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Greenlam Industries Ltd
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Ladies and gentlemen, good day, and welcome to Greenlam Industries Limited Q4 FY '23 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.
Thanks. Good afternoon, everyone. A very, very warm welcome to you all to the Greenlam's quarter 4 earnings call. On the call, I'm joined by Ashok, our CFO; Samarth from the finance team; and SGA our Investor Relations advisor. The results and presentations have been available on the stock exchanges and the company website. I'm hoping that you all have had a chance to look at the results.
So I'll give you a quick brief on how we see the demand situation in both domestic and international market and then give you an update on where the CapEx situation is for the various endeavors which are ongoing with the new facilities and capacity expansion.
So on the domestic front, we believe the demand is pretty reasonable. We've been able to grow both in volume and value for value across categories versus Q3 sequentially and Q4 of FY '22.
On the domestic market, with the introduction of products across price points and laminates with the Gujarat factories takeover, we think now with us having products across various price points, our ability to enter markets to upsell partners to higher products and also filling the gaps in the market have increased considerably. We are increasing our focus on adding channel partners going on to more geographies and introducing new products. With the introduction of plywoods, too, we think our strength in the market will only increase with channel -- with us becoming more important partner with the dealers and with the insurances. And otherwise, by and large, throughout the country, we are driving more numbers and we're driving more work on ground to be done.
On the domestic, I think the other noteworthy point would be we think we should from unorganized to organized this company and we see unorganized companies and players getting weaker and organized and larger brands and better managed companies getting stronger. So we see that trend in the laminates clearly. And even in plywood, we here that the midsize and organized companies are struggling with markets and portability and savings, et cetera.
On the international market, we continue to be focused on the mass market as far as laminates are concerned. For certain product categories in the international markets, currently, we have constrained the capacity with the Andhra Pradesh facility getting the production in Q2 of this financial year of few dimensions and for certain markets and that will kind of move up the export numbers post the factory stops in. With the Gujarat facility too, we've added certain products, certain markets, which in the past we had -- we were not able to serve through the capacity decisions.
So overall, in the exports market, too, we think we should be looking good in the export market, too. Certain markets which were having currency challenges, I think the intensity of the problems are reduced. But there's still some challenges, but by and large, we think the international business and export business to do well for the organization.
So that's broadly more like a helicopter view on where the markets are domestic and international.
On the performance of that, we surpassed the INR 2,000 crore milestone in revenues in FY '23, and we also surpassed INR 100 crores in profit after tax in FY '23. It's been the first time we did as a Greenlam industries. And across parameters of gross margins, net margins, EBITDA margins, working capital cycle, we have crossed various operating parameters, we've improved and we thought this will equal in Q4. Losses in the veneer and allied categories have reduced. Margins in the laminates business have expanded. And likewise, ROCEs have also improved to the 24-odd percent with 2 new projects of Andhra Pradesh and Tamil Nadu.
On the CapEx front, the Gujarat facility has more or less stabilized. We also upgraded the facility with the first production line which permitted production on May 17. And we hope that very soon we should bring the plant to maybe 80% to 90% utilization.
With the upgraded capacity of Gujarat, the total laminate capacity is now 21 million sheets. This will become about 24.75 approximately with the addition of the Andhra Pradesh laminate facility.
The plywood plant should start in the month of June 2023. The Andhra Pradesh plant of laminates should begin commercial production in Q2 of FY '24. And particleboard plant should start production towards the end of Q4 FY '24. So that's on the capacity creation and expansion which we are undergoing.
So totally, that's it from my side. And obviously, I'll be happy to answer your queries and questions in the Q&A session. I will now hand over the call to Ashok. Ashok will take you through the financial and operational highlights of the quarter and the year. Ashok, over to you.
Thank you, sir. Good afternoon friends. I'll take you through the quarterly performance and then move on to the annual performance.
For the Q4, on a consol basis, our net revenue for the quarter grew by 15.2% on a year-on-year basis and grew by 6% on sequential basis to INR 534 crores as compared to INR 463 crores in Q4 last year.
Gross margin grew by 390 basis points to 48.8% in this quarter from 44.9% in Q4 last year. On a sequential basis, too, the gross margin grew by 50 basis points.
EBITDA margin was up by 320 basis points and stood at 13.9% in this quarter as compared to 10.7% in Q4 last year. On a sequential basis, margin was up by 300 basis points. EBITDA in absolute terms grew by 49% to 74% -- INR 74 crores in this quarter in comparison to INR 50 crores in Q4 last year.
Net profit for the quarter stood at INR 46 crores as against INR 25.7 crores in the Q4 last year.
Moving on to annual performance. Consol net revenue for the year grew by 18.9% on year-on-year basis to INR 2,036 crores in comparison to INR 1,703 crores last year. Gross margin was up by 210 basis points to 46.7% from 44.6% last year. Gross margin in absolute terms grew by around 25% to INR 947 crores in this year as compared to INR 759 crores last year.
EBITDA margin was up by 50 basis points to 11.5% from 11% last year. EBITDA in absolute terms grew by 24.5% to INR 233 crores as compared to INR 187 crores last year. Net profit grew by 41%, and it stood at INR 128 crores in this year as against INR 90 crores last year.
Moving on to segmentary performance. First, the laminate. For this quarter, laminate revenue grew by 16% on a year-on-year basis and 7.1% on sequentially basis and stood at INR 492 crores as compared to INR 424 crores Q4 last year. Volume growth stood at 16.8% on year-on-year basis. Domestic laminate revenue grew by 11% on year-on-year and 2% on sequential basis. Volume growth stood at 26.7% on year-on-year basis. International laminate revenue grew by 20.9% on year-on-year and 12.2% on sequential basis in value term. Volume grew by 5.3% on year-on-year basis.
EBITDA margin stood at 15.6%, a growth of 270 basis points on year-on-year basis and 320 basis points on sequential basis.
Products and volume were at 4.55 million sheets at a utilization level of 96%. Sales volume for the quarter stood at 4.67 million sheets and our average realization for this quarter was INR 1,008 per sheet.
Moving on to annual performance. Laminate revenue grew by 19% on a year-on-year basis to INR 1,852 crores from INR 1,556 crores last year. Volume grew by 3%. Domestic laminate revenue grew by 25% in value terms. And in volume terms, it grew by 15.6%. International laminate revenue grew by 13.6% in value terms. And in volume terms, however, in volume terms, it degrew by 9.3%.
EBITDA margin stood at 13.1%, has a growth of 40 basis points over last year. Products and volumes were at 17.40 million sheets and at a utilization level of 99%. Sales volume for the year stood at 17.04 million sheets, and our average realization for the year was INR 1,038 per sheet.
Now I'll move on to another segment, Decorative Veneer & Allied segment, which consists of Decorative Veneer engineer floors and engineer doors. In the decorative veneer segment, revenue grew by 6.8% on a year-on-year basis. However, it degrew by 4.9% on a sequential basis to INR 42 crores from INR 39.56 crores last year. Volume grew by 8.4% on a year-on-year basis.
Revenue of Decorative Veneer business grew by 18% for the full year, INR 274 crore in comparison to INR 147 crores in FY '22. Volume grew by 11%. Sales volume for Q4 stood at 0.32 million sheets. The previous INR 173 crore is for the entire Veneer and Allied business.
Sales volume for the Veneer for the quarter stood at 0.32 million square meters. And for the year as a whole, it was 1.21 million square meters. Capacity utilization for the quarter was 19% and for the year as a whole was 29%. Average realization for the quarter stood at INR 859 per square meter and for the year stood at INR 877 per square meter.
Moving on to engineered wood flooring. Revenue for the engineered wood flooring business degrew by 20% on a year-on-year basis and degrew by 22% on a sequential basis to INR 8.5 crores this quarter as against INR 10.5 crores in Q4 last year.
For the end -- for the year-end, engineered wood flooring business grew by 16.4% to INR 42.7 crores as against INR 36.7 crores last year. Our capacity utilization was 8% in this quarter and 12% for the year as a whole.
Moving on to engineered doors. Revenue for the engineered doors business degrew by 8% on a year-on-year basis and degrew by 29% on a sequential basis to INR 6.4 crores this quarter as against INR 6.9 crores quarter 4 last year.
For the year as a whole, engineered door business degrew by 9.4% to INR 24.3 crores as against INR 26.8 crores last year. Capacity utilization for this quarter was at 16% and for the year as a whole, it stood at 15%.
Net debt for the quarter ended stood at INR 304 crores as against INR 148 crores at the end of December '22. This is on account of project debt which was drawn in this quarter.
Net working capital for this quarter stood at 66 days, and for the year as a whole stood at 70 days.
That's all from our side. I would now like to open the floor for the question and answer.
[Operator Instructions] We have the first question from the line of Mr. Achal from JM Financial.
Congratulations for the great set of numbers. Just a couple of clarifications I wanted to check on. A, with respect to the gross margin improvement, if you could elaborate a little bit. And specifically, if I look at the EBITDA level improvement Q-o-Q, quarter-on-quarter, it's fairly large when the gross margin improvement is 30 bps, the EBITDA margin improvement is 280. So just wanted to understand, is that entirely due to operating leverage? Is there any write-backs or anything which we should be aware of, sir?
No, Achal, there is no write-back in terms of that. So there are a couple of things. One, the revenue went up from -- in comparison to last quarter, revenue were up by nearly around INR 30 crores, INR 32 crores. And gross margin has improved 48.9% -- 48.9% to 49.2%. The expenses were not gone up in the same proportionate and some of the expenses like we did not do in this quarter which may happen in the next quarter, like one of the advertisement, but which we do normally every quarter. So that has not happened in this quarter, that may happen in next quarter.
So some of the -- what you are seeing, some of this is when expenses may go up in the quarter, but overall trajectory will remain on towards the higher EBITDA in comparison to last year, what you see.
Understood. Is it possible to quantify, sir, what is the A&P in this quarter in absolute number and compared to 3Q and 3Q FY '23?
I will come back to you on it.
No problem, sir. The second question I had with respect to volumes, I mean, if I look at the volume growth of 17% Y-o-Y, obviously, it is great. But it's also to do with the low base. So how do we look at the volume growth for FY '24? And if you could also give some sense about domestic and exports, how the volume growth would look like.
Look, volume growth, Achal, capacity available to us in FY '24 will be partly the full year or 11 months capacity of 3 lines of Gujarat and the Gujarat factory started last year, probably end of August, September. So we'll have that capacity available with us. We'll also have the Andhra Pradesh plant getting into production in Q2. So clearly, capacity is available, will expand. And also without entering certain set of markets -- certain segment of markets which we were not meaningfully present in also drives more volumes.
So clearly, I think, if you look at FY '24, we should be looking at maybe like a 10%, 12% kind of volume growth at least, yes. We're talking laminates right now.
Yes, yes. So in the last quarter, you had talked about, I think, 13% to 15%. You would maintain that? When you say -- at least, I presume you would maintain that? Or do you think..
I have not made my note for what I talked last quarter, but obviously, the endeavor will be in that direction. And like I said earlier in the call, also for certain export categories, we are running full with certain capacities, and those capacities are coming up in Andhra Pradesh plants, when they get into production. I think we will also have a lit bit of push there. Those are normally the bigger sized laminates. So we might not see big quantity numbers growing, but you'll see hopefully reasonable value coming up there. But it should be in that direction more or less.
Got it. Just a clarification on this margin part, what is the margin you think? Because for the full year, the laminates EBITDA margin was somewhere around 13%. What is the number one can look at the range, one can work with, sir?
So hard to give a margin, but as we talk right now, with higher revenues, with more size and scale, with costs at the moment being about stable. And as you probably know, in laminates business, we have a big chunk of exports and imports coming in and we were severely under stress in FY '22 with margins and costs going up, and that's kind of normalized now to pre-COVID level.
So more or less, I think on ground situation looks normalized from a sea freight and see freight impacts us in both annual export in terms of costs. So I think if you are able to drive the volumes, we should be looking at, with the way things are looking now, if something dramatically changes, obviously, one can't say about that, we should be looking in a decent range what we've done in maybe Q4 wouldwe should be following that direction.
The next question is from the line of Udit Gajiwala from Yes Securities.
Just firstly, a follow-up on the previous participant. Sir, what kind of revenue growth should we expect? Are you expecting to take any price hikes given that the Gujarat plant will be more of a mass market product? So will the revenue growth be lower than the volumes?
So overall, as a company, we are saying we should be like a 20%, 25% revenue growth, considering the Gujarat plant, considering plywood plant starting in the month of June and also considering Andhra Pradesh actually starting in Q2. So we should be like at 20%, 25% kind of revenue growth target for FY '24.
As far as price hikes are concerned, I don't see us taking price hikes in laminates or veneer products while as you know, that we always work towards improving the value mix of the products. So maybe the prices per sheet increase will not happen, but if you are able to improve the value mix by selling higher valuer items, maybe the price relation kind of improves -- still improves from where it is right now.
Understood. Understood, sir. So similarly, sir, what kind of debt level should we be looking at in FY '24? And of the CapEx, if you could just highlight that how much we have incurred for each project and what is expected in '24, that would be helpful.
Udit, so for this project -- for these 2 new projects, which is plywood and laminate and particle board, we have spent close to around -- we have spent close to around -- close to around INR 450-odd crores till now in this, and we expect another around INR 500 crores will be spent in this and some will move -- some might move on to the next year in terms of that.
And in terms of debt, net debt level, we were at around close to -- we were at INR 312 crores in this quarter. We expect debt to be in the range of around INR 700 crores, INR 750 crores by end of this year.
This is net debt, right?
Yes, this is net debt.
[Operator Instructions] The next question is from the line of Sneha Talreja from Edelweiss.
Congratulations on great set of numbers. Sir, just wanted one clarity on the exports front. We have actually on domestic front, while we've done a great amount of volumes with a very strong growth, on export front, we are not yet back to the volumes that we have achieved. One thing that you mentioned was that AP plant will come in right now it's capacity utilization constraint that you have. But how are we earlier doing at least 20% to 30% higher volumes in the export market which was a previous high? Some clarity there would be helpful.
So I'm not sure, are you asking what the volumes are? Are you not -- are you saying we're not achieving those volume growth in exports? Is that what it says?
So how were we earlier doing higher exports if you are currently lacking capacity, we had earlier done much higher export volumes.
No, we're not doing exports. So Q4, volume growth is about 5.5%, 5.3% more than Q4 of FY '22 and value is about 23% higher. And versus Q3 sequentially, export volume was over 13%. So I'm not sure what the question is. Ashok, if you can answer.
Yes. As we mentioned previously also in this year for couple of quarters, we had challenges in some of the export markets where the currency challenges and all these things, which has impacted in, let's say, quarter 2 and quarter 3. And we are now slowly and gradually coming back to normal. And you can see in this quarter, the growth was in volume terms also grew 5%. And in the value terms also, the growth is there.
What sir was mentioning in some of the variants, we have the capacity constraint which is primarily the bigger size of laminate where in -- as of now, we have more orders, but we cannot sit because of the -- even though the overall capacity may not be within 100% because of Prantij, but in Prantij, we manufacture only 4x8 kind of a thing. the bigger variety, we are having more orders, which will get resolved once our Naidupeta plant comes in because there we will have all the 3 sizes. That's what.
Understood. So that will happen from Q3 onwards because Q2 will have the commissioning happening?
Yes. We will have this for the Naidupeta it is planned in Q2.
Understood, sir. And you also mentioned on the margin part, which is helpful that operating delivers certain amount of gross margin improvement. So given that our volumes will only increase from hereon, are these sustainable margins that we should resume from the coming quarters?
Well, like we said earlier, the environment of costs, it is in front of us. So if you're able to drive more volumes and maintain realizations by constantly working on value mix improvement while we also enter the -- while we also push for more volumes in every segment of the market. So maybe we think we should be able to sustain it, but one can't say for sure, in certainty, but we think we should be in this space.
Understood. Sir, lastly, on the doors side of it with whatever Ashok was mentioning on the call, the numbers part. I think our numbers for the doors division looks sequentially as well as Y-o-Y down. Any significant things happening on the doors side? Would you like to highlight any vision for this particular segment from the doors and the flooring business, how are we now looking at this segment given that we also have particle board plywood in order those coming up?
Yes. So if you take -- if you look at quarter-on-quarter, flooring business is at 7.8 which is a 25% value down. Realization has gone up because we've not been able to do any exports in both floor and door segment because of challenges in the markets at that point. The sea frieght conditions and imports and exports, all the restrictions were there.
On an annualized basis, flooring has done about 16.5% more than FY '22. We have done about INR 42-odd crores. And doors about 11% lower overall this year at about INR 22.42-odd crores. So we think we are very close to kind of bringing the business to profitability. I think with cost bonus under control, we need certain volumes. We need more volumes in the segment to improve the business. The realizations have gone up in both flooring and the door business because largely, the focus has been on the domestic market in this business. So that's where we are on this business.
The next question is from the line of Praveen Ranjan Sahay from Prabhudas Lilladher.
So it's related to the laminates and allied product business. If I look at from the last 3 quarters, your realization is continuously going down. Is it because of some product mix or the softness or the correction in the prices, you are reducing the pricing?
Yes, Praveen, as you see that we have introduced -- we have entered into -- we have entered into liner or maybe the starting category of the laminate from the start of our Prantij plant, which is at a lower price point. So that we have not reduced the price in general for our laminate. But on account of this, yes, the overall price realization lid look to come down a bit.
But that is being met through the value mix increase in the other business rather than the franchise business. But yes, there is some impact on the overall.
But there is not much of a -- if you compare from the last year, let's say, Q4 of last year, it was 1,001. This year, also it 1,008, so in fact, is going up by 0.7%. Yes, of course, if you compare from the quarter 3, then it is like 2% down on a sequential basis. But nothing in general price reduction has happened as well.
So the way forward...
Give me a moment, sir. Sir, on the management line. Sir, there is a slight static on the line. So if you have a receiver, can you please pick up the receiver and speak?
We are speaking from the polycom.
Polycom? okay, sir, no problem. I would request the speakers to speak a little bit farer from the polycom. Please continue. Thank you.
Praveen on the pricing, like Ashok correctly mentioned, there's been no general reduction. And there's a marginal reduction in realization versus Q3. In certain cases, case to case, we have corrected competition intensity and with RM cost coming down, see if it's coming down. We have cut it some, but I think that's very, very marginal.
That's helpful, sir. Can you also give some color on the domestic and the export realization? Is that the domestic is on the lower side versus the export?
Yes. So as of now, if you see the domestic prices are lower in comparison to export prices, and that's because the difference in the unit -- if you see in the domestic side, mostly the 8x4 laminate sheets are being sold, whereas in the export market, there are bigger-sized laminate as well as the boards are being sold where the unit realization is higher than the sheet prices. So it's part of the product is a bit different in export their pickup products and maybe larger units also. So maybe this is not the best comparison, but for simplicity sake and to bring something for certain calculations we have arrived at.
Sir, related to your veneer segment, I can observe that the sequential basis, the production has been down whereas sales has improved in the volume terms. So like you had a production in the last quarter and which you able to sell in this quarter? Is it something like that happen?
My guess is -- that's what my guess is, yes.
The next question is from the line of Rajesh Ravi from HDFC Securities.
Sir, am I audible?
Yes, sir.
Sir, first of all, in terms of the total project, is there -- all the ongoing projects, is there any cost related escalation which you look forward to, like in the particle board and the laminates plant?
So there could be certain escalations in civil costs and construction costs, et cetera, but it's all more or less manageable. But in machineries, there are not much escalations. And somewhere, see if rates have come down which were taken earlier, so we've not been able to exactly get them in it, but there could be some escalations in the cost.
Okay. Fair to assume that there would be closer to 5% or more than 5% than the earlier stipulated CapEx?
Well, we don't cross minus a little bit hard to give you a number at the moment. But it's more or less in that range.
Okay. And secondly, this INR 500-odd crore which you're expecting to spend in FY '24, could you give a breakup of the same across the 3 units, ply, laminates and particle board?
We will share that off-line.
Sure. The volume guidance which you are giving, slightly north of 10%, isn't that conservative number given that you have 5 million sheet capacities from the Prantij plant, which will be ramping up, I assume, full utilization this year. Even this AP plant which you'll be setting up, given that you have already constrained of capacities and you have a strong distribution both in domestic and exports market, so are you building up slow ramp-up? Are there some constraints which will slow down the utilization of the new factories?
No, nothing like that, but we're just seeing that sometimes just to convert action into reality, it just takes some time. So I don't think it's conservative. I think it's more reasonable as there are always some or the other surprises which come in. Obviously, we will not stop at 10%. If we can do more, more will be done. I think that's more fair to expect that.
What sort of utilizations you're -- we should factor in for the Gujarat plant and for the new Andhra plant, assuming the Andhra plant is available for 6 months and the Gujarat plant is available for the full year now?
So Gujarat plant is already 7 months, it is up and running. And we are as of now close to around 75%, 80% in this. And we had told in the beginning of the call also, at the expanded capacity, we are expecting the similar kind of thing in the next year -- in this year.
And for the Andhra plant, we have budgeted 50%, 60% in the first year from the commercial products in a short -- so let's say 6 months utilization at 50%, 60%. Where the difference will be there, it is more sheet and board, whereas the other plants are predominantly only sheets.
Correct. The other plant means Gujarat only has lower in sales.
Mostly sheets.
Correct. So if you're building those sort of numbers, we would be looking north of 20% volume growth. Am I missing something?
Because we just run the math. Ashok will run the math again and maybe chat with you on that. Okay.
[Operator Instructions] The next question is from the line of Hrishikesh Bhagat from Kotak Mutual Fund.
So two questions from my side. Firstly, with regards to this foray into the plywood are now considering the plant is fairly close to commercialization. Now, how do we see the A&P spend and probably promotional spend? How would they stack up for FY '24? That's my first question.
And second question is related to particle board. Now considering the sea freight correction that you highlighted, obviously, imports must have also gone up. So any impact you've seen on the particle board industry because of the higher imports?
Plywood currently is so largely focused on South India and no go pan India for the plant being in Tamil Nadu. So A&P spends will be largely localized and not national in nature. And the factory starts in the month of June, you're right on that. That's on the ply piece.
On the particle board, you're right. Sea freights have come down, which definitely expands the possibility of board being important. As you are aware that the model of particle boards is that nearly 80% of revenues will come from pre-laminated particle board and not from plain boards. So the whole focus will be on in a way decorative particle board on a user term, where we laminate the particle board decorative board and then ship to the market.
So yes, it will have some impact in terms of more imports. That's what we're guessing. But by and large, I think from a model, we don't see much challenges because our eventual sale in the market if not plain boards, it's going to be pre-laminated particle boards.
The plain board sales, if any, to will just be a stop gap or a small part of the overall revenue mix.
So does that answer your question?
Yes. Thank you.
The next question is from the line of Bhavin Rupani from Investec.
The first question, sir, how should one understand the pricing with the raw material cost declining. Do we plan to pass on the benefit to the customer?
So like we said earlier to some other participants, in general, we have not reduced any prices. Case to case in certain categories, we have done some correction. We might have to do some correction.
Okay, sir. And sir, I should want to understand the margins from Pranij plant, Gujarat plant? Will it be possible for you to quantify it?
No, very hard to review that number because if we produce only a certain category of product in that factory, so independently running a map of that plant versus others will not be a fair comparison. So I think we'll have to look at the Pranti plant's margin in totality as a laminate verticals margin. So that's a decision the company is taking on some products to be produced in some plants, the other plant considering availability of raw material costs, freight, et cetera.
The next question is from the line of Abhishek from DSP Mutual Fund.
Sir, just a couple of questions. Given that the sea freights have now normalized, how does your overall competitive scenario and pricing scenario in the export market is looking? Are you able to become more competitive now because? That had been kind of been working against us. Just some thoughts there.
Like you rightly mentioned, Abhiskek, the sea freight is normalizing, our competitiveness versus our international matter competition, people who are producing laminates and allied categories in respective countries. Our competitiveness actually expands with the normalized availability of containers, normalized selling time and normalized freight. So we think we will be taking away more market share from international laminates business and with our base of teams, warehousing, distribution, by and large, in a good position. We think we can take more market share in the international business.
Okay. And sir, the other thing is also in terms of the domestic laminates, how is the competitive scenario there, particularly from the semi-organized and the lower end of the value segment. Any color there would be helpful, sir.
Not much has probably changed in terms of competition intensity. But we do think and we do note a lot of midsized, lower-level companies are having challenges with sales and with elections and all of that. So I think as such nothing has dramatically changed, but we think those companies are getting weaker, and we are probably taking some share gradually from that segment.
Okay. And sir, just usually in the general wood panel and especially in plywood also since you'll be entering now, are you seeing the sharp increase in timber prices that one has seen? How will your procurement be? Are you kind of -- do you have enough sourcing as far as the timber is concerned? And any percussions of the same on the unorganized because their ability to manage pricing is much difficult. So some color on that would be helpful.
So as far as timber sourcing from domestic market is concerned, it's relevant to the plywood and the particle board business. And both our factories, plants are coming up in South India. So as we talk right now, we are kind of now entering the raw material buying space for the plywood factory for plywood plant. And I think we'll know more as we talk next.
But as we see things now, obviously, our boat costs have risen sharply, especially in North India and slightly in South India. Our guess is if wood costs do go up, you go and pass on the price increases to the market.
We do know that at the moment, the rate of increase in South is lower than North and other parts of the country. But I think we'll be a bit more wiser in the next 3 to 6 months when we actually go and buy raw material and consume normal being.
As far as the unorganized companies are concerned, clearly, I think the organized companies have a better position in terms -- when these things happen. -- because their buying capacity, their payment capacity is superior and contractors and farmers and aggregators have organized companies as a preferred buyer than unorganized companies. Yes, this is the sense we have at the moment.
The next question is from the line of Ankur Kumar from Alfa Capital.
Congrats for a good set of numbers. Sir, first question is what will be your peak revenue potential at current prices when you go to full utilization considering all CapEx plan?
So we said that, [indiscernible]. So considering the [indiscernible] Andhra Pradesh plant [indiscernible] Gujarat plywood, particle board, we think the revenues will be in the band of INR 3,500 crores to INR 3,600 crores approximately with the investments we are doing now unless we are able to further improve any value mix of improved utilization. So by and large the things will be somewhere in that space.
And can we expect like 3 years for us to reach those levels?
Well, that is the end of what happens with the market don't know what.
Yes. Got it, sir. And sir, on margins that you said that lower A&P spend. So can you please quantify that number as in how much was it versus history.
For this quarter only. Normally, one quarter will be in the range of around INR 6 crores, INR 7 crores.
INR 6 crores, INR 7 crores.
Yes.
Okay. So this quarter, it was much less...
1% of A&P expenses which did not happen in this quarter, which is around INR 6 crores, INR 7 crores.
But general -- in last Q4, how much was it, sir?
Sorry?
For the last Q4 or full year, what was the number? Basically, I just wanted to know how much have you reduced on that.
It has gone up in the year as a whole, if you see, then it has gone up in terms of that. It's only that one line item expense did happen, which is around INR 6 crores, INR 7 crore only, the overall expense has gone up just in Q4 A&P.
If you see this year, the overall expense has gone up in comparison to previous year.
Okay. And what is our expectation for next year? How much of A&P would we like to do?
It's difficult to give you the -- in terms of -- in terms of that. This will be in line with what it is there in the current year.
I think as a percent of it would be similar -- plywood -- we'll have lower revenues and higher A&P as a percent. So probably as a company, percent probably will be similar I guess. I really assure Ashok to give you the data on that.
Got it, sir. And sir, last question would be, you said revenue, will you expect 20% to 25% growth for this year. But volume side, you said only around 12% to 13%. But you also said that pricing, we don't expect much jump. So can you please...
Yes, because plywood revenue will also come in overall revenues. There'll be -- we talked about the volume growth of only laminates, not other categories. So we said that for laminates 10% to 12% type of volume growth. We also said prices may not increase, but our endeavor is concentrating into improve value mix. And then there'll be plywood revenue coming for about 6 to 9 months. There will be revenues coming, but we didn't talk about volumes in that. So considering all of that, we said 20% to 25% kind of a revenue target growth.
Got it. And sir, our brand is quite good in the market. But if I look at our margins, it seems lesser than the competitors like Century and Stylam types.
I'm not sure whether what you're saying is correct. So I think maybe Ashok needs to review that once I think you can see the margins and will also have to see return on capital employed. So as you probably know, sometimes margins can be higher, but ROCE gets weaker. So I think Ashok has to run a math to be on that.
The next question is from the line of Nikhil Agarwal from Vt Capital.
Sir, my question was on the employee cost, since you have been -- you have about 3 new plants coming up in the next 1 year, so what sort of growth should we see in the employee costs?
Yes. If you see in terms of this also, we are building up the team for the newer vertical, plywood vertical, new team has been built. We are expanding the team to expand our overall reach in the laminate. So we believe that it will remain in this range bound at least for this year.
Remain in the range bound about...
About the same as a percentage in terms of what it was there in the FY '23.
Okay. Got it, sir. Sorry. And so if you could throw some light on the raw material prices, like I believe chemical costs have stabilized, but what about costs on the craft paper front? Like what have the prices been out there?
Yes, it is stable as of now in this quarter -- in the last quarter and a quarter as of now what we are talking, the laminate -- the crafter paper prices, the chemical prices, as you said, that it is stabilized a bit softer in comparison to previous quarters.
Okay. Got it, sir. Sir, one last question. Sir, if you could throw some light on the unorganized market and how have they been faring. And like what would be the price differential like between the organized players and the unorganized players?
It is already -- as we mentioned at the beginning of the call that it is ongoing process and the -- whatever we have the understanding and knowledge that unorganized players are weakening on, let's say, on quarter-on-quarter. The unorganized player growth are higher than the overall industry growth. So we believe that they are taking market share from the unorganized segment in terms of that.
Okay. Sir, any reason why the unorganized sector, they are weakening and like any specific reason?
There are a number of reasons in terms of their size not investing in terms of their consumer preference are moving not only in our segment in every other segment that consumer segments are moving in terms of the organized product because they offer the value for money in terms of cost can be moved, but they offer value for many good quality, good choices, availability of the material. There are a number of reasons that why people are moving towards the organized segment kind of thing. And basically, the main difference earlier was mostly the people, unorganized, they do a lot of revision, which is also coming under pressure from the government. So we believe that going forward, also, it has moved towards the organized rather than the unorganized.
The next question is from the line of Achal from JM Financial.
The question here is that in terms of the mix for laminates in terms of B2B and B2C, in terms of end usage, any more perspective you can provide how much would -- of the laminate would be directly consumed by the customer? Or how much would go in the institutional setup.
We can't provide like much information on this -- but I would probably know that homeowners, the biolaminates, which is aided by influencers architecture ID, so if your question is what our mix between residential, commercial, that's one -- that's one -- that could be 1 potential way to look at it. Or if your question is what's been done by carpentry and what's been done by OEMs? So I'm not sure what you wish to ask.
Both aspects, if you could.
So, overall market will be more like 60%, 65% residential, 35%, 40% commercial. And I'm not sure that has changed, maybe geographical changes might be there.
As far as carpentry and OEM is concerned, so clearly, we see larger carpenters contractors opening workshops with the mechanized furniture, panel manufacturing and then installing furniture fit outs on the site. I can't put a percent to it.
Understood. Where I'm coming from is in terms of the particle board, you did mention that 90% of our sales will be prelaminated. So I was just curious to understand if it will come at the cost of the laminates because, ultimately, the customer has a choice between the customized laminated furniture or ready-made furniture. So I was just coming.
So I said 80%, not 90%. And prelam particle board is largely an off-site manufacturing product, which means that one has to work on the boards in a workshop or in a factory or an OEM setup. So typically, because of the dimension of the board which on an average will be higher than laminates and bit thicker and carrying so many SKUs is not practical on ground in India. So goods from the manufacturing plant of the company will get shipped to fabrication plants directly.
So in particle board, mostly, it's specification-driven model focused on OEMs or furniture manufacturers doing commercial furniture, doing kitchens at times. In India, the usage of boards in kitchens, particle boards in kitchen is still very limited. Although internationally, a lot of kitchens use particle boards. So mostly it's going to be commercial furniture, loose furniture, study tables, TV drawings, desktops, et cetera, which will be including particle board. The number of SKUs will be fewer than laminates in terms of design options and texture options. So that's where we are.
So currently also, if you see -- we said that in our reports earlier to actually INR 4,000 crores to INR 5,000 crores of market that existed particle boards -- so I think we'll end up taking share of unorganized companies there too, because good quality boards are not available. Quality of lamination is very inferior. The physical and surface properties are very poor. So this is how we look at it.
Got it. Just last question. With respect to this INR 5,000 crore market, how much of this will be currently imported? And basis our cost of production, how -- what would be the price difference between us and them?
I don't have the math right now because we're still a bit away from commencing it. Obviously, we've done our work and all that. So -- but maybe we can respond to you in a more meaningful manner at a later point on this particular.
The next question is from the line of Udit Gajiwala from Yes Securities.
Yes. Sir, could you quantify the EBITDA level losses for the door and floor segment for the quarter and the full year.
So for the quarter, floor and door having a loss of INR 2.7 crores at EBITDA level. And for the year as the whole it is having a loss of INR 9.7 crores.
This is both put together?
Doors and floors.
The next question is from the line of Rajesh Ravi from HDFC Securities.
I have few follow-up questions. This Andhra Pradesh laminate project, once this particle board is fully commissioned, how much the laminates would go for captive uses?
Sorry, I didn't hear you clearly, please.
Am I audible?
Yes, I'll respond to this. Rajesh, in this case, when we are talking about the prelam particle board, in this, the entire laminate is not need to be laminate and need to be put on that. It's only the top layer of laminate, which is decorative paper that only need to put. So both these facilities are independent of each other. Laminate is not going to be used in most of the cases on the particle board.
I just wanted to understand the particle board unit will have a separate lamination -- laminate print -- lamination unit. I mean the laminate producing unit? Or it will be made from the laminate plant, which is getting commissioned next quarter?
That's what I was trying to tell you. The laminate, only the top layer of the laminate, which is the decorative paper only will get -- so it will have a separate line for this.
Okay. Okay. So this capacity does not include, the current capacity which you are mentioning?
So the 2 independent plants, it process of prelamination particle board, it's different from high-pressure laminates which we say laminates, in terms of the pressing line, the dimension, the cycle time et cetera, 2 independent plants. The only thing normal between them, which can be possible is a decorative paper inventory.
Okay. Understood. Understood. And sir, for the laminate exports market, what is the growth outlook? And where are you positioned given that in terms of your focus on the exports market given that you have strong distribution, regional distribution across markets.
So we said that earlier. I think we should look at some good or decent growth in the export market. I think this will continue. I think we've been growing at a certain pace over the last several years. I think that if you are talking about 10%, 12% quantity growth, it also includes export market. So export market should also grow a little bit plus/minus this year in FY '24. And we also set certain categories of export markets, those capacities at the moment. A challenge that once Andhra Pradesh factory comes in, we'll also have some more capacity to push exports in certain dimensions in certain markets.
Okay. And sir, in the particle board, when you talk about the market size of INR 5,000 crores, could you also explain in terms of volume terms in CVM what could be the market size in India?
Yes. So I think that math, because we can have independent -- you can have independent chat with Ashok at a later point. We have entire breakup of volumes in domestic imports, prices, realization and also, I think that can be a different conversation.
The next question is from the line of Bhavani Kumawat from Philip Capital.
Am I audible?
Yes.
To understand on the international business front, how is the demand scenario currently on international side?
Hard to like give you one blanket answer because we operate in about 100 countries right now. But overall, I would say, if I use the most appropriate word comes to mind is reasonable and some markets are doing better than the others. But like we said, with sea freights conditions normalizing and with us expanding more capacities, we should look at taking more market share from international competitors.
Okay. Sir, just wanted to understand about your distribution model in international business versus international player as well.
I'm sorry, will you come again?
I can get things like very brief, I think I give you a quick brief. So it has a dual approach. We have a distribution model with partners. And again, it varies form geography to geography. I must say that first. So we have partners having holding stocks on ground and then going out to joineries, cabinet manufacturers want to produce, et cetera. Some large OEMs who ship directly because they have a lot of consumption. But we have sales teams in most markets which work with the channel partners. In certain markets, they work with architects, interior designers, builders, developers to generate demand. So different geographies have a slightly different operating model basis the condition on ground.
Okay. And what is the pricing difference [indiscernible].
It's very hard to give you one blanket answer because different geographies have different product offering in terms of thickness, dimension, et cetera. So we can't give you one flat answer because every geography has a slightly different approach.
But as you can see, the average realization of exports is slightly higher on a per sheet or per board basis because certain markets of exports take more -- consume more larger-sized products than the normal 4x8s gets consumed in India.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Thank you, everyone, for joining the call today. For any further query, you can get in touch with us or to the SGA or Investor Relations adviser.
Thank you, everyone.
Thank you so much.
Thank you very much, sir. On behalf of Greenlam Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.