Greenlam Industries Ltd

NSE:GREENLAM

Earnings Call Analysis

Earnings Call Transcript 2024-Q2

[Unknown Attendee]

Good evening and a very warm welcome to all for the Investors and Analysts Meet 2023 of Greenlam Industries Limited. I'm Manasi Bodas from Strategic Growth Advisors.

Today, we have with us on the [ dice ] management represented by Mr. Saurabh Mittal, Managing Director and Chief Executive Officer; Mr. Ashok Sharma, Chief Financial Officer; and Mr. Samarth Agarwal, VP, Finance from Greenlam Industries Limited.

We will first take you through the presentation, which contains overview, key strategic initiatives and growth drivers. After the presentation concludes, we will be open to take questions from the audience. I would now request Mr. Saurabh Mittal to address the audience. Over to you, sir.

[Saurabh Mittal, executive]

Good evening, friends, and a very warm welcome again from my side for the Analyst Meet and Investor Conference. Samarth and Ashok will take you through the business presentations. And I'll be happy to address your queries and questions post that. So I'll hand over the dice to Samarth now and then following which Ashok will take you through the numbers. Samarth?

[Samarth Agarwal, executive]

Thank you, sir. Good evening to everyone. Thank you for taking out time from a busy results season and to hear us out. We'll just go through the presentation in a brief. The presentation is already uploaded on the stock exchange, and I hope you've got a chance to look at it.

So we'll just start with the presentation on a brief note that what we have done and how the business -- we have structured the business for a multiyear and a sustainable growth outlook that we have.

Yes, on the -- so over the last 18 months, we have done -- executed the projects. We have announced the projects in December 21. We have executed them, a couple of them has been on stream. One of them is under construction. These have been a record delivery in terms of times where we have demonstrated how we have set up the plywood unit in Tamil Nadu, [ inband ] how we've done the laminate unit in Naidupeta, [ Andhra ] Pradesh. These commissioning demonstrates that the company is dedicated to look at maintaining capital efficiency and continuing to add shareholder value and making a sustainable growth over the next period of time.

Just to give a glimpse the capacity that we have in the laminate business was about 15.62 million sheets and over the last 18 months, this has increased by almost 57% to now 24.52 million sheets, which is by adding -- by acquiring and turning around a plant in Gujarat is in Pradesh. which has a capacity now of 5.4 million sheets and in Naidupeta, Pradesh, which has a capacity of 3.5 million sheets and boards. With the Naidupeta unit, we also introduced our second large size of laminates, which is 6 by 14. Earlier, we had 6 by 12 when Nalagarh. Now we have added 6 by 14. This Naidupeta plant and Pradesh plant, both are proximate to the port, one on the Western side and one on the Southern side of the country, which gives us a leverage in terms of quicker turnaround times. And in terms of quick delivery and servicing the customers.

So just to give a brief of who we are and what we have done and where we started all this journey almost 3 decades back now. We laid the foundation of our first laminate unit in [ Baru, ] Rajasthan in 1993. The laminate business has been spearheaded by Mr. Mittal, sir, over the last 2.5 decades, he has been involved deeply into the business within professional team running the show here.

We have -- from a 2 manufacturing unit, we have now 5 units, one in Baru, Rajasthan, [ Nagarajan ] Pradesh, [ Pantes Gujarat ], [ Tendia ] Tamil Nadu and Naidupeta, Andhra Pradesh. The products that we manufactured in the wood panel industry from a substrate, which is now plywood to laminates, vinyls, floorings and doors.

Since we are a large exporter in the laminate business, the certifications that we have, the standards that we maintain in terms of our certifications, which goes to matching the European standards to the Asian standards, we have all our PFC FSC certifications in place, and we can be as good as any international player on the laminate business.

So a true leader in the business, we have the largest capacity of laminate as of now. We are our largest exporter of laminates for the last 12 consecutive years. And we are the only manufacturer of real wood flooring in the country and the first organized manufacturer of engineered doors. Again, first in the industry that we have been funded by International Finance Corporation for our project in Naidupeta, Andhra Pradesh. That's one of the first things that has happened in the wood panel industry.

We have a very eminent Board, which has been very engaging, highly value-additive. We have added members in the Board led by Mr. [ Shirakash Metal ], sir, who is the Non-Executive Chairman, Mr. [ Soril, sir ]; [ Marun Man ], [ Sandeep Daji ], [ Matti Giman ], [indiscernible] and then Mr. [ Jalas Daliso ]. So all these board members are actively providing their inputs to the business as well.

So on a growth journey, if you look at it in the '93 when we laid the foundation of the -- our first Baru plant, then in 2005 -- sorry, in 2002, we started the decorative veneer business in '05, we started the first international subsidiary. Then in '09, we set up the Nalagarh unit, the second laminate plant of the group or the business. Then we have set up these subsidiaries in U.K. in 2012, then the major event happened, which is the demerger in 2014. October [ '14 ] precisely 9 years from today's date. Then in 2019, we have added another -- we have acquired another company in Switzerland, and we have incorporated Greenlam South under which we are doing the large CapEx plans as of now. Then we have acquired EG Industries Limited, which is having the plywood unit and is actually on a verge of getting merged with Greenlam Industries. And then we issued our first listed entities in 2022 and acquired Pradesh plant and successfully turned it around as well also. We raised equity in 2022 for -- to the extent of INR 195 crores. And then we have -- in 2023, again, we have commenced the production for the plywood as well as the laminate unit. So this is the journey that we have gone through in the last 3 decades which is, again, setting up the show for the future to come.

Glimpse of our major brands led by Greenlam laminates. Under the laminate brands, we have Greenlam Laminates and new [ Michael ]. Then we have a [ plants ] green lamp brand for the interior and exterior [ class ] and then these brands, which as the restroom cubicle and the locker solution. On the wood business side, we have [ Decowood Veneers ], again, a flagship brand for natural and generic veneers. Then you have [ Macassa ], which handles the door, floor as well as the recently launched Macassa supply brand as well.

Coming to the products, I'll take you through the individual products that we have and how these products are relevant and have created the business. The flagship business or the majority of the business that comes from is the laminate business. Laminate, as we all commonly use in all our day-to-day furnishers and our interior works -- is -- comes in various thickness, sizes, finishes, textures and right from 3-feet by 7-feet to a 6-feet by 14-feet sizes that has been recently added over 10,000 SKUs that we do, which comes into various finishes, which is your [ mass way ] glass -- your super glass and your thicknesses, which can range from 0.6, 0.7 MM to as high as 25 to 30 mm as well, which is used for manufacturing your cubicles, your restrooms, your locker solutions. It has various applications in your day-to-day interiors. You can use it in furnitures, you can use it for your first art claddings, you can use it for your interior paneling and practically all your servicing solutions laminate has an answer to it.

Coming to the clads, which is your interior and exterior clads, this is one of the more sustainable products and an alternative use for your facade cladding. Highly appreciated category creation in the industry wherein your exterior, your home exteriors can be beautifully facade with the -- using the laminate. So these are most sustainable. These are [ anti-gray ]. These are anti-dust pollution, UV rays protective comes with a large warranty from our side. And clad has been -- clad has been the starter business, which is your cubicles, which is covered here, is a kind of a category creation itself. So these are being widely used in the international market, and these are being adopted now in the domestic market. And kind of pins up avenues for higher usage of an alternate usage of laminates in various forms and sizes.

On the restaurant cubicle side, we have just now launched latest collection and a refreshed -- complete refreshed collection of our restroom cubicles -- couple of samples have been placed at the back. We would love for you to see those samples and catalogs. These restroom cubicles have been designed by the imminent bridge designers and comes in different shapes and from an application perspective. Also, these -- along with these risk from chemicals, we do provide our panels. We do provide standing benches, stand on platforms, benches, vanities, et cetera, which can now be made using our compact laminate. So that can be one of the larger usage, again, a category creation there where you can make higher usage of laminates across the industry.

Coming to melamine phase chipboard. Right now, we don't have the motherboard production facility that is under construction when we do with the particle board coming up in the [ cubicle ]. Right now, we only do a lamination on the chipboard, we buy a chipboard and do a lamination and set it as a as a complementary product to an OEM segment. And melamine phase chipboard is one of the largest used product in the furniture industry in the office location, in any of your ready-made furnitures, or all your office interiors, your kitchen works, your furniture can use melamine phase chipboard which is pre-laminated particle board also, as we call. And being extensively used now.

Coming to the wood category, again, veneers led by decorative Decowood [ brand ] is again the largest in the industry that we have. Decowood Veneers comes under 3 subcategories, which are natural veneers, engineered and [ peak ] again, an alternative to laminations which is an expensive office is a natural food which is applied on your furniture or your premium housing premium offices, your premium areas where decorative veneers can be used as a furnishing or a surface product.

On the engineered wood flooring, again, we are the only manufacturers of [ in ] wood flooring in the country wherein we use the entire -- the top layer of the veneer. The bottom layer is head out of the pine wood. It's a real wood flooring that is an alternative to the flooring requirements, keep your floors full, keep your flow and gives you a very test -- sorry, aesthetic look of the floors. This is one of the premium -- used in the premium housing and the premium continuums, the flooring segment here.

Coming to the engineered wooden doors and frames. Again, we are the only organized manufacturer of this category in the country. Where we manufacture those which are used in hospitality, in education for your -- any public areas, your interiors, your house doors, et cetera. So we have -- unlike a traditional doors, which are made on the site, we are doing it in off-site where we manufacture the entire door at the factory. We're using CNC machines, and these are made to order sizes and that can be installed at the ad projects. So these are largely B2B business where these are not retail where we are present and where 5 or 10 door order can be taken, but these are large project businesses where we take larger size orders.

Coming to the recently launched product, which is plywood. This facility is based in [ Tenda, Namiladu ] the single largest location manufacturing of plywood with a capacity of 18.9 million sheets. This comes various size again and thicknesses. And can be, again, a substrate product, which can -- which is giving us migration from a surfacing solution come to a substrate company now. So with this and with the particle board getting added in next year, we will be an integrated player, wherein we provide substrate solutions as well as the surface solutions also. So on the plywood, again, this has been -- the quality has been very well received. We manufacture 100% calibrated plywood. And again, plywood is a very, very widely used material in the wood panel space.

So coming to the green credentials, again, as I said, that we're being the largest exporter of laminate in the country, and we export to length and [ break ] geographies across the world. Our certifications do match any level of international players, where either it's a European standards or an American standards and a couple of certifications like we are certified. Our products are largely certified for IGPC green building. We have Greenlam Gold and again, [ Greenguard ] certification and so on and so forth. So these certifications make the product comparable to any of the international players that you have.

Now again, one of the important slides there, wherein you find the -- you will find the capacities consolidated. We have 5 manufacturing units [ little ] on North, which is in [ Malaga ], Northwest, which is Baru, Rajasthan. Then on the West, which is Gujarat and then Southern there are 2 factories. One is in [ Tenda ] for plywood, and then one in Naidupeta, for laminates and particle boards. Out of this, 4 of the factories or 4 of the plants produce laminates. Except for [ pending ], all of them has laminated production facilities. We have the largest capacity in the country for laminates, which is 24.5 million sheets per annum. Again, for the decorative veneers, and veneers floors and doors, the capacities are 4.2 million square for veneers, 1 million square meters for floors and 120,000 doors per annum. And door floor and veneers are in [ Baru only ], which is in Rajasthan plant. [ Restore ] plants are laminates and one is in [ Tendo ] plywood. So particle board plant that we announced shall come up by quarter 4 of this financial year. This is again based out of Naidupeta. We have a corporate office in Delhi, and we have 2 experience centers that we have created one in -- the one in Kolkata which is the eastern part of the country and one in [ Adabas ]. So these experience centers kind of displace all the products and the applications that we have and gives customers a one-roof display of all the interior requirements that you would have.

And so this is -- all this infrastructure is supported by 9 regional distribution centers, which are strategically located across the country. And our staff or our employees, which are there almost in 200-odd countries present on, which are working in terms of generating the business. And this is largely supported by the overall employee strength, which is roughly about [ 600 to 500 ] plus as of 30th September.

So photographs pictures of our manufacturing units. The first one in Baru on top of left, the right one is [ in Andhra Pradesh ]. The last, the left on the bottom row is Pradesh Gujarat. The middle on the bottom row is individual [ Adu ]. And the right one on the bottom row is the Naidupeta plant. So all of them, yes.

Coming to the global footprint, as we are widely present in India length and breadth, we are equally widely present in the international market as well. We have 8 operating subsidiaries and regional offices that we have, almost 130 people working on ground for us across geographies and exporting, which are helping us in exporting the products to more than 100 countries across the globe. So as you can see, right from America to Africa to South America, to Middle East, Europe, U.K., Asia, we are widely present across geographies and the material is either sold or redistributed across. And all these sales happens predominantly in our own brand. We don't do large part of white labeling. So mostly, we have built those distribution globally as well, wherein we are selling under Greenlam's brand and people know the brand, the product is established. The market opportunity is pretty large. That way, as exports have been almost 30% of our laminate business, over the last so many years. I think that market also remains very important and strategically important for us for our growth.

Just to give you, somebody on the market sizing, what we estimate, again, no numbers here in terms of any reports and all, but largely from our own estimates, we say that -- the domestic market of laminate is roughly INR 12,000-odd crores with INR 3,000 crores exports happening from India and INR 9,000 crores is the domestic consumption. Out of this 9,000, again, we kind of -- we believe that INR 3,000 is the unorganized segment and 6,000 is the organized segment to which we are a part of. In terms of the market share, if you look at it, 15% is largely the share in the domestic organized market and 25% is the exports from India happening. So we're largely the largest exporter and holding almost 25%, 30% of the market share for the exports happening from India.

I think more than this is the opportunity, which is on the international scale. Internationally, we estimate that the laminate market is roughly $8 billion. That is poised to grow to roughly $10 billion to $11 billion as we move ahead. And that market presents a large opportunity wherein we have invested in, for the last so many years in terms of building the infrastructure that can -- so that the leverage can be taken in order to exploit those markets. Reach more deeper and kind of address or kind of -- make more meaningful inroads in each of those markets as we grow.

So roughly, what we export as of now is $115 million is the international revenue that we derive from the laminated international markets. So these figures are mostly on the March side, as of 31st March, we went updated us on September.

So the last 5-year summary of the financial numbers, how we have grown consistently over the years since '19 to '23, except for the over the year where the degrowth was, which I believe was there for across the industry. But apart from that, if you look at it, the margins have been quite stable, except for, I think, 2022 where we saw a dip on account of raw material fluctuations that we had. It's quite a significant raw material -- and if you look at the ROCE, again, these ROCE have been computed without taking into account the capital that is deployed for the projects that we have undertaken in the last 18, 19 months. except for that project -- project capital employed, the ROCE has been pretty healthy across a 17%, 18% band.

And return on equity also, we raised equity last year in FY '22, '23. And hence, you find that the base is higher in terms of the equity. And hence, the ROE numbers look to be a little subdued as of now. But as this capital gets on to we sweat this capital more by way of manufacturing. We believe that our numbers and the ratios are -- can significantly improve from this from here on.

So coming to the fact that whatever we have invested or we investing, how the prospects look like and what is the address or the market that we're looking at. Just to give you a glimpse that -- we have been a surface solution provider. We are now looking to become an integrated player in the wood panel industry where we provide the substrate as well. So plywood is already there, particle board is -- come in some time. So with this, the building blocks of the wood panel which is your plywood, MDF particle board, laminates. So all the categories where the entire wood panel industry stands, we want to be a meaningful player in terms of the substrate as well as the software solutions. And become a mark of respect and a mark of recall where Greenlam becomes the flagship recall brand across segments and across categories that we operate at.

So again, from a domestic addressable market, earlier, if you look at it, our opportunity was only laminates and veneers, roughly INR [ 14,000-odd ] crores kind of addressable market which now by the addition of plywood stands at roughly about 44,000 what we believe is -- continues to be the largest market size as of now. While the MDF and particle board is also growing, but I think plywood has been an age-old product has been the category leader until now. But -- and as we see that the more involvement of online furnitures or more organized carpentry goes on, you would see that the share of the other substrate product will also rise. And with the experience in the decorative space that we have, I think we have a -- we have -- we are very well poised to take on this opportunity and grow as we move ahead.

And once the particle board also comes on stream, I think the addressable market will be roughly about [ INR 49,000 crores, INR 50,000 crores ] which was roughly INR 14,000 crores. So now you can look at the kind of opportunity we are looking at it and the kind of the depth in the business that we have and the ability to address these market opportunities in a meaningful manner that will help the company to grow forward.

So what we are doing with our earnings, I mean, where the earnings are deployed, how we are looking at it. So if you remember, in December [ '21 ] we undertook one of the largest investment cycle of our history with almost INR 1,200 crores of CapEx being deployed, which will kind of double up the gross block that we have as of now. And these investments are poised to really provide a future of the growth in the space that we operate. So that's the largest investment that we have done as of now, which will broad-base our revenues move from the laminats, move from the surface to the particle to [ plaster ] substrate products, extending beyond 2 locations now to 5 and entered the Western India and the Southern India also in the [ South ]. These manufacturing units being strategically located across country helps you to kind of service the entire nation across geographies and not even the domestic space, but also on the international front, the proximity to port will help you in terms of servicing the customers and do the catch up on the international market opportunity that you have?

So why we are optimistic and what makes us so confident about investment. These large growth sales that we have. It is largely -- the India story seems to be poised for a multiyear expansion, but this is going to go for a while. The manufacturing across segments across has just started we're seeing CapEx cycles across. I think this will drive some sort of demand there. Again, the demand for residential commercial space has risen the residents houses or the commercial applications, which is your hospitality, education, IT, health care, et cetera. So we are seeing a search the real estate that way. Post [ GST ], I think there's a move towards the more the organized sector. People are moving or liking of brands or more the organized sector. There are higher compliance issues, which are making life difficult for the unorganized segment. And that creates -- largely creates a way for the organized companies to grow higher.

Particle board sector is kind of an inflection point, we believe. We saw what happened to MDF about a decade back when MDF was started. We believe that with the online furnishing -- or sorry, furniture market, more of carpentry, more mechanized carpentry happening. I think even the particle board is at the same similar kind of an inflection point and will grow as the category expands meaningful player comes in and the offering becomes more qualitative rather than being quantitative as of now.

So [ Indians ] are also recognizing brands and are willing to pay price for a quality product. They recognize they understand that branded players, large players offer quality and price points can be a secondary matter for them. And they also want that there should be a single shop where you can have all the products which are made available. So that kind of things helps you in terms of leveraging your product portfolios. Yes, so that's on the domestic front that we have.

On the international markets, again, international opportunity is very, very large. We have been present in the international markets since 2005. We had made meaningful infrastructure, people and play there. and that kind of leverages us in terms of making a meaningful revenue from the international markets. As you see, almost 50% of the laminate comes from international market laminate business. And that market is something which is very wide in terms of its size. However, that opportunity is yet to be catched up and for us for players like us, where we exploit those markets more, make our reach more efficient, more deepen and kind of expand geographies and all.

And also, India as a manufacturing hub, has been recognized as a large laminate export quality laminate exporter, where in [ players ] are more respected. They are predominantly the first recall an option with the international play or substitute for the international markets.

The cost of production in the international market is a little unfair. They are finding it difficult to sustain. We have seen a lot of geopolitical issues around. We've seen inflationary issues in the large economies, which makes a dent on the local manufacturing. Again, giving a flip to players like us to make more meaningful inroads. Larger size of laminate that we have introduced, again, that's a category we have been unable to service earlier. But now with that 6 by 14 size, and a combination there, and I think we are poised to reach out to a large segment of customers which were missing earlier. And with the 2 plants located [ on in close ] to the Western ports and one in the [ certain ] ports, the [ Naidupeta ] is very close, about 70, 100 kilometers from [ Chennai ] or from Kattupalli ports and all. That makes your lead time very, very short, quicker turnaround time, faster servicing and the easy access to the -- to shipping out your products across.

And also, as I've already said also, we are equally well certified in terms of the quality and the certification as any other European and American player be. So on the investment side, again, what Greenlam has achieved in the last 8 years since the demerger, we're kind of looking to replicate that in a much shorter time now. We have charted out a 5-year growth strategy in 2021 beyond that stream and kind of achieving that in time. We'll position ourselves as an integrated service and our solution and surface [ as of now ] -- sorry, our surface and a solution provider. And I think the brand that comes in will be a much more respected brand that will come our premium in the markets.

So where we present our only laminate floors and the veneers. Now with the investments, we would have particle board and the plywood also coming up. So plywood has already started. Particle board will again be there by the next year.

So coming on to the business update on the laminate front, the Pradesh plant that we acquired in June 2022 with a capacity of 3.4 million sheets was upgraded to 5.4 million sheets in May 2023. That plant has been turned around in a record time and now operating almost at 100% capacity utilization. Again, this plant being near to the Western Port also opens up our opportunities for exports from that plant. This has strengthened the company's ability to service products and segments, which were not there earlier. So we were not on the commodity side, so we can have a large meaningful play on the commodity side as well. However, having said that, this plant not only manufactures commodity laminates, but also on the mid and the premium side also. So practically, we are not differentiating amongst our plants that what is being manufactured at workplace gradually and over the time, all these plants kind of manufacture as per the need of the [ RN ] as per the product that is required.

On the plywood, again, which is in [ Tenda ] Tamil Nadu. This is the single largest location plywood unit with a capacity of almost 18.9 million sheets -- sorry, [ 1 million ] square meters per annum, my apologies. This is commenced operation in June 2023 now. And the brand name under which the plywood has been launched is [ because of supply ]. Again in the mid- to the premium segment, you can now see the pivot samples outside on the back of the hall. So again, this built again -- this plant, again, is being near to the agroforestry built. So since plywood requires a lot of wood or agroforestry wood, that is serviced from your Tamil Nadu, Andhra and Karnataka belt, where you get the agroforestry wood and then convert that to a plywood. So that kind of helps us in achieving the raw material mileage also. This plant is closer to those belts and all.

And the southern market is the largest market for any product, we believe, in the wood panel space, including plywood. The laminate also the largest market for us is the Southern market only. And we believe it is one of the more faster adopting market for mechanized furniture market for more organized carpentry which helps you in terms of position yourself as a meaningful player in those markets. Just one thing to note that the plywood that we produce is 100% calibrated, which is [ Mason ] zand essential and which gives you a better surface finish, which is a very must for any kind of mechanized manufacturing that [ you do ] and this -- the product has been very well received by the channel partners. That's the feedback from our [ our end ] I think we would love to hear any channel checks from yours well.

On the laminate side, so this is the fourth laminate plant that added in Naidupeta, which has a capacity of 3.5 million sheets and boards. When we say board because we are making a larger sized laminates also here, which is 6 by 14. And this -- the investment that was done in the time of the commercial production was INR 230-odd crores. With this manufacturing facility coming up again near to port kind of servicing, helping us and servicing the customer of higher churn of inventory, faster, lower lead times, both in imports as well as exports. And a quicker inventory churn. So we believe that this will play a very vital role in again, expanding the international footprint and servicing the international market as well as servicing the domestic markets from this plant. So we have more from the north plant, we can strategically look at our service the northern part. The southern plant can help in servicing Southern, Western [ Binge ] from [ Deprantes ]. So I think -- so healthy mix in terms of the manufacturing presence that we have.

One more thing to note here is that both Pradesh plant and Naidupeta plant, has been built with a vision to keep in mind that both these units can take multiple rounds of brownfield expansion. We have additional space in both of these units. As you are aware that both Nalagarh and Baro, we, right now, cannot do any further expansion because of space constraints. However said so, the Naidupeta plant has space, which can undertake multiple round of brownfield expansion as we move ahead. And the capital outlay that will be required will be very low in terms of your CapEx plans which will help you in eventually looking at better returns in the longer run. As we have seen in Nalagarh, we started with 3 press, we've now had 6 press, we've done a brownfield expansions in that unit. Similarly, we can do in Naidupeta, also and in Pradesh also. So that way, the future needs of the laminate capacity has been taken care of. And with the minimal capital, luckily, we can add capacities in a quicker time which can help us in expanding more.

So on the particle board side, this plant is right now under construction. Right now, we have a melamine phase chipboard unit in Bero, where we only do a lamination, as I said earlier. But with the motherboard production facility coming up in Andhra, we will be able to leverage and provide a higher value proposition to the consumers, especially the OEM segment, the organized carpentry and the mechanized furniture fabricators, wherein largely are the ranges that we can offer, the color, the decors being a large laminate player will be significantly value additive, and we are very confident that with this investment. So with this investment, we'll be able to leverage the particleboard as a product category.

The capacity that we are putting up is roughly 1,000 [ CBM ] per year. And this will be a state-of-the-art European technology that -- and a continuous press line that will put up in Naidupeta, which can be evident to any international particular board player that you might see.

So again, particle board being agroforestry product is made out of agroforestry wood. This plant, again, being in based on Andhra is closer to the agroforestry belt of Andhra, Tamil Nadu and Karnataka, which helps you in kind of leveraging the raw material from these belts which is very important as the wood is the major consumed RM in the particle board. Further, we would also looking at taking plantation activities in the nearby region which can help generate sustainable RM sourcing as we move ahead.

So again, coming to the demand drivers, these are largely where the change in the urbanization that is happening, the rapid modernization demographic dividend that is there. We believe these demand drivers kind of takes you forward in terms of generating the demand for housing, which in turns around your demand for the products of our category and the commercial spaces as well.

Higher demand and construction and hospitality, education, health care, IT offices. So these all are related areas wherein the products, our products, including laminates, veneers, flow, door, particle board or plywood can be effectively used. Again, government is also looking to push some furniture parks in the southern states, which can be impetous to leverage more on the wood panel industry. And again, as a significant export opportunities in the export market is a fairly large market where it is yet to be exploited and you have larger meaningful inroads to be made in those areas.

So in the end, I think what we started in 2021 is guiding us to move ahead. And we have embarked on a journey, which we call as next orbit which will make us larger in terms of our product offerings, in terms of our portfolio, more profitable, more sustainable growth for more decades to come. And that's where the foundation of Greenlam which was late 3 decades ago, and which is being reinvented now to give you a meaningful growth for the future.

So I think with this, we start with the financial numbers. And I'll hand over to Ashok to take you through the financial numbers.

[Ashok Sharma, executive]

Thank you, Samarth. Good evening, friends. I'll take you through the financial statement for the quarter and for the half year. So in this quarter, for the first time, we have crossed the INR 600 crores of sales in a quarter. So on a year-on-year basis, our -- on a year-on-year basis, our revenue has increased by 16.5% on a quarter-on-quarter basis. It is increased by around 17%. On a half year basis, the growth was [ 18% ] and stood at INR 1,118 crores.

On EBITDA front, we could be able to grow our EBITDA by around 41% on a year-on-year basis and by 17% on a quarter-on-quarter basis. On a yearly basis, EBITDA grew by around 35%. Our PAT was higher by around 35% on year-on-year and around 22% on quarter-on-quarter basis. On a half yearly basis, PAT has grown by 33%.

A glimpse about the balance sheet, which is -- borrowing has gone up since we are investing into the new project. So I'll move on to the segment, laminate and allied segment, which is our biggest segment. Here, our revenue has gone up by 13% on a year-on-year basis and 12.5% on a quarter-on-quarter basis. And on a half yearly basis, it has gone up by 11%. Gross margin was up by 730 basis points on year-on-year, and it is down by 40 basis points on quarter-on-quarter. EBITDA for the quarter stood at INR 87 crores, which is around 52% higher than the last quarter -- last year same quarter. And on quarter-on-quarter, it is up by 25%. EBITDA margin stood at 16.4% in this quarter as compared to 12.1% in Q2 last year, a growth of 430 basis points. And on a quarter-on-quarter basis, it has grown up by 160 basis points.

Capital employed in this quarter has gone up to INR 778 crores since we -- our Naidupeta laminate plant has come on the stream on 29th of September. So there is only 2 days of commercial products and which has started. So there is no sales or revenue or profit, which has been added in this, but the capital employed has gone up. This is in terms of quantitative details, so we are at 94% of capacity utilization. Our production was around 5 million sheets, which is highest so far. So this capacity utilization in this since the Naidupeta unit has come for the 2 days only. So we have capacity utilization we have calculated without that. And sales for the quarter was 4.93 million at an average utilization of INR 1,034 in comparison to INR 1,059 last year same quarter in comparison to quarter 1, the average relation has gone down by around 4.8%.

I'll move on to another segment, veneer and allied segment, which consists of decorate veneer [ Mikasa ] doors and Mikasa floors. And this, the net revenue stood at INR 57 crores, a growth of 23% over last year same quarter and around 35% on a quarter-on-quarter basis. On a half yearly basis, the growth stood at 15%. The gross margin has also gone up from 37.4% last year same quarter to around 43%. And in comparison to quarter 1, it is nearly at the similar level. EBITDA loss has come down to INR 1.4 crores in comparison to INR 3.2 crores last year same quarter and from INR 1.6 crores in the quarter 1. At the half yearly level also, the loss has come down to INR 2.9 crore as compared to INR 5.6 crores last year.

Capital employed has also come down from INR 193 crores last year to INR 180 crores this year. This is in terms of decorative veneers quantitative details wherein the product centers gone up by around 5.9% in last year and 58% in comparison to quarter 1. Sales for the quarter was 0.39 million square meters, which is similar to last year. However, from the quarter 1, it has gone up by around 43%.

Moving on to the newest segment plywood and allied segment, which particularly this was the first quarter in which the full production was available. So we are in the process of ramping up the products and as well as the revenue in this segment. For this quarter, our revenue was INR 15 crores. And practically, this is the revenue for the H1. Gross margin was around 40%, 41%. And there was an EBITDA loss of INR 10 crores since this was the first quarter. So the initial expense of sales promotion as well as the segment has to ramp up in terms of that.

Capital employed in this segment is INR 175 crores. And the capacity utilization for the quarter was 16% with an average realized around INR 239 per square meter. In terms of operating parameter, which is net working capital, this quarter, our net working capital days was 60 days. in comparison to 69 days in the quarter 2 last year and 72 days in the quarter 1 of this year. On a half yearly basis, our net working capital days has come down from 72 days to 64 days.

So with this, even the -- in the areas of revenue, we are able to manage our working capital with a lesser amount of nearly at the similar level of our capital. In terms of debt position, which has gone up significantly in comparison to last H1 from INR 75 crores to a net debt to around INR 670 crores net debt, but this is this is predominantly on account or primarily on account of which we are doing into the New York project.

Return to ratio in terms of ROCE and ROE, the capital employed, which you rate [ INR ] 1,380, which is minus the Naidupeta particle board unit. We have added the plywood capital employed as well as the capital employed on account of laminate Naidupeta laminate also unit into this. With this, the ROCE comes to 18% for this quarter as compared to 16% last quarter. And for the half year, it is 18.4% as compared to 15.3% last year. Written return on equity stood at 15% on the expanded capital after we raised the capital in the last year, INR 195 crores.

This is what all from the financial side from our side. Now I would like to open the house for the Q&A. Thank you.

[Unknown Executive]

Thank you, sir. Now we will start question-and-answer session. And even willing to ask a question, can please raise their hand and mention name and their company name before asking the question.

[Unknown Attendee]

I'm here from [ Amidst ] management. So my first question is, we've seen some [ upper ] in CapEx costs in almost all your projects, all your 3 projects, which we see anywhere from the June 20% to 30%. So what's driven that? And how do you look at incremental return on capital employed on your incremental gross block because of that. So as the capacity and your revenue projections still remain the same? Or how do you look at it?

[Saurabh Mittal, executive]

Yes. So one is on the -- if you see -- if you go one by one, in laminates project, we are, right now, at about 94% utilization without the [ annapolis ] factor, which just started end of September. And if you add the [ autoport ] capacity, we are hoping that in the next 6 to 9 months, we'll again come to 95%, slightly shy of 100% duration. So we are building additional space at the Naidupeta plant in terms of physical space and also building additional utilities or higher capacity of utilities like the resin plant, boilers, storage space. So our guess is maybe not so far future, we have to add some more capacity of laminates. So we're kind of getting ready in a way for that. So that's added to the incremental capital expenditure. So when we put the next line of presses or next lines of presses in the [ Andreades ] plant, the incremental CapEx will be not so high, albeit a smaller CapEx. We have demonstrated that in the past also in both Broad Factory, Rajasthan and Himachal. So that's on the laminate story. On the particle boards, we had started with a lamination line and the main production line of particle boards. We've added certain features and particle boards with different kind of densities, some different dimension particle boards, doing some value-added categories and particle boards which have been very successful in Europe, which is with texture products with larger bids. So that's added to some additional capital expenditure in particle boards. And there too, we have space on the Pradesh plant to add one more board line and one more lamination line. So I think it's a mix of capability building, some capacities getting altered and certain other infrastructure costs getting added like earlier, we have planned for a 33 kV line, and now we're going for 132 kV line. So some infrastructure is being expanded.

Considering the positive future, we think about the business and the plant. If you go for the plywood factory, again, there has been some capability building in terms of some process in improving the quality of plywood when you cut the plywood all the layers of near will look uniform color you can probably see that, which today, no other branded player has in the market. And there is some more additional infrastructure being built in terms of housing, et cetera, in the plant location. As far as the revenue potential, the justification of return ratios, we don't think that's going to get altered in any manner.

[Hrishikesh Bhagat, analyst]

I just asked in an altered manner. So your particle board CapEx has kind of gone up. Would you still envisage one extra turn on your incremental CapEx? Or will it still be only a INR 600 crore incremental revenue. Because you said that you added value added products. So is there a revision in that guidance.

[Saurabh Mittal, executive]

So particle boards with the capacity we're installing and the value mix, the value mix, return in terms of getting the right percentage of the value mix of products might take some time. But with the kind of capacity we are putting in, we can expect on a near full capacity, INR 700 crores to INR 750 crores of revenue because particle boards, about 80% to 90% particle boards is sold as laminated boards and not as bare boards. So I think -- I hope that answers your question. Thank you.

[Keshav Lahoti, analyst]

Congratulations on great set of numbers. Just a follow-up on the last question. So what sort of return ratios you're looking at no particle board, whether the margin which you are seeing would be like 20%, 25%. Will it also increase because of change in dimension. And third year would be the right way to look at the ramp-up plant of particle board?

[Saurabh Mittal, executive]

So 20%, 25% EBITDA margin, we think, is sustainable. If the value mix contribution expands, it can inch up also. And I think third year should be a fair expectation for the board line to ramp up. I think that's a fair expectation.

[Keshav Lahoti, analyst]

Okay. So what is the sense on the import of particle board, how big it is?

[Saurabh Mittal, executive]

I don't have that data with me. So if you have that data with you?

[Ashok Sharma, executive]

So the last what we have seen -- it was in the range of around INR 300-odd crores for the period. Exactly we need to see the -- because the situation keeps changing. One thing which you need to understand in this in the particle board, the most of the import, what happens is happened for the rare board in terms of the door, which is most like a commodity and like -- and our intention is to sell more and more the pre-lam board than the bare board in terms of that. where the competition is not from the imported, it is in terms of you need to improve, we need to penetrate in terms of deeper into the consumer segment, kind of a thing in terms of the -- so it is not a like-to-like comparison because anybody who will import the particle board, ultimately, this needs to be prelaminated and get sold or consumed into the market.

[Keshav Lahoti, analyst]

Got it. Good to hear that the rates plant is operating at optimum utilization. So earlier, you have guided that the margin from this plant would be less versus your normal margin. But in your number, we can't see any impact. So whether the plant is performing better than your expectation?

[Saurabh Mittal, executive]

You could say that partially that I think we've done better than we communicated but that doesn't happen always. So -- and also certain product mix has also got altered in that time. We also enhanced the capacity, as you are aware. So even production has went up with the...

[Keshav Lahoti, analyst]

Understood. Lastly, I forgot to say my name. I'm Keshav Lahoti from HDFC Securities.

[Unknown Analyst]

Sir, why the particle board plant is coming in south, why not in other locations because you rightly said that there is a lot of import on the motherboard, the chipboard, if we call it, at the south ports. And so why is that? And secondly, on the plantation. So first answer this then. On the plantation side, like you mentioned that you'll be doing the plantations as well taking it.

[Saurabh Mittal, executive]

So I think we tried to explain this in the next over presentation. So multiple reasons why the plant's first coming up in South India. So eventually to serve the entire country, one plant may not be enough at some point. But initially, it's coming up in South India of the first tactics coming South India, considering several factors. Availability of raw material being one the most important factors. So Andreas, Tamilnadu and Karnataka have meaningful agroforestry plantations, which can use for particle production. Particle boards can also be produced out of waste wood fire wood chips of various wood species, you don't need only one specie to produce a particle board, unlike maybe in MDF, you can mix wood and you can use that. So reason availability of raw materials there. South India constitutes about 45% to 50% market consumption of particle boards considering the number of furniture plants, making office workstations, cabinets for the IT offices, shop without furniture plant since. So there's a good consumption of maximum consumption is in that region. So I think raw material availability and consumption of boards. I think these were the two large factors besides the fact that we wanted to put up a plant where from one location, you can do compact laminates, you can do laminates and you can do pre-lam particle boards.

So most large projects of offices or even this convention center, people want compact laminate or bathroom partition. They want laminate for panel like you will see this here and they need a same color matching of the office workstation. So the idea was to also combine a location where we could do all. So considering raw material, proximity to port export potential South India market, South being the largest market for laminates and for particle boards. That's how we kind of chose Southern location. Export potential laminates because -- and even chipped it depends in certain countries which don't have motherboard manufacturing because countries in Middle East, Africa, where there is no wood available, they end up importing the particle board from Europe or from Southeast Asia and we already export lavages to those markets. So there could be a potential of chipboard exports at some point.

[Rajesh Ravi, analyst]

Can we [indiscernible], which is second...

[Saurabh Mittal, executive]

Sorry?

[Rajesh Ravi, analyst]

Can we match the [ VNI ] numbers or...

[Saurabh Mittal, executive]

So our model will be really more laminated particle board and not plain boards and we already have partners in those markets selling our laminates. So many partners in these regions use our laminates and compacts and they're importing pre-lam particle boards or cell have MDF from European companies. So it will be a laminated model, not a plain board part.

[Rajesh Ravi, analyst]

And going forward, are we thinking to integrate ourselves with some kind of an OEM like Marino is doing with IKEA in that maybe just to start with the cut boards, not the full furniture. Would we be thinking on that side as well?

[Saurabh Mittal, executive]

So initial plan will be to sell laminated boards to furniture makers. We are not looking at integrating with them as yet, but we would be shipping them prelam particle boards. At some point, you can do components of particle boards, which could be cut workstation with edge band in, et cetera. which we are aware of. But at the moment, the sort of plan in the -- it is not the -- not in the immediate future.

[Rajesh Ravi, analyst]

So just the domestic market, we'll be focusing on.

[Saurabh Mittal, executive]

Domestic market, 100 particle boards value-added rewards that will be the focus for us.

[Rajesh Ravi, analyst]

And the gross margins and the EBITDA in that particle board, sir.

[Saurabh Mittal, executive]

So we said 20%, 25% is the mathematics, which is coming out now in terms of EBITDA margins. Gross margins also will be in the range of what we're achieving now in the band of 50%, 45%, 48%, 50%, which will keep fluctuating basis the raw material costs and prices, et cetera.

[Rajesh Ravi, analyst]

Is the plant coming at the right time?

[Saurabh Mittal, executive]

Well, I think it's never the right time for the plant. We need -- India has no meaningful producer of particle boards. One of our competitors is also setting the plant. And we also believe because of lack of good quality boards in particle boards because of lack of proper company promoting prelam particle boards has given market share of pre-laminated MDF because there's no good boards available in particle boards. So I think considering the long-term opportunity, our presence in the segment, really some timing, you can't time these things. So we think it's okay.

[Rajesh Ravi, analyst]

And the Century number, if I look at the prelim article Board, I think the current quarters are 7%, 8% EBIT kind of a margin. So the margins have been dropping, maybe the quality of those particle boards are not that too good. So -- but then we are guiding for a 20% kind of 20%, 25% range. So do we see -- because I understand that the product category is at a very nascent stage. So do we really see that kind of because of the raw material, if I talk both in the north and south, yes, there is some kind of a difference in the raw material at the...

[Saurabh Mittal, executive]

I'm not sure Century's margins, I think...

[Rajesh Ravi, analyst]

No, I'm sure about that. So it is 7%, 8% EBITDA particle board.

[Ashok Sharma, executive]

Keep on fluctuating in terms of that, and that business is also not a small business for them also as well as in comparison to us also. So I don't think it will be an apple-to-apple comparison. And again, as we said that our intention to sell more and more prelam board in terms of that, and that comes with our expertise into the paper-related business in terms of that. So I think the -- this is not an apple to happen comparison. And again, on a quarter-on-quarter basis, margin may differ in terms of that. We -- what we believe on a longer-term basis, the margin which we have -- which we have projected, we will be able to achieve that margin in terms of.

[Saurabh Mittal, executive]

It also depends on the kind of plant one has. So I'm not so aware what the margins were recently. But -- so as is a continuous press, which with our understanding consumers less PA has better yield, the ability to produce various dimensions are higher, which means for the furniture maker, they can achieve better yields, lower wastage I think this is a multi-night line and a Chinese line as far as whatever I know, but I could be wrong. That's the sense I have. So I think not completely comparable.

[Rajesh Ravi, analyst]

US is a German line right.

[Saurabh Mittal, executive]

It's a European -- German line. Sorry.

[Rajesh Ravi, analyst]

And sir, coming to the raw material side, how is the south at the moment. So there are two things, right? So in MDF versus the particle board, supply Board would be of 7 orders of a cycle of popular or eucalyptus versus an MDF 4 to 5 years? And in particle board, is it 2 years, if I'm right?

[Saurabh Mittal, executive]

So plywood now you can peel timber at even 3- to 5-year cycle. Usually, farmers don't wait for a 7-year cycle. And you have newest spindles billing machines, which could feel lower girth logs or timber. As far as particle board is concerned, like I said earlier, particleboard doesn't necessarily need only fresh timber. All the waste of wood fire would discarded [ fruitbear ] in fees, which complete their life cycle. So all kind of goods can be used. So if you ask specifically for a number of years, so even 2 years is good enough for particulate the raw material.

[Rajesh Ravi, analyst]

And sir, what about the MylaDupia, which is that a new thing which can catch up in India? Do you think so?

[Unknown Executive]

Myladupia is like a form of a pine specie, which is low-end density. So yes, if it is available, it depends on the cost and you can do it. In plywood, you can't use the complete Myladupia because the density and the weight reduced in particle board and MDF could towards depends on the cost and availability.

[Saurabh Mittal, executive]

So I think Century's margins were 21% to 20% MDA. So I don't know whether you got your figure. Yes, particle board we're seeing. Yes, particle board. [Foreign Language] I was surprised. Maybe you mix with laminate and particle board maybe. Just check this, please, please.

[Dhiral Shah, analyst]

So my question is again on the particle board side. So how are we looking to compete with the MDF side because MDF also, we are hearing a lot many capacity coming on.

[Saurabh Mittal, executive]

So like we were saying earlier, particle boards, about 80% to 90% particle boards are sold as an particle boards. We don't sell bare boards. So particle board consumption or value of market in India is about INR 5,000 crores. The major usage of particle boards, it's office furniture, trolleys, TV trolleys, study desk, panel inserts, a lot of government segment users, particular board, school furniture, soft fit outs. So I think particleboard has a space in itself. So we'll probably take market share from unorganized companies from imports India still ends up importing a lot of furniture. Even workstations are being imported from Malaysia, Thailand, Vietnam, because of lack of good quality boards, lack of furniture making in India. So I think that's one story of the particle boards. Prelam particleboard is about 25% to 30% lower priced than prelam MDF. So -- and for most of the interior application where the product doesn't come in contact with water or high humidity, although you have a high unit range also in particle boards. So prelam particle boards or particle boards are good enough. But the idea is not to diesel, MDF and sell particle boards. At the end, all the three panel products, plywood, MDF particle boards have their own market share on specific areas where consumers, fabricators, architects, designers want to use. So if you want to create comparison, we believe for most applications, Prelam particle board will win versus prelam MDF.

[Dhiral Shah, analyst]

And sir, what utilization we will be generating EBITDA margin of 20%, 25%?

[Saurabh Mittal, executive]

So we said...

[Ashok Sharma, executive]

This we said that this is the highest margin, which is at the optimum level of, let's say, above 90.

[Dhiral Shah, analyst]

Initial in first 2 years, what kind of margins we are looking to achieve or utilization we are looking to achieve?

[Ashok Sharma, executive]

So the initial year, we have cited a 50% utilization at that it breaks even at the EBITDA level. And then going forward, as and when we keep moving up, the EBITDA margin will keep increasing.

[Dhiral Shah, analyst]

It's on the plywood side, right now, we are EBITDA negative. So at what utilization we will be, let's say, PBT positive?

[Ashok Sharma, executive]

At around 45%, 50%, we become the EBITDA positive. So you can see that around 60%, 65%, we will be at PBT.

[Saurabh Mittal, executive]

But plywood, as you know, probably we're just focusing on South India right now. And we're also building a brand in the network as we talk right. So initial costs are higher than.

[Dhiral Shah, analyst]

And so on the brownfield side, since we will be utilizing the incremental capacity in the next 6 to 9 months. So what kind of capacity addition we will be looking at that point of time? And what would be the CapEx requirement?

[Saurabh Mittal, executive]

So I'm assuming you're talking for laminates. Laminates typically, we add one line at each time unless we have to add more lines. So each line, you can assume will cost anything between INR 30 crores, INR 35 crores, one line of laminates, which would be press integrator plate truck.

[Dhiral Shah, analyst]

And in terms of million sheets, how much it would be.

[Saurabh Mittal, executive]

So it depends on sheets and boards and realization. So what the data we give out is we say sheets oblique boards. So if the capacity is to produce boards then the number of units will lower, but the value will be very similar.

[Dhiral Shah, analyst]

So how much more press line we can put over there?

[Saurabh Mittal, executive]

So on the Polish we have enough land, we can add -- we have write on three lines we've installed so you can add anything between another 3 to 5 lines. In Gujarat, you also we have enough plan. We can add anything between 3 to 5 lines that also.

[Dhiral Shah, analyst]

Okay. And sir, lastly, on the export side, since we have added maybe new product category by -- so how much this will help to improve our export outlook in the coming years?

[Saurabh Mittal, executive]

Right. So until now, we only had a dimension, a maximum dimension was 6 feet by 12 feet for certain applications and certain markets where people want full height cubicles. They don't want like opening. So they need a 6 feet by 14 feet. So several markets where needed a full height cubical of several customers who needed both the dimensions, and we could only give one dimension. So this will help in expanding that category. I can't put exact value on how much 6 by 14 we will end up selling right now. But clearly, I think this will open up several customers and also add revenues to the customers we were exporting to.

[Ashok Sharma, executive]

Just a word of a small correction that we don't -- it's not that within 6 to 9 months, the entire capacity of laminate will be 100% used in terms of -- we have added increased capacity in plants in the quarter 1, and we have just now added the 3.5 million sheets of oblique board which is three prices in terms of that. It will take some time in terms of getting utilized. It's not going to be the 94% of the utilization, which we have shown is without the [indiscernible]. So it is going to take time in terms of that within 6 to 9 months. It's not going to be utilized 100%. Probably we believe that in the next year, we will be near to that utilization kind of.

[Dhiral Shah, analyst]

And so on the debt part, lastly, so once the particle board comes on stream and once it start utilizing. So what will be the debt repayment schedule over the next 2, 3 years, since we have a net debt of INR 690 crores as of now.

[Unknown Executive]

So see, currently, we have a rate of INR 670 crores as of the September, and we believe that by March, it should peak out around INR 80 crore, INR 850-odd crores ballpark plus minus something. And from next year onwards, the repayment starts. So the repayments are also staggered and not built up equated with every year that happens. And I think at the peak level, it goes to about INR 100 crores, INR 120 crores for the next -- starting, I think, '26 onwards, '24, '25 to '26 onwards for 3 years. And then it kind of tapers down as the large part of the portion of the debt repay off.

[Dhiral Shah, analyst]

So initially, it will be INR 100 crores to INR 120 crores. '25 or '26?

[Unknown Executive]

'26, '27.

[Dhiral Shah, analyst]

So what will be for FY '25, '26, the debt repayment schedule?

[Unknown Executive]

I'll check.

[Ashok Sharma, executive]

And indeed, 50% of our debt is there for the longer duration. The debt which is coming from the IFC as well as from the debt for the equipment. That is for the duration of around 10 to 12 years of repayment. So next year is close to around INR 60-odd crores payment is there. 60-odd crore payment is there. As of now, we are servicing around INR 25-odd crore repayment every year. Next year, in the FY '25, it goes to around INR 60-odd crores.

[Operator]

I request participants to mention your name and company name before asking t

[Unknown Analyst]

[indiscernible] from Securities. Sir, firstly, you mentioned about the export opportunities in your presentation. Could you please clarify what is the cost differential right now between you and the regional players in the countries that you see.

[Saurabh Mittal, executive]

So if you would compare like-to-like us and the regional market leader or the brand leader, depending on the geography, I think will be lower by anything between 15% to 20%.

[Unknown Analyst]

And is this difference currently because of all the geopolitical or the cost difference will sustain over, say, 5 to 7 years kind of.

[Saurabh Mittal, executive]

So it's a function of several things. One is that the brands are stronger. They have local production, maybe better supply chain, better specification, more people on the ground, so they're able to come on better pricing, although gradually, the gap is only reducing. So I think that's one large reason on the pricing. Second is many regional international companies barring few have become subscale because they've not added capacities over several years. And also, it's about third gen, fourth generating businesses, not interested to run the business. Be investors about companies who want to again go and sell in 5 to 7 years. So we believe many large international companies, which were large at one point, have kind of become static or stagnant and they have not added capacities. The cost of putting a factory internationally has also gone up. The ability to get approvals of norms of pollution has also increased. In the laminate business, you need a certain amount of manpower despite optimum automation. So the manpower costs have also gone up. So across multiple factors, the international companies or factories or plants haven't really expanded. And we think as we keep adding more resources, better inventory on ground through our own warehouses, through distribution partners, adding people to work with architects, IDs in several markets, the brand is getting stronger and pricing pass improving.

[Unknown Analyst]

Right. And sir, secondly, on your annual guidance, you had given a 25% growth guidance for this fiscal. Any changes to that?

[Saurabh Mittal, executive]

We had said 20% to 25%. So I think we should be somewhere in the vicinity as we see things up, yes. So right now, we're at 13%. We had 13%. So I think we should be somewhere 20% plus/minus.

[Unknown Analyst]

And the same on margin, sir, for this fiscal, if any number on the blended business.

[Ashok Sharma, executive]

So we have already indicated in the range of around 13%, 14%. I think we will be in that band kind of a thing.

[Unknown Analyst]

They say in the Wood segment that Mr. Ashok is the best CFO we have ever seen. And I won't risk my reputation again to challenge the century lager number. So I think you guys are bang on that. EBIT is around 20% or so. So my apologies on that, sir. So coming to, sir, laminate segment. See, the global penetration on that surface of the limited which goes on the surface is quite high compared to India. So do we see that INR 9,000-odd crores domestic market going towards INR 30,000-odd crores or maybe more in the next 10 years? Is that a possibility? Or can any other surface material can compete going forward?

[Saurabh Mittal, executive]

So laminates is not only used on the surface. It's also using partitions, as you saw in the presentation. Bathroom partition, Facade laminates. It's used in laboratory furniture tops, which also surface in a way, used as partition products in operation theaters, hospitals. So the applications of laminates has expanded over the last few years. That's one. Yes, in the future, the application of laminates or consumption can grow with people wanting to have better interiors petasthetics, better performance if you see this room is more laminates and paints, sorry, [indiscernible]. Walls with laminates by the way. But in the bathroom is got competition yes. So yes, it can expand. Internationally, the services is not only laminates, it's also pre-laminated particle board and pre-laminate MDF. So if you look at IKEA furniture, for example, maybe 7%, 8% is prelaminated particle board. So where you put the paper on the board itself. So the consumption of decorative paper or laminated surface is very high. But not all the surfacing material is only laminates. It's laminates and prelaminated particle boats or MTF.

[Unknown Analyst]

So can the pre-laminated particle board cannibalize our sales of laminates, is it possible?

[Saurabh Mittal, executive]

So our sense is both the segments will grow. In some applications, prelaminated particle board is good enough. And in some applications, you want laminate. So where you need more physical properties of scratch residency, secret burn, coffee stain, et cetera, et cetera, you use HPL where you just want a basic workstation, which is happening today also, you just use a prelim particle board.

[Unknown Analyst]

And sir, going towards the gross margin, your competitor Marino is northwards of 50%, 52% rather. And we are at 47%. And when can we -- I'll again risk that.

[Saurabh Mittal, executive]

team has the numbers. I think gross margin-wise. You don't go Lam on lam numbers. My guess is we are very, very similar. We are certainly higher as read.

[Ashok Sharma, executive]

Yes. So for the lam, if you see us also gross margin will be in the range of -- similar in the range of this -- like in this quarter or half year, it's -- Around 53% kind of a thing. It's difficult to get the Marino gross margins as they have other products also and they don't disclose the gross margin for the individual product. But what we believe the gross margin will be in the similar range or plus/minus 1% or 2%. We can be higher or they can be -- unless we have the data, it's difficult to give -- compare the exact number, but we believe in the similar range.

[Saurabh Mittal, executive]

But you're caring so much of competition. I must also say all parameters, we are superior to the company you mentioned, working capital, ROC, that's also important, right?

[Unknown Analyst]

And on the B2B business side as well versus the competition.

[Saurabh Mittal, executive]

We're talking about the numbers. You're talking about the numbers and performance.

[Unknown Analyst]

No. So basically, the project division, I think there are only two major players in the project divisions on the competition. You and the competition. So how are we progressing towards in that I think we could do better in the domestic space.

[Unknown Analyst]

So can India become a furniture export market going forward?

[Saurabh Mittal, executive]

Sorry?

[Rajesh Ravi, analyst]

Yes. Can India become a furniture export market, is that the -- because that will really take forward the particle board consumption. So -- or maybe just not bringing into China.

[Saurabh Mittal, executive]

I don't have so much sense of the furniture export in particular. But my understanding is today, we are importing furniture for any large IT projects, office projects, I believe, and you still end up importing furniture. So I think first step should be to replace imports and come to domestic consumption. Plants around the port areas can become potential for exports of furniture. But for that, you need panel products, which is you need prelam particleboard and MDF and calibrated plywood. Because that goes as input to the furniture industry to make the furniture products. So yes, can be, but my guess is there's still a large possibility of facing imported furniture with domestically produce furniture.

[Unknown Analyst]

We -- thank you very much for the presentation. One of the things we see in other industry players and participants discussed fairly extensive.

[Operator]

State your name.

[Unknown Analyst]

So I'm Sean from [ Artwood ] partners. One of the things we see in other industry players discuss fairly extensively in recent commentary is concerns around -- flagging concerns around raw material prices, pricing trends over the past few quarters in particular. Could you share a little bit more color on how you've been seeing this over the past few quarters and sort of your view kind of any color on trends going forward to.

[Saurabh Mittal, executive]

So in our business, in the laminates, veneer, flooring, door. By and large, raw material costs have been overall stable. Some cost increases have happened and then some items RM costs have come down. Where we've seen raw material cost increase is in the plywood business. So over the last 3 to 4 months, we've seen significant increase in the local plantation timber costs, while the cost for face mini and chemicals have been by and large stable. Today, fortunately, unfortunate part of business is a bit smaller. So that's why you still see improvements in the gross margins of the business.

[Unknown Analyst]

Going forward, do you have a sense -- any sense of how you're thinking about any protection or any sort of insulation against the timber prices in particular?

[Saurabh Mittal, executive]

So timber prices, depending on the demand and supply, and it's quite cyclical because these are all plantation timber from agroforestry sources. And what we've seen in the past also, although not under Greenlam Industry, but generally, our experience has been when there's more -- when there's less plantation at a certain point, so you have less crop coming to the market. And if demand and supply don't match, cost goes up. And when prices go up, you have a lot of plantation happening. And as we know from ground sources, there's a lot of plantation of agroforestry, which has been -- which is happening across the country. in Southern India and North India. And most of the nurseries who sell these sapplings are running out of stock. So we hope in the next maybe 1 or 2 years, there should be enough materials to come back to the industry. Which again, kind of depresses prices. And I think you just -- like a cycle.

[Sneha Talreja, analyst]

This is Sneha from Nuvama. Just a couple of questions. So what are the plans now with the wooden flooring in the duals business? We haven't touched upon much today?

[Saurabh Mittal, executive]

So that's a hard question. And obviously, we are running behind our own internal schedules of steam running it. So numbers are improving. Revenues are improving, but it's not improving at the pace we wanted to improve, although our efforts are on with sales teams getting slightly reorganized bringing in more focus on the architects, IDs for specifications. So I think it's just a matter of some more time before this business kind of turns on completely.

[Sneha Talreja, analyst]

So what I understand is this is a premium segment, like nobody is doing as premium flooring as maybe you are doing and which you also point out, but premium residential market doing so well, what are we missing out here?

[Saurabh Mittal, executive]

So I'm sure we are missing out something, which we don't know as yet. But with the general information we have on the premium homes is that a lot of construction and sales is happening now and just at a macro level, we think many of these homes will come for interior fit-outs maybe over the next 12, 24 months. I think that's at a macro level. But clearly, I think internally, we still have to do better and it's probably just a process of getting the products specified going out and meeting those homeowners, architects IDs. And our sales teams are also here. I'm sure they listen to this conversation. I was talking about this to one of our regional managers on the subject. So I think just a matter of time before we get this going. The product is very well accepted. The performance is good at the flooring business, especially. We've also reduced certain capital employment in the business. I think just some more time before this kind of turns around.

[Sneha Talreja, analyst]

Sure. Secondly, today, you mentioned a lot on the laminate phase where you're adding capacity is geographically, which you've not done in the past. You started with two plants and now you're going at. What is generally the cost of transportation in this business? And does geographically spreading out, what it could add to your margins? Or is there any peer of yours who is so spread out that compared to you are.

[Saurabh Mittal, executive]

So we don't know if any other peer of ours who is spread out meaningfully. So there are people who have like 11 press and the 3 names, so that's not geographical presence. Besides freight cost, I think time to market is more important, I think the quicker turnaround, quicker supplies to market also adds to quicker demand. So I think cost is one factor. So clearly, you will end up reducing freight costs but you cannot -- considering the product range, we can't see a plant not only services north for all categories because different sizes of laminates are being produced at different factories. So I think supply to market, time to market being at the ports, not like for Asia from enterprise factory, dispatch to arrival is like under 10 days from our factories in [indiscernible] dispatch to Asia. Southeast Asia would be like 25 days or 30 days, considering the rail transportation. So I think the time to market, quicker supply chain, I think, brings tremendous value and only so much you can do in one particular plant. So I think with improved sales, quicker service, I think we'll be able to command better premium, better pricing. Improve our working capital, which will lead to margins and to improve return on capital employed.

[Sneha Talreja, analyst]

Understood. And last one on the particle board side, since you mentioned you won't have the import number handy at this point of time, how much imports are coming in. You yourself are importing a lot of material and pay laminating and selling it.

[Saurabh Mittal, executive]

No, no. We're not importing a lot of boards are part -- but this is very small. And we only buy locally -- sometimes the import, but it's very small. So we laminate particle boards and MDF, for customers who aren't matching laminates where they want the same design paper on a laminate and a particle board or an MDF. It's a small part of our business. We buy it locally mostly and not from imports. In both it's a very small part. What we import is decorative paper and Vineet melamine final all that stuff.

[Arun Baid, analyst]

This is Arun from ICIC. So just a clarification, you mentioned that the particular plant CapEx is going up from INR 600 crores to roughly INR 725 crores because of value add. But earlier used to guide onetime CapEx, which is INR 600 crores would your revenues. Now you're talking about INR 75 crores -- INR 75 crores of revenues. Is it a miss because if your value add is going to go up because should the revenues have gone up much higher?

[Ashok Sharma, executive]

So Arun, it's not only the value add and which we have said in our and our communication to the stock exchange also. It is a mix of everything. It includes some amount on account of value add. Some -- and these were announced the project CapEx estimate was announced around 2 years before. So during this period, the cost of everything has gone up, which includes commodities and other. So it is mix of everything at that and that moment of time when you announced the project, not the entire project is freezed on that day 0 day in terms of that. So it's a mix of everything. Cost of equipment or cost of the civil construction has gone up, some changes which we have done in the specification where instead of bigger size equipment. We are taking some value add. It's a mix of all. And so the cost of project CapEx has gone up. And by this -- adding this value add as well as on the similar side, the sales price or realization has also gone up in terms of that. So keeping all these put together only that what we have as of now, we are budgeted is around INR 700 crores, INR 750 crores is on the revenue side, which we believe. And eventually, that meets out is 1:1 wherein the cost of CapEx has also gone up and revenue is also going up.

[Arun Baid, analyst]

And how much would it depreciation for this plant?

[Ashok Sharma, executive]

Depreciation for the plant, this is the European plant and continuous process plant. So on an average for the equipment, it's around 6%, 6.5%. And for the building as per the norms that get depreciated over a period of 6 years. So we believe that total put together will be somewhere around somewhere around INR 50 crores. Yes, somewhere around INR 50 crores.

[Arun Baid, analyst]

So sir, that at INR 50 crores of depreciation and assuming, let's say, INR 700, INR 750 odd for the revenues. The ROCs would be pretty low in the project even at peak, assuming everything goes our way.

[Saurabh Mittal, executive]

So what is that ROC, which you are as per U.S. company.

[Arun Baid, analyst]

Assuming a INR 700 crore turnover, right, and 20%, 22% margins, your EBITDA would be around INR 150-odd crores, minus depreciation of INR 50 crores, INR 100 crores would be your Ballpark EBIT and INR 775 crores is your CapEx working capital would be at least INR 70-odd crores, right? So INR 850-odd crores of capital employed and ballpark let's say INR 100 crores, INR 120 crores of EBITDA. Less than 15% pretax or...

[Saurabh Mittal, executive]

Is what you're talking on the first year...

[Arun Baid, analyst]

Third year third year. Assuming full revenues.

[Saurabh Mittal, executive]

So third is the capital employed is also keep coming down once you keep depreciating the assets.

[Arun Baid, analyst]

So it won't be material because I'm saying INR 50 crores we've taken a number.

[Saurabh Mittal, executive]

We have budgeted in the range of around 20% in terms of that. We believe that over a period of time, it will be able to achieve that.

[Arun Baid, analyst]

Okay. Maybe I hope you're right, but if you do a number or INR 850 crores and 20%, INR 170 crores should be your number so much.

[Ashok Sharma, executive]

Mathematically, what you're saying is right, but Obviously, we have more opportunity to improve the value mix, raw material cost, demand generation, capacity utilization can be certainly higher than the installed capacity. So these capacities are rated on a 330 days or 30 days. So there are multiple opportunities to keep pushing up, which you've done, if you do a mathematician project also, mathematically, it might come to something else. But right now, we are nearly 35%, 40%. So that's where we are.

[Rajesh Ravi, analyst]

This is Rajesh Ravi here from HDFC Securities. My first question pertains to the laminate business. What is the outlook for the export business, given the geopolitical risk we are currently seeing around Israel and its impact on the European sales? And second question, could you give some guidance again for the full year in terms of laminate volume growth. In the plywood, what is the volume numbers or revenue number you're looking for second half? Yes. I'll come up with follow-up questions.

[Saurabh Mittal, executive]

Over to the export thing, I'll leave Ashok with the numbers. So exports, yes, there is a deposit risk as we all know. Our experience in the past has been that bringing some situations and also because of our own efforts in the market, we end up taking market share of the total exports. So if you see a first 6-month rate of India's exports, the update we have is the exports from India has actually come down. And our market share has increased. And I think a few of the top analysts here measure a lot of data, and I think they probably can ratify what I'm saying. So -- and Middle East region is an important region for us. We, in fact, also shipped to Israel. The feedback we have from Israel is that markets are operating. The fact is running at maybe a 50% utilization on the Israel market. And in general, I think our base is still so small with larger size laminates, newer geographies, we are opening up, our presence with the larger customers in Europe is still quite small versus the potential we have. So maybe at a macro level, there could be a challenge on the market opportunity or growth, et cetera. We're at a very micro level down to our business, I think there's still enough opportunity to grow our business. And if you look at H1, exports is how much is. So if you look at H1, exports for us has grown about 12% in value terms, right? So that's on the export story. And what was the next question?

[Rajesh Ravi, analyst]

The volume cadence for full year.

[Ashok Sharma, executive]

So since we have started in this last quarter only. So we believe that our early intention is to do the 50% for the entire full year. We believe that going forward, every quarter, this utilization will keep on increasing. And we believe in the fourth quarter, we will be close to that 50% number of 30%, 40% capacity utilization in that fourth quarter.

[Rajesh Ravi, analyst]

So you said 50% utilization for the new plant in Q4, right?

[Saurabh Mittal, executive]

We believe we intend to do so. In that range.

[Rajesh Ravi, analyst]

Understood. And sir, plywood, what is the ramp-up guidance for this year?

[Saurabh Mittal, executive]

So this similar 40%, 50%. This is what we said about the for the plywood only. For the laminate, we believe that all since the -- any product can be produced in any of the plants. So there is no specific to any plant guidance in terms of that. Laminate, be for the entire business as a whole.

[Rajesh Ravi, analyst]

So okay, I just missed it. What is the total volume number you're looking for the laminates then for full year?

[Saurabh Mittal, executive]

So for the full year, that initial we are expecting in this overall will be somewhere around 15-odd percent in growth -- value growth. That's value growth. [indiscernible] 15% of value growth value. You were asking volume growth. H1 we've done -- how much 6, 7. We've Done 11% volume growth in H1 SeaCSo normally, we don't give out volume numbers and all that, but we believe to do value growth, some volume will also to go out there.

[Rajesh Ravi, analyst]

Okay. And lastly, on the particle board, the follow-up question. So when you said this capital employed will also shrink. So you're implying that INR 50 crore depreciation is what you will be bringing down your capital employed. And hence, in the third year, you're looking at a lower capital employed and that INR 150 crore will give you 20% ROCE?

[Saurabh Mittal, executive]

In that range -- in that 15% to 20% in that capital -- sorry, ROCE, which we are thinking at plant when it's a full utilization, which we are projecting into third to fourth year that time, we believe that we will be in that range.

[Rajesh Ravi, analyst]

Okay. And given that this will be largely a B2B business and you would be largely selling to big OEMs, furniture OEMs. Any groundwork which has started or potential customer mapping, which has been done given the amount of CapEx and at least first year also, you would be looking at, say, INR 100 crores to INR 200 crore type of revenues from this factory.

[Saurabh Mittal, executive]

Sure, absolutely. And these are not necessarily new customers. We also sell -- so it's not only a B2B model. I don't know what you mean by -- when you say B2B, we'll have to create a channel. We'll have channel partners and dealers and wholesalers who stock and sell to smaller OEMs, aluminum fabricators, furniture makers. There'll be large as in our context in India. -- furniture makers who will buy directly from us. We'll have to work with architects, designers to get their design shape specified. And we already have presence with architectural firms with the B2B or OEM market, where we sell laminates either directly or through our channel partners. So it's already something which is part of our ecosystem. Yes, specifically for prelam particle boards, we'll have to do some more work that's already on.

[Rajesh Ravi, analyst]

Okay. One last question, if I can. Could you share some trends on the raw material side for the laminates, how last two quarters, the raw material prices, craft paper eco paper and these resin prices have moved on in the past 6 months?

[Saurabh Mittal, executive]

So the paper prices, the design paper prices are more or less stable in terms of in the past 2 quarters, craft prices since we procure normally the domestic craft, it is somewhat -- it goes up and come down, but we can see that primarily it's in the similar range kind of a thing. The chemical prices would the downward bias in the past 2 quarters, it is in comparison to previous quarter. It has come down.

[Operator]

As there are no further questions...

[Saurabh Mittal, executive]

You asked too many questions. Last one. No mention of competition. I don't know an answer for that. I think like we said, particle boards again pre-laminated particle board. It fits into our entire program of laminates, offering a solution to customers with matching laminates, matching compact laminates of bathroom partition matching prelam particulars of furniture. So we thought this is the first step for us to get into. And also, it's not as crowded at the moment, at least versus MDF. So I think prelam particle boards was the natural extension considering our laminated designs and decorative paper offering solution to customers. That's the reason we move particle boards. I heard you asked why not -- why particular pores and why not MDF? Why not or why plywood? Plywood and not MDF? Yes. So I think there are two different questions. So one is why would plywood gets aligned to the residential home market where people use laminates, veneer, and a plywood where carpenters do on-site carpentry several kitchens need calibrated plywood, they use our laminates. So I think that servicing the channel, servicing the carpenters, contractors, kitchens offering them the entire range from one company, what's the reason to get into plywoods. Besides the fact that it's a large market opportunity, which has two national players and no meaningful third player. So we also sense a opportunity for us to get into plywoods. And why not MDF is a different question.

[Operator]

As there are no further questions, I now hand over the floor to the management for closing remarks. And post that, everyone can join us for the high tea. Over to you, sir.

[Saurabh Mittal, executive]

Thank you, friends. Thanks for taking out the time and hearing out patiently to us. Should you have any other questions, you can reach out to us or our IR partner, SG forte. Thank you.