Two things, Shobhanji. What do you think was the industry growth in last quarter as per you?

Speaker #3: Industry growth in the last quarter?

Shobhan Mittal: Industry growth in the last quarter?

Speaker #6: Yes.

Arun Baid: Yes.

Speaker #3: So, I mean, I would say somewhere in the mid-teens.

Shobhan Mittal: So probably I would say somewhere sort of mid-teens.

Speaker #6: The reason I’m asking this, Shravan ji, is because when we look at our numbers, we have been losing market share—even this quarter, last quarter, and the quarter before that—in India.

Arun Baid: The question why I am asking this, Shubham, is when we look at our numbers, we have been

Arun Baid: Yeah

Arun Baid: losing market share even this quarter,

Arun Baid: Yeah

Arun Baid: last quarter, the quarter before that in India. I am not talking of export.

Speaker #6: I'm not talking about exports, because exports are something beyond our control right now. And when I look at margins, there's no sign of a revival. Optically, yes, they've gone up in this quarter.

Arun Baid: Yeah

Arun Baid: because export is something beyond our control right now.

Arun Baid: Yeah.

Arun Baid: And when I look at margins, there's no signs of revival. Optically, yes, it's gone up in this quarter. Again, it comes down in next quarter. So what's the game plan? Because we've been losing our No. 1 position, actually, for the last two quarters. Century Plyboards is now No. 1 in India. You might say-

Speaker #6: Again, it comes down in the next quarter. So, what's the game plan? Because we've been losing our number one position. Actually, for the last two quarters, Century has done more volume than us in India.

Speaker #6: You might say.

Shobhan Mittal: 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 Plyboards still has a much higher, let's say, focus on north of India because of their higher production capacity utilizations in the north of India. At this point of time, the Q1 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 Plyboards. We have now taken a decision that we're going to be price competitive against all the players in the market and price ourselves at par with them.

Speaker #3: So Arun, on the SE, our being 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.

Speaker #3: Compared to the north of India, Century still has a much higher, let's say, focus on the north of India because of their higher production capacity.

Speaker #3: Utilizations in the north of India—at this point of time, I mean the quarter one for us—we almost intentionally chose not to sell to OEMs because of the raw material cost increases.

Speaker #3: And now that situation has gone back, we will continue to we'll bring our focus back. And at this point of time, we are now earlier we were priced at a premium to Century.

Speaker #3: We have now taken a decision that we're going to be price competitive against all the players in the market and price ourselves at par with them.

Speaker #3: And the focus will be on enhancing volumes and capacity utilization. So there has been a strategy shift, I would say, and that is why, as Himanshu also mentioned, we have seen domestic volume growth for the past few quarters.

Shobhan Mittal: And the focus will be at enhancing volumes and capacity utilization. So 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'll continue to pursue this.

Speaker #3: And we'll continue to pursue this.

Speaker #6: For us to have the industry-leading growth back, because in this quarter, on a numbers basis—just for the record—we had the lowest growth in the industry.

Arun Baid: For us to have the industry-leading growth back, because in this quarter, on numbers base, just for the record, we have the lowest growth in industry. Of all the

Speaker #3: Yes, correct.

Shobhan Mittal: Yes, correct.

Arun Baid: Lowest. That is only India business.

Speaker #6: I'm going to focus only on India business.

Shobhan Mittal: I appreciate that, and I think that is 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 did not want to supply to OEMs at the cost of not being able to supply to the retail segment.

Speaker #3: Yeah, I appreciate that. And I think that's what we said—that the OEMs went completely out of our picture, and to a certain extent, that was intentional.

Speaker #3: 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.

Speaker #3: And it was I mean, if I price OEMs the same level at retail, then in a way, I'm telling giving them an option of take it or leave it kind of a scenario.

Arun Baid: Yeah.

Shobhan Mittal: If I price OEMs the same level at retail, then in a way, I am giving them an option of take it or leave it kind of a scenario.

Arun Baid: Yeah.

Speaker #3: And that's keeping in mind that if it goes at retail prices, then we lose the business. So we were willing to accept that.

Shobhan Mittal: That is keeping in mind that if it goes at retail prices, if not, then we lose the business. So we were willing to accept that.

Speaker #6: Yeah, sure. But Shravan ji.

Arun Baid: Yeah, sure. But should we depend on-

Speaker #3: Also, I think, Arun, there was a delay on our competitors' part in implementing the pricing fees. We were very disciplined in implementing the price increase from the very first point where we had decided to.

Shobhan Mittal: 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. But-

Speaker #3: However, the others had accumulated large orders at old prices and continued to supply in the market, which also resulted in us losing some volume.

Speaker #3: But that was also a result of that.

Shobhan Mittal: that was also a result of that.

Speaker #6: Yeah. No, so Shravan ji, from now on, I'm trying to understand. I appreciate what has happened, but incrementally, can we expect us from Q2 onwards, as Greenpanel, to have industry-leading growth in the domestic market?

Arun Baid: Yeah. Shubham, from now on, I am trying to understand. I appreciate what has happened because of their doings. Incrementally, can we expect us from Q2 onwards as Greenpanel to have the industry-leading growth in the domestic market? Can we expect that?

Speaker #6: Can we expect that?

Speaker #3: Yeah, but Arun, you see, do keep in mind that there is, let's say, a play of a smaller base and a larger base also.

Shobhan Mittal: Yeah. Arun, you see, do keep in mind that there is, let us say, a play of a smaller base and a larger base also. That will also come into play. I mean-

Speaker #3: That will also come into play. I mean, no, no, no. I mean, the idea is that we'll maintain our market share or try to take away market share.

Arun Baid: Shubham, market share-wise also-

Shobhan Mittal: No, fair enough. The idea is that we will maintain our market share or try to take away market share, and that is why we are now pricing ourselves so aggressively to the market that we do not want to lose any option for volumes.

Speaker #3: And that's why we are now pricing ourselves so aggressively in the market that we don't want to lose any option for volumes.

Speaker #6: Okay. Thank you, Shravan ji.

Arun Baid: Okay. Thank you, Shubham.

Speaker #3: Thank you.

Shobhan Mittal: Thank you.

Speaker #2: Thank you. Participants who wish to ask a question, please press star and one. We will take the next question from the line of Utkarsh Nopani from Anand Rathi Shares and Stock Brokers Limited.

Operator 2: Thank you. Participants who wish to ask a question, please press star and one. We take the next question from the line of Utkarsh Nopani from Anand Rathi Shares and Stock Brokers Limited. Please go ahead.

Operator: Thank you. Participants who wish to ask a question, please press star and one. We take the next question from the line of Utkarsh Nopani from Anand Rathi Shares and Stock Brokers Limited. Please go ahead.

Speaker #2: Please go ahead.

Speaker #5: Yeah, sorry. So my first question is regarding the channel inventory. You had mentioned that because of the price rollback, we had seen this taking up of channel inventory.

Utkarsh Nopani: Yeah. Hi, good afternoon, sir. My first question is regarding the channel inventory. You have mentioned that before some of the price rollbacks, 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 further destocking of inventory in September quarter.

Speaker #5: So, I wanted to know whether the inventory level has now come down to the normal level at the end of June, or are we likely to see further destocking of inventory in the September quarter?

Speaker #3: So 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.

Shobhan Mittal: Well, 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

Speaker #2: Ladies and gentlemen, we have lost the line of Mr. Mittal. Please stay connected while I reconnect. Ladies and gentlemen, we now have the line of Mr. Mittal connected.

Operator 2: 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.

Operator: 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.

Speaker #2: So please go ahead.

Speaker #5: Yeah, so I'll continue with the last question. The market sentiment continues to be that prices will remain volatile, and there could be further reductions.

Shobhan Mittal: 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, 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.

Speaker #5: Hence, people are wary—the channel partners are wary—of holding inventory. So, orders are on a sort of hand-to-mouth situation, with the channel partners not willing to hold inventory at this point of time.

Speaker #5: So, we still have that effect in play. Okay. And sir, 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% to 9%.

Utkarsh Nopani: Okay. On the margin side, if you see for the MDF segment, our margin in the last four quarters has been relatively stable at around 8.5% to 9%. Historically, we have delivered around 18% to 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 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

Speaker #5: And historically, we have delivered around 18–20 percent margin. And you have also mentioned that it would be difficult to give any guidance on how the margin trajectory would be going forward.

Speaker #5: But directionally, do you see the margin going at least to more than double-digit level over the next couple of quarters? Or do you see challenges because of the compression in the market, that the margin may not go back to the double-digit level even over the next couple of quarters?

Speaker #3: I see. Again, it is all a matter of volumes and operating levels coming into play. With even the slightest improvements in volume and capacity utilization, margins would go up substantially.

Shobhan Mittal: 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. So 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%. I would say as a company with 50% to 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.

Speaker #3: So 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 is capacity utilization. Even with 50 to—I mean, I would say as a company, with 50% to 60% utilization, 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 utilization, I would say margins are comparably much better, I would say.

Speaker #3: And if we just simply bring up our volume utilizations, I think we should be at much better margin points than our competition.

Speaker #5: Okay. And sir, lastly, do we have any growth capex plan over the next, say, 18- to 24-month period?

Utkarsh Nopani: Okay. Lastly, do we have any growth CapEx plan over the next, say, 18 to 24-month period?

Speaker #3: Are you talking about any—do you mean to say capex plans?

Shobhan Mittal: Are you talking about any, you mean to say CapEx plans?

Speaker #5: Yes, sir.

Utkarsh Nopani: Yes, sir.

Speaker #3: No, so at this point of time, on the MDF side, for the next 18 to 24 months, we don't need to do any capital expenditure, barring some maintenance expenditure.

Shobhan Mittal: No. At this point of time, on the MDF side, for the next 18 to 24 months, we do not need to do any CapEx 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% to 40%. That, again, would be a small investment, not anything substantial. On an immediate term, that is our plan.

Speaker #3: On the plywood side, our plan is to focus on utilizing our current capacities completely. At that point in time, we do want to see if we can add some machinery in our existing facility.

Speaker #3: With a very minimal investment, we can enhance our production volume by 30% to 40%. But again, that would be a small investment, not anything substantial.

Speaker #3: So, in the immediate term, that's our plan.

Speaker #5: Okay. Thanks a lot, sir.

Utkarsh Nopani: Okay. Thanks a lot, sir.

Shobhan Mittal: Okay.

Speaker #3: Thanks.

Speaker #2: Thank you. Ladies and Chairman, as there are no further questions from the participants, I now hand the conference over to the management for their closing comments.

Operator 2: 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.

Operator: 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.

Speaker #3: Thank you, everyone, for your time. We look forward to speaking with you again after the next quarter. If anyone has any further questions, please feel free to reach out to us.

Shobhan Mittal: 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.

Speaker #3: Thank you, and have a good day.

Speaker #2: 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.

Operator 2: 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.

Operator: 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.

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Q1 2027 Greenpanel Industries Ltd Earnings Call

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