Greenlam Industries Ltd
NSE:GREENLAM
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
452.2
626.65
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Greenlam Industries Ltd
Earnings Call Analysis
Summary
Q1-2025
Greenlam Industries' Q1 FY25 earnings call highlighted a mixed performance. The company achieved a 7.4% year-on-year growth in consolidated net revenue to INR 604.7 crores, despite facing challenges such as export container shortages and higher raw material costs. Domestic revenue grew by 4.5%, while international revenue surged by 22.1%. Gross margin dipped slightly to 52%, and EBITDA margin fell to 10.6%. Net profit declined to INR 19.9 crores due to higher depreciation and interest costs from new plants. Although there were setbacks in the Decorative Veneer segment, the company remains optimistic about future growth and market share expansion.
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to Greenlam Industries Limited Q1 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations 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. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Saurabh Mittal, Managing Director and Chief Executive Officer, Greenlam Industries Limited. Thank you, and over to you, Mr. Mittal.
Thank you. Good afternoon, friends. Welcome to our earnings call of Q1 FY '25. I'm joined by Ashok, our CFO; Samarth from the finance team; and SGA, our Investor Relations adviser. You probably have had a look on the results available on the exchange and the company's website.
So I'll give a quick update on how the quarter went and the challenges we faced and the opportunities we see. So Q1 on the revenue side, we've grown about 17.5%, 17.4% more precisely with domestic business growing at about 11.8% and export business growing by about 22%, 23%. So the growth was slightly lower than what we had expected, and we faced challenges in both the domestic business and the export business.
The domestic business grew at about 11.8%. And because of the election-related disruptions with people, workers not being on ground, on-site works getting affected, some heat issues coming in. So the domestic business was impacted. In June, we did see improvement on ground with the business.
So that's largely on the domestic piece. In the domestic, if you see, particularly, we had a dip in the veneer business, which again is largely -- is a business which is done on site with carpenters and polishers, et cetera. So I think that probably is the reason on the dip in the Engine business.
On the export business, I think we grew -- we could have done better, and we had challenges on the container availability, goods in water, in transit. So I think this challenge has been persistent for the last, I think, nearly 9 [indiscernible]. And I'm not sure when this will get streamlined. So -- but on the volume and the value growth, I think we've done reasonably well.
We've also been able to improve realization in the export business. So I think that's on the export business. We think as we move ahead, both in the domestic and the export business across all categories of laminates, veneer, flooring, those plywood, I think things will look better. And clearly, I think we are driving to win more market share and also continuously accelerate the rate of growth on the revenue side.
On the raw metal side, I think we've largely been able to maintain the gross margin of previous year Q1, but were a dip versus the Q4. So we've seen costs in job due to rate increases on the box. We've seen a slight increase in costs in laminate business and seen timber costs going up in the plywood business.
On the plywood, we passed on certain cost of the market effective July. So about close to 4% price increases is done. On the laminate side, we are still reviewing the cost impact and whether we can offset it with higher volume and better value mix. So we get to make a decision on the price increase on the laminate side. So that's on the cost part.
As far as the new projects are concerned, the Tamil Nadu factory of plywood on the factory side, I think things have got largely streamline. We need to only drive more business. On the laminate factory, the new plant in Anapolis, that plant is also moving in a good way. Most of the plant operating parameters, manpower on ground systems have largely got streamlined. Again, there, too, we have to improve more business. So utilizations did improve in Q1. And I think as we proceed through the year, things should keep improving.
On the Patito plant, as mentioned, we should be to start the plant in Q3 of this financial year. So that will be newer plants and newer projects. The Coushat plant that we had already committed earlier is, by and large, running well and near full capacity. So I think that's going reasonably well. So that's broadly from my side. I think on the industry side, I think the building metal industry, the mode of construction, which is happening has happened. It is without work will come in. So we are quite positive on our ability to build a domestic market.
On the international markets, too, we are getting more market share across many geographies. We're adding new customers with new capacities available with us. The new sizes of products we can do from our [indiscernible] plant that's also helping us win more market share and add more customers. So I think on both the geographies, we feel that things will keep improving as we proceed despite certain headwinds and certain challenges which keep coming. So that's probably from my side. Ashok will give a detailed update on the numbers and figures, et cetera. And we'll be happy to address your questions, if any. Ashok, over to you.
Thank you, sir. Good afternoon, friends. I'll take you through the financial performance for the quarter. Consolidated net revenue for this quarter grew by 7.4% on a year-on-year basis. However, degrew by 3.1% on a sequential basis to INR 604.7 crores as compared to INR 515.2 crores in quarter 1 last year.
Gross margin this quarter was marginally lower by 30 basis points to 52% from 52.3% in Q1 last year. On a sequential basis, gross margin de-grew by 100 basis points. EBITDA margin was down by 190 basis points at 10.6% in this quarter as compared to 12.5% in quarter 1 last year. On a sequential basis, EBITDA margin de-grew by 280 basis points.
EBITDA in absolute term remained flat at INR 64 crores in this quarter as compared to INR 64.4 crores in quarter 1 last year. Net profit for the quarter stood at INR 19.9 crores in this quarter as against INR 33 crores in quarter 1 last year. Net profit was lower due to higher depreciation and interest costs related to 2 new plants, which we have started last year.
I'll move on to the segmental performance. Laminate revenue for this quarter grew by 13.2% on a year-on-year basis and remained flat on a sequential basis to INR 534 crores from INR 472 crores in quarter 1 last year. Volume in Laminate stood at 11.9% on year-on-year basis. However, the Domestic laminate revenue grew by 4.5% on a year-on-year basis and degrew by 6.4% sequentially in value terms.
Volume growth stood at 10.6% on a year-on-year basis. International laminate revenue grew by 22.1% on a year-on-year basis and grew by 5.3% sequentially in value terms. Volume grew by 13.8% on a year-on-year basis. EBITDA margin for the laminate business stood at 13.6% in this quarter, a degrowth of 120 basis points on a year-on-year basis and a degrowth of 300 basis points on quarter-on-quarter basis.
Products and volume were at 5.08 million sheets and at a utilization level of 83%. Sales volume for the quarter stood at 4.67 million sheets this could have been better, but because of availability of containers, some of the footwear [indiscernible]. Our average relation for the quarter was at INR 1,105 per sheet.
Moving on to Decorative Veneer and Allied segment, which includes food veneer, engineered pros and engineer doors. Revenue of Decorative Veneer business degrew by 24.1% on a year-on-year basis and degrew by 47.5% on sequential basis to INR 19.6 crores from INR 25.3 crores in quarter 1 last year. Volume degrew by 26% on a year-on-year basis.
Sales volume for the quarter stood at 0.2 million square meters, and the capacity utilization for this quarter stood at 21%. Average [indiscernible] this quarter stood at INR 960 per square meter.
Moving on to engines. Revenue for the old floor business grew by 7% on a year-on-year basis, and degrew by 6.5% on a sequential basis to INR 13.4 crores this quarter as against INR 10.3 crores in quarter 1 last year. Capacity utilization stood at 13% in this quarter. Engineered dose revenue business revenue grew by 40.7% on year-on-year and remained flat on a sequential basis to INR 9.8 crores as against INR 7 crores in quarter 1 last year.
Capacity utilization for door business stood at 21% in this quarter. In the plywood business, our revenue stands at INR 27.6 crores in this quarter. Sales volume for the quarter 1 stood at 1.14 million square meters and capacity utilization for this quarter was 24%.
Average realization of plywood in this quarter stood at INR 242 per square meter. Our net working capital days stood at 65 days in this quarter as compared to 72 days in quarter 1 last year. Our net debt stood at INR 912 crores, which includes debt of approximately INR 465 crores on account of ongoing particle board project. That's all from our side. I'd now like to open the floor for question and answer. Thank you.
[Operator Instructions] The first question is from the line of Keshav Lahoti from HDFC Securities.
So I want to understand more on laminates export side because the freight costs have seen a sharp spike. So how should we read? Because if the freight cost rises substantially, whether the domestic manufacturers of that country becomes more competitive and will it be able to pass on this entire increase in freight cost because this quarter, you have seen some 300 bps sequentially margin compression in laminates, how we see the margin going forward? And do you maintain your 13.6% laminates margin guidance for the year and 20% revenue growth overall?
I think that's a good question. So clearly, credit costs have gone up. So normally, we end up -- so we have agreed a freight cost with the customer, beyond which we charge them for the increase. So in the last 3 months or even now, we've been able to pass on most of the increases, barring a few increases in certain markets.
So as we proceed, my guess is it depends on where the freight costs go to. So I think certain markets we'll be able to pass on the increase. In certain markets, we might have to do some cost share kind of a model. So I think it will be like a mixed bag as we proceed.
As far as the competitors is concerned, so the competitiveness is not only on the cost of certain geographies, the local manufacturers don't have capacities also. But yes, with extreme freight costs or exceeding extremely high freight costs, even if you end up passing on the increase of the customers, it impacts the business model in those countries.
But as we see at the moment and like the data suggests for Q1, we have grown at about over 20% in value. We've also improved our realizations. So I think this focused on driving volumes and the constant focus on product development and premiumization is something we've been pursuing for many years. I think with this combined strategy of pushing of the volumes and construct improving value mix, I think we should be okay with the business model.
Certain markets we export to, there's a currency advantage also, which we are gaining because in those geographies, which is mostly the pounds, we export in pounds and we have no imports so that bit of currency advantage also we are gaining. So that's on the freight and how we see the international markets.
As far as the margins are concerned, there could be some movement, a percent here or there. But if you see the margin reduction is also due to certain operating costs, which have gone up. The output, the sales have not been booked, which are produced. So there's also a little bit of those valuation accounting issues also are there. So I think very hard to say exactly what percent movement will happen. If the wins do go up, we are able to sell -- we are able to improve value mix, maybe some of those additional costs can get up with additional volumes, better price mix, et cetera. Very hard to say what's going to happen. But Ashok to comment on that also. Ashok?
Yes. We will be -- as of now, the same guidance which we have given, that 18%, 20% in the new. And EBITDA last quarter was 16.6%, which was higher than our average margin. But we believe that we should be in the range of [indiscernible] 16%, but everything will depend upon how the cost moves from here.
Understood. And how should we read the increasing crap paper cost to onwards? Will it have any major impact any reading?
So certain crap paper costs have gone up like -- so it will have an impact any costs going up, will have an impact. And certain Deco costs not as base price because of the sea freight decrease from both Southeast Asia, East Asia and Europe. So that's also adding to the cost. The base price haven't got, but the freight costs have gone up. So in some way, we have to bear for the cost with the supplier. Some places, the shipments FOB, so we have 2 persons. So there will be some cost impact. I think we have to make up with better efficiencies, some improved value mix, I think. And those efforts are going on.
Understood. But what is stopping some price hike in the market right now if the crap paper prices are increasing and the copper wire taking price hike to put on?
So that, like I said earlier, so we are also reviewing whether we need to increase prices in the domestic market. Internationally, we will not be able to increase prices because of the freight cost increase passed on to the customers or more or less. So that's going to be hard to increase prices. So it's actually the focus on pushing out more volume and improving the value mix. Domestic market, we are agreeing that we can do a price rise.
Okay. One last question from my side. Normally, if the freight you book usually in advance. Like I want to understand the increase in freight cost is passed on with the lag of it?
No. In terms of our book, it is passed upon on every consignment to consignment and it cannot be booked in advance. So it is booked depending upon the vessel availability and the time of export of it. So beyond the agreed cost with the customer, in excess of that is getting passed on to the customer. In most of the cases, however, in some cases, something we have to deal with.
The next question is from the line of Praveen Sahay from PL India.
Yes. So my question is related to the export. So you also mentioned about the container availability that also restricted some export order to execute. So how has in the Q1 that impacted? And what's the situation right now? Is that worsen more than the Q1? And when you are expecting things to normalize?
Yes. So in the Q1, we have already mentioned in our communication that even still at the towards the end of June, we could not be able to ship some of the materials, nearly 1.5 lakh sheets, we would not be able to ship. And that situation in July, it's only, I will not say majorly improved, but a little bit better than June. And it's difficult to, as of now, say when the situation will become normal because it's not in our hand is more of a geopolitical situation, which is creating this trial. So as of now, we only hope that this will get improved, but it's difficult to give exactly by when this will get resolved.
Okay. Second question is, as you had mentioned that there is no price hike in the laminate. And also, there is some cost has been increased. But if I look at your gross margin in the laminate has not much on the Y-o-Y side corrected. So do we expect a way forward, there is some correction in the gross margin because of some rate cost impact?
So I'll take the question. So if you see, while GP gross margin not being too affected is also because we've been able to improve the value, and I said that to the earlier colleague of HDFC. But we've always had a focus on both driving volumes and improving the value mix in domestic and international.
So our present relation has slightly also improved in Q1. So as we move ahead, I think the effort, we can't say this with certainty, but the effort is to drive more volumes and also drive their value [indiscernible] in both domestic and international markets. So as receiving now, maybe it may not be major impact despite the RM cost increase in the laminate business.
Okay. Last question, sir, related to the domestic laminate business, and there, the numbers are quite soft, and you had given an indication of a general election and the leeway, which has impacted the Q1. So how the things are playing out right now because these things are in the past now as a whole laminate domestic business, you are seeing some kind of improvement?
So if you see Q1, we've had a domestic business about 10% quantity growth. And value growth has been about slightly above 5%. And like I said earlier, we have started seeing improvements from June onwards. So our sense is that even this month is looking pretty decent. So our sense is it should be kind of normalized quarter in Q2, at least on the domestic demand side.
The next question is from the line of Senha Talreja from Nuvama.
Just a couple of questions from my end. You've seen around [ 12 ] in domestic market for last year export growth is also interesting. Just wanted to understand what would be the growth rate, industry growth rate? And does that mean you are really gaining market share? And if at all, could you give some flavor is it national players losing market share? Or is it smaller players there losing market share? Assumptions there would be helpful.
So domestic data, we don't clearly have. So it will be not right for me to -- I don't have the data, so I can't say much. But the sense we've got that has been slow in domestic in Q1 for most of the players, both organized and unorganized. And we don't -- we've not been able to see any other companies results, so I can't say too much on that. On the export, there is some DFT data and all that. So I think there we see that we have on market share, and we've grown more than the industry growth in the quarter actually, yes.
So optimistic, hard to say now. But I think once the data comes out of the other companies, we'll get a better sense of what's happened on that.
So I mean you're deep diving into exports. In that case, is it that you -- India as a country is gaining market share or you specifically are coming out? Or is it a shift between the domestic players? Or is it -- you're gaining some outside players based on your cost advantage, in your advantage?
So I think we're too small to put these numbers into a very macro. But I think clearly, within the -- within exports from India, I think our market share has gone up. And the geographies we are operating in, not all geographies, certain geographies do 1 more business maybe versus the regional local players there.
Also, you [indiscernible] we've added a lot of capacity in laminates with 3 lines in [indiscernible], 3 lines in Gujarat. We've also added new sizes of products. So only we would continue with capacity in the earlier plan. So I think that's also freed up supply chain and improved our supply chain into markets because we've already built many markets.
So I think a bit of growth is happening. I think we are winning our market share for airports have gone up. I think certain geographies, we're also taking share from the international players. I don't think the overall market is growing so much. I think it's more of a market share shift domestically and international.
Understood. That was helpful. Secondly, on your other divisions is, of course, Decorative Veneers plus Floorings, and those put together. What is the reason why we are not seeing similar growth there? Because I think you have definitely raising capacity and utilization levels are lower. Is it the market accepted towards the premium product that is not letting it happen? And what would be your turnaround strategy there?
So if you see other parts of the businesses, the flooring business has not slipped much versus Q4 sequentially has grown versus Q1. And as we talk, we'll see improvements moving ahead. That's in the flooring. If you see door, too, we've not -- we actually gained versus Q4 at a small base, and we've grown reasonably well versus Q1 of previous year.
And again, I say this, as we move by, we'll see both the floor and the veneer business do well -- sorry, the floor and the door business do well. The Decorative Veneer business was a bit of a disappointment. I think here, we clearly have slipped in Q1 versus Q4 and versus Q1 of previous FY. And our sense is because this product, and I said this earlier, this carpentry work and polishing work and this level of heat disruption, this is mostly an on-site work. So I think there's a little of a challenge here.
And I said I think in Q2, we should come back to a regular business and again, we already see that this year because in the veneer model, the way the business works, people come to select the material specifically to move to sites, there's a carpenter, there's a polisher. So there's a little bit of a manual intervention, which is a bit higher than the other categories. We still don't have large factories finishing veneers in the plants and making furniture. Maybe that's 1 of the factors or maybe it's just been a bit slow.
On the ply business, Q1 of last year is obviously not relevant. Versus Q4, we've been flattish or slight growth of 5%. We started opening besides South India, the Maharashtra market also starting April, so that's still WIP. So yes, we could have done better, but it's not that we've not done okay. I think when everyone data comes out, probably we'll see that reasonably okay. I think as we move at probably we'll keep doing better on these categories also.
Sure. Any vision where these all 3 businesses or 4 businesses, individually smaller ones would start contributing to profitability or at least breakeven?
Yes. So if you see -- I don't have the data. But Q4 last year will come into profit. Now so if you see the flooring indoors, a very minor loss. Pliers, we've been able to reduce the loss. So I think from a breakeven, that's an operating level at the EBITDA level. I think as far as the profitability is concerned, I think that's not too far away on the veneer flooring dose. Ply, I think we still to ramp up there will be more volume to come to a profitable position. But we're on a job in terms of driving more business, getting more market share, settling these businesses.
Understood. Sir, and lastly, maybe Ashok, sir, also can handle this. Regarding employee expenses, is it also because of the fact that our new business, which is particleboard is expected to come in and cost seems higher right now? And when can I see as a percentage of sales or the number in a nutshell?
No, this is not related with the particular mode because since that has not yet come into the -- on the commercial production. So that's not in the books as of now, that might stand out. But if you compare from the quarter 4, so if you see that inside cost has gone up by INR 10 crores. So that will be -- and that is on account of like onetime annual expense, which happens bonus in the quarter 1 and the annual increment. So not much has gone up in terms of percentage, yes, it might have gone up because of the sales being low in the quarter.
[Operator Instructions] The next question is from the line of Utkarsh Nopany from BOB Capital.
Sir, I have a few questions from my side. First, on the Particle Board segment. Sir, like if we see a particle board CapEx cost per unit, obviously, we are not quite higher side at around INR 30,000 per CVM versus if you see for the other MBA projects which are -- have been recently come INR 21,000 to INR 25,000 of that.
So given that Particle Board, which has significantly lower realization compared to the MDA products. So whether we can we think of clocking low double-digit ROCE on this project even if we are able to operate and prevent at full capacity in the future?
So your observation is correct. And as the things stand as of now, which we have said in the last here also. But as the things stand as of now, the raw material cost to the timber cost is at the highest level until now, and the work on the cycle. And we believe that it will settle down by the time we come into our official products and the starts, and we come back up to certain size and scale. We believe that in terms of when we reach the full utilization level, which will happen in the third or fourth year kind of a thing, then we can have that money in the range of around 15% to 18% ROCE.
Okay. And for that 15% to 18% ROCE, what kind of realization and EBITDA per unit we are assuming, sir?
So EBITDA can be in terms of -- not in terms of per unit, it's more in terms of as a percentage of revenue. We -- it will be in the range of 20% to 24%, depending upon what the raw material prices and the sales prices at that moment of time in terms of that. And we are seeing an optimum utilization of 90% plus, which can happen in the fourth year of operation.
Okay. Sir, my second question is on plywood. Sorry, I'm coming back again.
Can I?
Yes. Just one on the particle board of CapEx cost comparable. You might want to just also consider that particle board is largely a pre-laminated particle business model. So it's not only a board production. So you have to lap. So the model will be laminated board will be sold at least 80%, if not more.
And so you have capital expenditures on intimates, presses, plates, more than the MDF plant. I think that's something should also grow. Also I would like to highlight here that the prospects are a bit more complex in MDF. And if you would study trends of Europe and even Asia, we see increasingly more plants coming off particle board because it's more cost efficient. It has a flexibility in the dimension of boards and new supplier to laminated board.
So the model is a bit different, not completely, but I think you must keep this in mind while comparing the capital expenditure. So it's not a board-to-board comparison of CapEx. It's board plus lamination of nearly 80% capacity lamination. So that's something you should keep in mind. Anyway, go ahead, sorry.
Yes. Sir, my second question is on the plywood segment only. Normally, we don't see any capital-intensive project takes so much of time to reach the breakeven EBITDA point. Then why it is taking so much time for us. And by when we are likely to become EBITDA positive for plywood segment, sir?
So plywood, so we are in the upper premium segment of the market. We're not in the middle or lower end of the market. And quarter after quarter, I think the loss is reducing. And if you see now nearly about INR 40-odd crores of sales in a quarter, which will become EBITDA, approximately slightly lower than that.
And [indiscernible] costs have also gone up substantially over the last 6 to 9 months. I think we're on the job to set up the sales model, secondary sales because it's also a branded model. We're not the lowest segment of the market. It doesn't sell only the price. So I think just to put the entire sales cycle in terms of demand generation, specification, that work is taking some time to bring it to that capacity. Otherwise, product quality, performance, South India's network is by and large in place in the market.
Okay. And so, sir, can we expect to reach the EBITDA breakeven for plywoods, say, maybe by the second half of this fiscal?
So well, it may be possible, it will depend on where the timber costs and where the sales are, clearly. So clearly, that's our intent to get there because we also have slightly higher marketing costs initially to support the sales of plywood. So I can't put that with certainty, but clearly, we want to keep -- we won't get there at the earliest.
Okay. And sir, for the laminate segment, our realization has been quite volatile on a Q-on-Q basis in the past few quarters. Can you please guide how much realization hike we should assume for FY '25 on an annualized basis, considering the current product mix?
Why did you say that it's volatile? Whatever I can see, it's fairly stable with an upward, slightly going upward. So it's not that it's moving up and down in every quarter-on-quarter basis. So it's fairly -- I will see the stable in terms of that with some upward increase.
However, in the domestic and export, it might happen. But overall, it's very stable, and we believe that the -- it will go it will go slightly going up, depending upon the product mix, what we have in the product mix as well as the domestic and export mix we have on a quarter-on-quarter basis. But it will with the better product mix, it should go up.
And sir, lastly, I just need a few data points. If you can just guide the budgeted CapEx cost for FY '25 and '26? And what would be our quarterly interest and depreciation cost from the March FY quarter period once we commission our particle board project?
We will come back to on [indiscernible].
The next question is from of Rishab Bothra from Anand Rathi.
Two, 3 questions from my side. One on the cost front. What is the mechanism where we can protect ourselves from the fluctuations in raw material prices? I mean there are frequent fire in some part of the geography. India also witnessed in a few months back. So what pricing impact does that fire have on our raw materials pricing?
Yes. So there's no fixed formula recipe in terms of intact. We are very actively managing our raw material cost in terms of, let's say, in the chemical from 45 days to 90 days the previous booking has been done. You can't do more than that because it will -- material will not be available.
In terms of base paper, we maintain an inventory of around 6 months to 7 months inventory we maintain. And the price is also fairly stable. It goes up as and when there is an ordinate movement in the cost. Let's say shipping cost is going up substantially, which will -- nobody can predict when as and when it will go up, and that has an impact on the overall, either it's either we are buying TAF, where the vendor will increase or if we are buying on a pub basis, which means our cost of getting the container or the ocean freight will go up. So we manage that on an actively basis in terms of that. But it's a very difficult wherein we can -- we don't have any impact on the price. We will have the impact that impact will be more on a staggered manner, and we'll have probably 2 to 3 months post the -- it starts happening in most of the cases.
Okay. And in terms of fire in [indiscernible] all those stuff, region?
That is -- that we have not seen any impact of that on our raw material price.
Doesn't the prices shoot up during those timeframes?
But why it is so it has no impact on us or our vendor. So we are not seeing any such basis in the past.
Got it. And in terms of plantation, do we intend to go for the plantation sometime?
So we are -- we have started running a program since last year. When we don't do the transition will help the farmers community in and in and around or by providing them the technical input as well as supporting them with the clonal kind of, I think, on a cost basis. And we have already started from last year, we had 2 of our plants in South India.
So this was on the cost front. On the revenue front, once the capacities are on stream, what is the maximum potential revenue which we can open and in what timeframe, in each of the segments?
Right now, only the particle board project is ongoing. the plywood, as well as the expansion of laminate, has already been done in last year. So with this, the particle board, once it reaches the optimum utilization of 90-plus or near 100%, we believe that at the current prices, we will be in the range of around INR 4,000 crores to INR 4,200 crores. And we believe that everything goes as per our plan, that should happen by, let's say, in year in around FY '28.
Okay. And sir, is there any fungibility? I mean if there are some disruptions [indiscernible].
Rishab, that is from the current whatever capacity which we have. But during this course of the next 3, 4 years, we might need capacity in lane laminate that should over and above this.
Sir, my next question was, is there any fungibility let's say there are some disruptions in overseas markets or in domestic market, we can divert those vice versa to maintain our growth momentum?
This is for laminates mostly, yes, certain products don't have a market in India. So that may not be possible, but large so you can assume mostly, yes. So the capacities are [indiscernible].
Got it. Sir, those would have been -- I mean the utilization levels have been not up to mark? I mean you have been mentioning time and again that, that will -- those will remain the same. But what is our long-term ambition of those capital utilization endorsements, doors and windows? I mean, so sorry, not in windows, doors and flooring.
So clearly, like it's inching up. I think last year, overall, we did better than the previous year. I think this quarter also in the first quarter versus the previous year's first quarter, in both the categories, we've grown about 30% and 50%. So I think it's inching up. And with a lot of premium homes, hotels coming up through the country, I think the flooring business to us looks to be in a good position. As far as the door is concerned also, I think the flow business orders has been decent. So I think both the business will keep improving as we proceed.
This will be more so institutional business only, not B2C as such?
The flooring is retail and institution. Doors is largely institution and some retail also.
And lastly, sir, peak debt level. What could be that in '25 and '26?
As per our estimate, peak debt will be in this year only because the project -- particle board project will get over in this year. So we believe that our peak debt will be in the range of around INR 925 crores to INR 950 crores, in that range. And from next year onwards, this should start coming down because the most of the CapEx will be over in this year.
The next question is from the line of Savi from IIFL Securities. .
I just have 1 question. Sir, on your plywood business, where do you see your going by March '25?
Sorry, will you come again, Satri? .
Sir, on your plywood business...
[indiscernible] again?
Yes, sir. Am I audible now?
Yes, yes.
Sir, on your plywood business, where do you see your past utilization going by March '25?
So for the year-end, it's difficult to give on a quarter-on-quarter basis. But for the year as a whole, we expect that our utilization will be in the range of around 40%.
[Operator Instructions] The next question is from the line of Bhavin Rupani from Investec.
My first question is [indiscernible] laminates business. Sir, what are the major factors which resulted in lower margins during the quarter? We mentioned that there was certain overhead costs which led to lower margins. Can you just quantify those overhead costs?
We will not be able to give that much detail. So in terms of employee cost, if you see that from the FY '14 -- sorry, the quarter 4 from -- it has gone up by close to around INR 10-odd crores, which includes onetime annual cost, which happens normally in the quarter 1, as well as the annual appraisal cost increment cost. That happens in the quarter 1.
Plus, if you see this related to the margin, in comparison to last year, on a year-on-year basis, the gross margin is by -- down by around 0.3-odd percent kind of a thing. And with this, I think these are the 2 major. And if you compare from the last -- from the quarter 4 also, the gross margin is down by 140 basis points and the implied cost has gone up. These are the 2 major factors which has resulted in the lower EBITDA margin for the laminate in this quarter.
And also the fact that a decent amount of shipments could happen, which are produced. So they were valued all at costs. I think that's also -- versus March, versus March ending and now, I think the inventory at plant and inventory in the water has also gone up again of the data. I think that's also a fair share that would have been invoiced and sold.
Clearly, that will also have helped the EBITDA margin as most of the manufacturing expenses would have been got incurred. So I think it's the utilization of the revenue recognition could not happen due to containers and goods in transit of exports. Domestic, there were no challenges on that front and the other cost spent.
Okay. Sir, if we remove the, let's say, Naidupeta is running at 40%, 45% utilization right now. If we remove the revenue or volumes of Naidupeta, is it correct that our total overall organic volume growth would have been in single digits?
So I think besides the 6x14-bit line in Naidupeta, the others are there have been some movement between customers and business. So actually moving it completely may not be appropriate. So 6x40 is a new line. It's a new product, a new line. I think that's fair.
But all the other sizes are part of the same business model, and we have moved certain business to serve certain geographies, certain markets from existing plants to Naidupeta to achieve a better supply chain, lower transit times, et cetera. I think that cannot be a right comparison, but I'll leave it to Ashok what he wants to comment.
Does that answer your question?
Yes, I have no follow-up. Sir, As far as raw material is concerned, apart from craft and the core paper we have been hearing that 8% to 10% increase in using prices as well. Is that correct, sir?
So as you mentioned earlier also in the base paper in most of the cases, the increase is on account of either it is increased by vendor or in case of FOB, cost of central has gone up for us. In case of crap paper, some grade of crap paper, there are increased in this quarter. But overall crap paper will not go up by around this much percent.
And in terms of chemical, again, in the chemical, also, there are impact of ocean freight in some of the chemical comes in container icon. So there also, there is increase of the Ocean trait. Mostly, I will say that in terms of the increase in the -- because of freight, except 1 or 2 cases where the base prices has also gone.
All right. Got it. Sir, next is on laminate expansion. Any plans for you?
Running at around 83% capacity utilization, and we have gone up in the past 108%, 110%. So we have around 17%, 18% -- sorry, around 25% capacity in our head. So we will take a decision at an appropriate time. We always review this our capacities on a regular basis. So we will take that close to around 3 to 4 quarters before when we reached that 108%, 110% or above 100%, then we will take this call.
But I think just to tell you that at both the plant in the Gujarat plant as well as in the South India plant we have NFC space in terms of to do a brownfield expansion, which can happen at a much faster pace at a much lower cost.
Got it. Sir, is it possible to quantify how much expansion is done at both Gujarat and South along with the cost?
It will depend upon the requirement at that moment because cost depends upon what you put what sizes of press you put. So it will be difficult to quantify as of now, but we have -- I can only say that we have enough space for the brownfield expansion.
Okay. So sir, can you assume doubling our capacity at both Gujarat as well as Naidupeta plant? Is it a fair resumption?
Yes. Theoretically, that is a possibility at both these location.
The next question is from the line of Rajesh Kumar Ravi from HDFC Securities.
My question pertains to exports. How -- in Q1, what would be the freight compared in top line? And how would have that changed in Q2 current run rate? We see that the freight cost is only looking up?
So Rajesh, what we have said in terms of that. So any additional freight has been passed on into the consumer, to the customer. And that is not part, that has become more as a contra item, that is not kept into the revenue. We pay and we recollect from the customers. That is not part of the revenue.
Okay. So in revenues, what you book is exactly which part of the cost in terms of credit cost?
Which is agreed with the customer on the over and above any additional costs that has become the customer, and that is not of the revenue.
Either in revenue or in OpEx, right?
Yes.
Okay. And sir, if I look at in terms of your -- whatever the agreed freight costs that you booked, that is reflected on the heading in the operating cost?
This will come into the other expenses.
Okay. It comes under the other expenses. And second question pertains to this particle board. One of the players is already Reno, is now ramping up their capacity almost a year would have been. They have been operating. Any understanding on how the market is, market acceptance of the product and their relation and what sort of how is the realization shaping up for the same? Because you would also be targeting similar customers.
So the feedback we have with that, they have a decent flow of business and exact utilization would not know. But you probably know that Marine and [indiscernible] will be the only companies with the size of capacity, flexibility of, dimension of the board's, the product quality, et cetera. So -- and we end up competing with unorganized lower level, low-quality particle board producers to produce board from [indiscernible] and from wood also, but mostly [indiscernible] technology, Chinese technology where both are not of good quality, uneven, finishing is not good. And certain market share in the OEMs, because of lack of particle boards, has been taken away by MDF. So we think we can also win some business from there. So we think it should go well.
The next question is from the line of Ritesh Shah from Investec.
A couple of simple questions. Sir, you indicated that we have the laminate exports. We have cost plus did I hear prior. So I wanted some clarification on that. Secondly, you also indicated that we have part of our sales, which is on FOB basis. I wanted some clarification on that. And third, I wanted to understand, is there a regional sales mix that you can provide on laminate exports. Just trying to understand right see impact and what we can do mitigated going forward if hypothetically the situation continues for [indiscernible]?
So with this, in terms of your first query. In the export, what we have said that for the -- most of our sales are on a CA basis only, which means the freight is paid by as only. So wherein we have an agreement where in a certain amount of freight is being built in the cost or the price of the product. In case of a very high fluctuation, if the price goes beyond those are beyond that agreed level, then the additional trade is charged to customer or a consignment to concern basis. So this is what we have explained. This we have started with pandemic. And now again, we have used this scenario now against after this geopolitical situation and the cost of rate has gone substantially in terms of that. And as your next query in terms of geographical wise details, sorry, we don't say that details into the product.
Right. Sir, so how should we look to mitigate these external factors like freight? Like is there a possibility -- how do we look at it? Like geographical diversification, I look at more of U.S. lesser Europe. How should we understand this?
No, I think that's not relevant in our case right now because we have capacities. We have markets. We have to service the markets. We are not going to do a commodity model. We have to keep our supply chain on to the customers. So we can't switch, we can't say no and yes, we are into a long-term model and branded distribution model, our teams are in the market working furniture makers, architects, [indiscernible]. So that's not relevant in our business model.
I think the only way to mitigate is to improve the value mix, improve the price point, improve efficiency, improve volumes and create more demand, sell better products, I think that's the only understanding here.
And sir, just last question. Sir, who do we sell our material to when we say we are -- we cater to exports. Is it inbox retailers? Is it master distributors? How does the sales actually happen?
So it's a bit of a longest discussion, but just brief, it will be channel distributors. It will be last furniture producers. Mostly these 2. At times, some large contractors, fabricators.
Okay. Is it possible to give some broad mix over here?
No, we're not able to provide that, please.
Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to the management for closing comments.
Thank you so much for taking out your time and patient hearing from us. Should you have any other questions, you can reach out to us or to SG or both. Thank you so much.
Thank you, everyone.
Thank you. On behalf of Greenlam Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.