Greenply Industries (NSE:GREENPLY) Q2 2027 Earnings Call

0:02 Ladies and gentlemen, good day, and welcome to the Q2 FY 'twenty seven Earnings Call of Greenply Industries hosted by Asian Market Securities Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please signal and operator by pressing star then zero on your touch tone phone. I now hand the conference over to mister from Asian Market Securities Limited. Thank you, and over to you. Thank you, Nasaya. Welcome to the 2Q FY 'twenty seven investor call of Greenply Industries. From the management side, we have Mr. Harinder Mitel, JMD, Sanjeev sir, CFO.

0:47 I now hand over the call to Harinder for his opening remarks, post which we open the floor for Q and A. Thank you. And over to you, sir. Thank you, Karan, and good morning, everyone. It is a pleasure to welcome you all to Greenply Industries Limited earnings conference call to discuss our financial and operating performance for Q2 H1 FY twenty twenty seven. During the first half of the year, we continue to strengthen our portfolio to enhance customer engagement through technology led focused brand building initiatives. In our premium hello, are you audible? Yes, sir. All audible. Please go ahead. In our premium plywood portfolio, we introduced TermiWrap, a patented nano technology based anti termite solution designed to provide an enhanced long lasting protection against termite attack, addressing a key concern for consumers across the country.

1:46 We've also strengthened Greenply Gold's value proposition through introduction of the eleven year fully covered plus plan, which complements its thirty year old product warranty by providing specific restoration and related cost coverage to bring in customer trust and customer delight. Our product innovation and performance showcased in Met Asia twenty twenty six across our product categories was highly appreciated by all. Through targeted engagement with architects, designers, dealers and other key stakeholders supported by interactive product demonstration, we focused on strengthening brand visibility, driving product awareness and reinforcing our product positioning in the value added and premium product segment. These initiatives are aimed at supporting customer preferences, improving product mix and driving sustainable product profitable growth.

2:41 The above initiatives, coupled with our continued focus on product innovation and targeted efforts across product categories and customer segments, have started yielding encouraging results. Initial feedback from dealers, architects on our premium product offering and innovation has also been encouraging. The positive response is translating into healthy value growth and reinforces our confidence in the premium strategy. Going forward, we believe sustained momentum in the premium category, supported by continued product innovation and a strong product mix will contribute to margin expansion and enhance overall profitability. Furthermore, given the healthy growth momentum in the plywood segment and our objectives of meeting the incremental demand through our own manufacturing capabilities, we are pleased to announce the expansion of our plywood manufacturing capacity at our existing Sandala Lucknow location.

3:41 The proposed new capacity will be 15,000,000 square meters with a budgeted CapEx of INR 125 crores, which will be funded through mix of debt and equity and is expected to commence commercial production in Q4 FY 'twenty eight. The facility will have a revenue potential of INR $3.20 crores to INR $3.40 crores at full capacity utilization. The expansion will strengthen our ability to serve the growing market while supporting our long term growth plan. With this expansion, our total plywood capacity starting Q4 FY 'twenty eight will be 81,300,000 MSM. Moving on to our ESG and sustainability initiatives. I am proud to highlight a major milestone in our green journey.

4:28 Greenply has undertaken one of India's largest private sector forestation program, a framework of verified carbon standard, VCS, validated group project titled agroforestry plantation in the country by Greenply. We have successfully rolled out the first phase across Gujarat and Nagaland, covering an area of over 2,300 hectares and transforming degraded shrublands and low productivity agricultural plots into thriving agroforestry ecosystems. This initiative is deeply collaborative. We have already benefited over five zero five local farmers through sapling distribution, hands on training, technical support to boost their long term profitability.

5:17 Furthermore, participating farmers will directly benefit from a share of the revenue generated from the sale of carbon credits. I'm also thrilled to share that a total of 256,688 carbon credits have officially been allotted to Greenply under this program. Looking ahead, we are fully committed to moving into the second stage of the project, which will expand our footprint to massive 12,000 hectares across both Gujarat and Nagaland. This framework underscores our commitment to blending strong environmental stewardship with robust socioeconomic value for our grassroot communities, paving the way of sustainable long term growth.

6:05 Now I would like to update you on Greenply's Q2 and H1 FY 'twenty seven financial and operating performance. Consolidated revenue for Q2 FY 'twenty seven stood at INR 799.7 crores, registering 16.1% year on year increase. Our consolidated core EBITDA stood at INR89.2 crores with a core EBITDA margin of 11.2%, representing an expansion of 300 basis points Y o Y growth. On a half year basis, consolidated revenue stood at INR 1,524.6 crores, registering a 18.2% Y o Y increase. Our consolidated core EBITDA was INR 167.5 crores with a core EBITDA margin of 11%, representing an expansion of 180 basis points Y o Y growth.

6:55 Let me now share the highlights of our individual business segments. In our plywood segment, we've achieved a volume growth of 6.1% on Y o Y basis in Q2 FY 'twenty seven with a revenue of INR 625.7 crores, a value growth of 15.5% on a Y o Y basis. The realization stood at INR $2.64 per square meter due to better sales of premium products. On the margin front, our core EBITDA margin stood at 10.05 for Q2 FY 'twenty seven, a growth of 180 basis points Y o Y and 160 basis over the last quarter. On a half yearly basis, we've achieved a volume growth of 9.2% on a Y o Y basis with a revenue of INR 11 and 52.3 crores, a value growth of 15.7% on Y o Y basis.

7:48 The realization stood at Rs. $2.64 per square meter. On the margin front, our core EBITDA was at 9.31 for H1 FY 'twenty seven, a growth of 120 basis points on a Y o Y basis. Moving to our MDS business. We've achieved a quarterly revenue of INR 173.9 crores with volume reaching INR 54,605 cpm. This reflects a Y o Y growth of 18.4% in value and 16.1% in volume terms. The reason for not achieving the targeted growth in the quarter was mainly due to some challenges faced due to monsoons and annual maintenance. The realizations declined to $331,816 per cbm due to rollback of the price hikes taken earlier.

8:37 EBITDA margin for the quarter stood at 15.2%. On a half yearly basis, we've achieved a revenue of INR 3 and 69.6 crores, a growth of 25.6 on a Y o Y basis, with volumes reaching 112,411 Cpm, a growth of 20.4% on a Y o Y basis. The realization stood at 32,694 Cpm. Margins on a half yearly basis was 16.3%, a growth of three fifty basis points on a Y o Y basis. Our Furniture JV, we have achieved a sales of INR 14.08 crores in Q2 FY 'twenty seven and INR 27.70 crores on a half yearly basis.

9:24 The JV reported a fat loss of INR 12.6 crores in Q2 FY 'twenty seven with our share of the loss amounting to INR 6.3 crores. On a half yearly basis, the JV reported a fat loss of INR 24.2 crores with our share of loss amounting to INR 12.1 crores. Our HDF flooring line commenced commercial production in July 2026 and is progressing well. We expected this business to begin contributing to our overall performance. And in the second half of FY 'twenty seven, as operations ramp up, our expansion ramp up, sorry. Our expansion projects, including the new MDF facility at Wadhosra and the new greenfield manufacturing facility at Odisha are progressing well and as planned remain on track for commissioning with the committed time lines. MDF is expected to commence in Q2 FY 'twenty eight and plywood in Q4 FY 'twenty seven.

10:21 On the balance sheet front, we continue to maintain a prudent financial position while investing for future growth. As of the end of the quarter, our consolidated net debt stood at INR $5.44 crore with a debt to equity ratio of 0.56x. This remains well within our guided range of 0.7 to 0.75 x. Participants, please stay connected. The management line has been dropped. Ladies and gentlemen, thank you for your patience. The management line has been connected. Management line?

11:10 On the balance sheet front, we continue to maintain a prudent financial position while investing for future growth. At the end of the quarter, our consolidated net debt stood at $5.44 crores with a debt to equity ratio of 0.56. This remains well within our guided range of 0.7 to 0.75x, reflecting our disciplined capital allocation, healthy financial position even as we continue to execute our planned capital expenditure program. Looking ahead, considering our H1 FY twenty twenty seven performance and the overall market environment, we intend to maintain our existing guidance for the plywood segment and remain confident on achieving it. For the MDS segment, considering the external operation, operating environment and strategic focus on value added products and profitability, we revisited our earlier whole year guidance and we expect to achieve full year volume growth of approximately 20% while maintaining core EBITDA margins in the range of 15% to 16%.

12:13 We remain focused on delivering sustainable growth, improving operating efficiencies and strengthening our market positions across our key product categories. With this, I would like to now open the floor for q and a. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on your touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of from Asian Market Securities Limited.

13:01 Go ahead. Thank you for the opportunity. Sandeep, just wanted to understand last two, three quarters plywood growth has been a buzz of 10% and this quarter's growth came in dead lower vis a vis estimates at 6%. So any changes in strategy for you with respect to premium or EcoTech? Any thoughts for that? I don't think there's a major shift in the strategy. Greenply was always premium heavy. And if you look at our utilizations in this quarter, the plant utilization were more than 100%. So, you know, at this given point, till Otisan, Sandila starts maybe another, you know, two quarters for Otisan to start. And for Sandela to start, say, another four quarters or five quarters from now. Till then, we... Actually, capacity is a challenge for us. So in the given environment, we wanted to make the best utilization of the capacity we had. And this year and this term, we wax campaign has given us a good boost in the premium segment.

14:01 So we wanted to make margin. We wanted to do the best with whatever resources we have at the moment. So given that, obviously, you know, we we kind of, you know, did a 15% volume growth and a 6%... Sorry. 16... 6% volume growth and about a 15% value growth. I think that was very good for this quarter, but I don't see that challenge post Odessa coming up. And obviously, EcoTech is at a sweet price spot and, you know, that continues to grow very, very sharply. And our focus of branding both EcoTech and the premium continues and the strategy in the market remains the same. But given scenario, lack of capacity, we thought that this is the best use we can make of capacity. Right. Right. Right. Right. And on the MDF front, can you just throw some light on the recent capacity additions and how you see the demand supply dynamics, you know, for for more three, four quarters?

14:59 I see the the the the fight in the market continues. The unorganized, obviously, they do not have an end... Endless supply of money, you know, so, obviously, the unorganized is facing a lot of heat. I also look at them maybe, you know, to some extent, shutting down shops, maybe in the next six months, one year for sure because at this margin level, I don't think they can survive. And again, in MLEF also, if you look at our overall production this quarter, our sales has been slightly more than what we produced. And production, we had some disruptions due to monsoon and due to, you know, the original OEM coming down for the annual maintenance. So I think whatever we could produce, we could sell very easily.

15:47 And even at the lower sales level, we have been able to deliver our committed margins. I think that is the silver lining. And once we have capacity, we have a very strong name. I'm sure we can sell. So our capacity also will get added somewhere next year, beginning of next financial year. So I think road ahead honestly looks great profitability wise, growth wise. Quite confident that, you know, whatever we've been working or thinking is kind of now working out for us. Alright. Yeah. Thanks for the detailed explanation. Yeah. Just a moment. The next question is from the line of Akshay Chida from Kanera Rubaikum Mutual Funds.

16:38 Thank you for the opportunity. My one question is related to the MDF margins. So in the second quarter, we have posted around 4,700 rupees of EBITDA per CV. Now what could be what would be the guidance going at? Obviously, you have guided for a 15% to 16% of in percentage basis, but if you could guide in terms of EBITDA per CVM, assuming the RM inflation, competitive intensity, product mix, and the volume ramp ups that would happen? I mean, is this 4,700 the base, and should it improve from here on, or how should we look at it? That was the only question. Thank you. Swan, can you answer this absolute? I'm not calculated on absolute value, but we are very confident that, you know, the 15, 16% kind of EBITDA we'll be able to deliver given our kind of cost that, you know, we are operating at today.

17:32 And this one line, you know, we are producing approximately 60,000 cubic meters every quarter. This is the kind of number we can easily deliver. And, obviously, going ahead as value added, if it further improves and flooring and installation also, we are going to start very soon. So with all of that, I think it should further, you know, improve from here. Yeah. And on the EBITDA per CVM, so we are confident that we will can maintain above 5,000. Got it. Okay. Okay. Got it. Thank you. Thank you. The question is from the line of Neha from. Please go ahead.

18:19 Hi, team. Good morning, and thanks a lot for opportunity. Just couple of questions from my end. While, you know, you answered on the plywood front about the volume growth. Even if I look at your MDF volume, the growth has actually tapered compared to, you know, what you were doing. And even on a q o q basis, there has been volume drop. Is there any element of seasonality, any complement density change that we are seeing? Although realizations also, you know, continue to dip on a quarter on quarter basis. Any color on the MDF vision? What are we actually seeing on account? So I think in MDF, whatever we could produce, we could sell. So if you see our production number for the quarter, our sale is actually slightly higher than the production number. 53,000 something is what we produce and 54,000 something is what we've sold. So I think production was a challenge for us, Neha, not the sales are doing that volume.

19:10 I think because of monsoon disruptions, because of annual maintenance, which was planned for Monday and it actually ran for four days, you know, stuff like that, overall production capacity fell and, you know, we couldn't produce. So I think that was a challenge for a Q on Q drop. I don't see any external environment or any other reason to be a drop in the volume. And I think we are very confident to easily get that back in quarter three and quarter four. However, for the whole year, we've still now guided 20% because we've missed out on h one, honestly. But on the margin front, we are confident whatever we initially guided, we'll deliver that. Understood. And the pricing plan, how how was the pricing during the quarter? Was the government density high?

19:59 Yeah. Yeah. Passed on That's very high. And, yes, the entire increase has been totally passed on, and everybody's absorbing the cost increase today. The 15 and a half percent that, you know, q one, everybody had taken a price. Right? Today, that's more or less completely passed back. But in spite of that, sir, I do... You know, we've been able to do these kind of numbers and, you know, survive and thrive. So you are saying the 15 and a half percent price increase which was taken in quarter one passed on completely. Where would that costing be, like, raw material costing? Has that increase sustained, or that has tapered off at all? I think the increase... I I think the increase is sustained. It's not come down at all. There's a good seven, 8% increase on the cost front because of the chemicals.

20:51 Everything else is more or less stable, but the chemical is permanently gone up. You know? And, yeah, at least a seven, 8% hit on cost for sure. So in fact, now the other big question is how are you even able to maintain a 15% margin given there has been a seven... 800 bps increase in raw material costing? That's one. Secondly, in case you can also answer in terms of how many news and any color on, you know, how how much of increase in capacity has already come up in this industry as a whole and further likely capacity additions happening at... In this case now. Sorry. Your voice is a little not clear. It's a little muffled. So can you just... So I... If I'm not wrong, you asked two questions. One you asked is how are we being able to maintain the 15% in spite of this cost going up?

21:40 And the second part of your question is what are the new capacities coming and what will be the scenario post that? Yes. Absolutely. Right. So I think we've been able to maintain because, obviously, you know, we've been working on the, you know, better product mix. That is one. We're even replacing plain interior grade sales with pre lab boards. So even if you see our pre lab volume, absolute volume for pre lab has gone up. Absolute volume for plain boards has also gone up. So I think those factors are helping us. In the beginning of the year, we reduced our energy cost where everybody's cost was going up. That's also helping us. We are building in other operational efficiencies of the plant. So I think a mix of all of this is kind of helped us... Helped our margins stay where we had guided.

22:32 So, you know, we were lucky, you know, we didn't fall short there. And on the second question, I think, yes, the competitive space is really increasing. Action that has started their plant in South. There's a new player called Alexa, which is starting up very soon. Our plant is also running ahead of schedule. You know, next quarter, we'll also be able to throw light even our plant is coming up. So, yes, competitive scenario is increasing, but from day one, I think our focus was very clear that we have the strongest brand name in the country. And for us to sell MDF at the operating price in the market will not be a challenge. So we are just going to make inroads into the plywood segment that, you know, we've been dominant for so long and keep capturing things, keep moving ahead ahead. Honestly, today, as per the name and the size of the organization, the capacity is very small.

23:24 So even with the next line, I don't see a challenge. My fear and my challenges will start third, fourth line onwards. So, you know, honestly, that's how I look at it from Greenply's point of view. That, you know, today, we are sorted, and with the next line also, I don't see that as a challenge. Understood, sir. No. Thanks thanks a lot, and all the very best to you. Thank you. Thank you. The next question is from the line of Anup Parag from Anand Parati Shares and Stockbrokers. Please go ahead. Yeah. Hi, team. So my first question is, like, in the MBS segment, our EBITDA margins have contracted on a sequential basis. So what is the reason for the same, and what is the share of value added products in the MBS sales volume?

24:19 You want to answer? Yeah. So as we... Sandeep, they had explained you in the... Just in the last call... Earlier call that the... Whatever the price hike we had taken, it is already rolled back. So that's only the reason that the... Our EBITDA margin has come down. Okay. And, sir, the share of value added products? So you see that we are reporting that MDF board and the prelim. So it is already given in our presentation. So they share the prelim has increased, but exact percentage, I don't have right now. Understood. And, what is the reason for improvement in the plywood gross margin in q two?

25:13 And, also, can you please guide us on the plywood EBITDA margins for h two FY twenty seven and FY twenty eight? So the main reason is the... Our focus on the value added product. As in the opening speech and on the replies, Sandeep has already given you the reason that the... Our... The new technology which we have introduced is given a good traction in the market and the our value product has picked up the green mainly the green. So the that's the reason is the gross margin is improved. And on the H2, as we had already given the guidance that we will maintain that if the sales goes up around INR600 crores, cross the INR600 crores, we will maintain the double digit EBITDA margin.

26:08 And sir, lastly, on the timber prices, how are the timber prices fair in Q2 FY 'twenty seven for both plywood and NBS? And what is the outlook for q two FY twenty seven as well as h two FY twenty seven? So as of now, the timber price are stable. And going forward, also, we assume that the price will remain the same. Yeah. We are not assuming that, you know, we'll again face a cycle where the prices will come down. And we feel that, you know, we are anyways in the top pricing, so we don't see a scope for further increase from here. So if there's any gain that should be additional add to the margin. We've considered whatever margins we are committing in MDF of plywood is considering existing.

26:53 If there's any eventful gain there, it should be reflected straight on the margin. Yeah. Thank you, sir, and all the best. Thank you. Thank you. Ladies and gentlemen, in order to ensure that our management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we will request you to rejoin the queue. The next question is from the line of from Investec. Please go ahead. Hi, sir. So thank you for the opportunity. So I just had one question on Samet JV. So how should we think about the timeline on the dilution of our stake in the JV? It has been, you know, a drag on our numbers. So how should we look look into this?

27:46 So, honestly, to remove the drag, I think the organization's taken a very difficult decision that, you know, we don't want to be fifty fifty JV partner. We want to have a minority. And the head of terms that we signed and we announced in the... After the previous board meeting was basically, I think, of January is the end date where we kind of dilute and we go down to '19, and they continue to operate the JV. Even today, because it is a fifty fifty JV, we are reporting the bad loss. But honestly, Greenply stopped funding these losses from quarter one. The partner is funding it in form of advances, and they are running the show. And January 5 to the end, they decided where the entire dilution will happen.

28:34 And thereafter, there'll be no drag. And whatever drag today also you're seeing on the balance sheet is only a line item entry. Actual cash flow for the same is not being contributed by Greenply. Okay. So sir, we've been writing invested INR105 crores, right? So is there a provision with... Related to this? So... No. See, on a consolidated basis, whenever there is a loss, we have already taken taken that. So the console, the numbers is already reduced by the loss what we had earlier or we... What we are doing today. So there is no requirement for further provision on this. Perfect. Perfect. Thank you so much for answering my questions.

29:27 Thank you. The next question is from the line of Satish Shah from Investec. Please go ahead. Yeah. Hi. Thanks for the opportunity. I just wanted to understand, you did emphasize on agroforestry carbon credits. Is there a way to quantify what part of our sourcing will be through the initiatives that we are taking? Will there be any tangible economic benefit? And how do you look at the carbon credits which have been allocated? Is there some scope of monetization over here? Yes. I think there's a huge scope of monetization over here for the farmers as well as for Greenply. And we have registered the entire Nara land and Gujarat work that we do with the farmers of this program.

30:16 And this is credit received till '23 end. We're going to get another tranche till '26 end, and each credit represents approximately one metric ton of carbon requested. Basically, metric ton of pollution absorbed. So they do satellite imaging. We register the projects, and the projects get audited. And then eventually, you will open a Demat account in which your carbon credits come, and then you can sell in the exchange. The monetization for Greenply will be very small. It won't be very big. But for the farmers, they'll be much larger. The idea is not to make a onetime income or another income at Greenply. The idea is to ensure that this income goes to farmer and becomes part of their sustainable income. If that happens over the years and over a period, we can get continued raw material at the right price. The farmer will be motivated, and ultimately, the landowner is who the carbon credits belong to. So, you know, Greenply is facilitating this whole thing for its own ESG, for its own sustainability, for the survival of its plant, and for farmer motivation.

31:25 So I think every box is getting ticked. Today, we've already sold a sample credit at $15 a credit. So if you calculated that value, I think almost $25.30 dollars of revenue will be generating by this carbon tariff sales. And Greenply will be enjoying, I think, anything between 10 to 20% of this. So that's the economic benefit for Greenply can get as per today's value, but I think that's a very minuscule number. That is not a focus point. The focus point is farmers in and around our catchment are going to be happy with us, and we are going to have a long sustainable journey with them for years to come. Alright. And would it be possible for you to quantify what percentage of our procurement on timber is currently via the initiatives that we're taking, or can it can it help us going forward?

32:20 I would say 50, 60% in the sourcing from the because of this program and a 100% sourcing in because of this program is what today we are doing. But eventually, this program will become national for us. This will be running in every state for us, and we're just going to make it bigger. So this will be our philosophy in any and every plant and this surrounding of the plant. Sure. My second question is why change in heart with respect to Summit? It was a beautiful optionality that the company had. There were synergies on the channel as well. What was it that... What was it which resulted to this this decision? So, the... You know, both our product segments are growing very fast, and both businesses need serious CapEx commitment.

33:11 And to further strengthen Samit and Groshamed, I think, you know, the JV partner's planning another 400 crores of CapEx. So, you know, at this point, I don't think Greenply's balance sheet was ready for that. And this 20% that we have is also going to be long term. We are also going to enjoy on arm's length basis certain, you know, certain grand charge, which is also going to be a significant other income. And eventually, the partner's vision is to list this company. And Greenply, at that point, will also have 19, 20% equity. So I think long term, now being outside, Greenply will still enjoy the reputation of the joint brand. Greenply dealer distributor network will still enjoy selling those products.

34:01 The risk of Greenply will come down drastically, and the whole investment will come in. And with the majority, I think the partner's focus will also be to then divert global sales to India JV, which will eventually make the Indian JV very profitable, big, and fit for listing. So I think on a long run, Greenply will still benefit out of this 20%, will still benefit on the brand charge and yet have a stake in the growth. And then the focus here on the balance sheet, there'll be zero drag quarter on quarter, and the focus will be fully on growing the existing MDF and client owned business. And I think we've been very vocal that we want to get into chipboard, and at some point, we'll be getting into chipboard also.

34:53 Perfect. And just last quick question. What is the motivation behind EcoTech Prime versus EcoTech? That's one. And when we say twenty year warranty on products, just wanted to understand what percentage of our revenues would qualify for this warranty schemes. How do we see this going forward, and how do we provision for it as well? Yeah. So there are no provisions that we take. For example, like, you know, our lifetime guarantee product club was launched twenty years ago, and the annual claim is not even 1.5 lakh rupees on that even today. So we only claim these things once we are very sure. For example, you know, we are talking about patented nanotechnology based termi wax. So termi wax is gone for graveyard test around twenty months ago.

35:44 And twelve months of finishing the graveyard test, we applied for the patent. And the fourteenth month after the test, we actually launched it in the market. So only when the organization is super confident do we take a step like this where we openly announce warranty guarantees. And the past has given the confidence to us as the management, our auditors, and our operating team that there's no provision required for this because the company is very confident on what we are offering. Sure. And EcoTech. Right? I think, see, the general mindset is to go up, up, up. So, yes, EcoTech seven one zero, EcoTech MR are the volume drivers undoubtedly. They are the sweet spot of the market. But, you know, Greenply never fails to launch a premium product at every point or at every price point or at every brand, you know, or at every sub brand level. So, yes, that was another step to further premiumize VicoTech.

36:43 Sure. Can I squeeze in one more? Yeah. Yeah. Please. Yep. Yep. Yep. Sandeep, you indicated two competitive intensity? So I think supply is still coming. Probably, they're down the value curve. So their value or pricing proposition is actually better. So do you see any light of the day, say, over next twelve months, eighteen months wherein profitability for MDF can actually structurally improve for us and overall for the industry as well? I think next twelve months will be further back. After that, structurally, things can change once the smaller people actually die out and the demand catches up. Because we have lot of new big entrants won't be interested because of the current industry scenarios. So new players are not wanting to come in. People who have already committed have come in. And the smaller players are going to die a natural death, and then I think the margins are for us can again start improving. But we are very confident with the way we are running. Key 15, 16% EBITDA, we'll continue to do even next year after our new capacity comes in easily.

37:56 So at this level, we can, I think, approximately, if I'm not wrong, maybe make 17, 18% type of ROC? Obviously, it can become 20, 22, 23 once the... Some people in the industry die and the overall margin... Overall volume catches up and the demand becomes greater. Thank you. Satish, if you have a follow-up question, we will request you to rejoin the queue. Ladies and gentlemen, in order to ensure the management is able to address questions, please limit your questions to two per participant. The next question is from the line of Shruti Mishantana from Ikigai Asset Management. Please go ahead. Hi, sir. I hope I'm audible.

38:44 Yes. You're audible. Yes. Yeah. Audible. Thank you. So I just wanted to ask in terms of plywood. I understand that, you know, we are constrained by the capacity that we have currently. But going ahead in the second half to kind of increase the new volumes, can we do more trading here? Because, you know, we are allocating our capacity to the premium products. So could we see more trading on the EcoTech or maybe a little less premium side to support the volume growth? Yes. That's definitely part of the plan. Honestly, if you see the h one, there were parts of h one which was very disturbed in terms of even the domestic. Like, for example, q one also, we were very disturbed because of the volume and because of outsourcing was really disturbed.

39:30 But in h two, obviously, we have a higher plan to do it, and we are very confident that, annually, we will do more than 10% volume growth still in the plywood segment. Got it. This is helpful. And secondly, in terms of MDS, so I think the... Based on the new guidance that we have a 20% growth for the full year, I think the second half has created 66,000 CVM on a quarterly basis requirement for q three and q four. So given that, you know, I think you mentioned in the opening remarks that we have a 60,000 per quarter set of a capacity. So how are we looking at, you know, kind of meeting this 20% growth target for the full year of FY twenty seven? I think we have inventory in hand.

40:15 Also, now that, you know, we'll be selling flooring in the second half quite a bit, that's going to give us... Sorry. What is it? I think, yes, sixty three sixty three thousand is what we are targeting in the next two quarters. And I think that is possible, you know, production and sales wise. So, yes, you're right. I think sixty three sixty three is what we will have to target in the next two quarters. Got it. And just on the wooden flooring part, is it possible to quantify what would be the contribution in terms of revenue from the segment? I think it'll be difficult to give a projection right now, but for next full year, we'll give a guidance because, you know, we'll have some base. But, yeah, it should be couple of crores every month for sure, $2.03 crores to begin with every month is a very easily achievable number.

41:08 Okay. And the realization for this would be roughly 60,000 per CBM? Correct me if I'm wrong. I would just tell you. One second. It would be in the range of 75,000 plus per cubic meter. Okay. Okay. Got it. Got it. And just one last question from my side. It would only Sandila fly. So I think you mentioned $323.40 crores of top line here at a 15,000,000 square meter capacity. So this implies a $2.20 rupees realization for plywood. So given that we have done $2.64 now, are we trying to, you know, increase this capacity more on the ecotech side? So just wanted to get an understanding then. So the... Honestly, this projection is conservative. And today, whatever number you're seeing includes PVC realization, includes premium plywood, includes cheap plywood, includes low end plywood, includes some very niche stuff we do for industrial grade plywood. So everything put together, this is a blended realization that you're seeing. And whatever growth is honestly coming in years ahead is mainly on the EcoTech segment. And also a lot of these capacities are being planned to convert outsourced to self manufacturing, which will overall give the business more confidence and better margins, better... And better productivity.

42:33 So, hence, the planning is conservative at two twenty. If we can achieve better, you know, that means higher absolute number as well. So it will be better only that. Got it. Understood. This is helpful. Thank you. I'll join back in the queue. Thank you. Thank you. The next question is from the line of Vishap Botra from Systematics Group Institutional Equities. Please go ahead. Hello? Hello? Yes. Hello. You're audible. Just wanted to check. You mentioned you also wanted to enter chipboard manufacturing. What is the timeline and CapEx involved in that part part of the business?

43:20 So, honestly, our idea of CapEx there in that business will be very different. We are not looking at a very heavy, you know, multi lines and a very heavy setup. We are looking at a dependent setup along with MDF everywhere we go, where we set up multi delight lines along with MDF. And in chipboard, our calculations and our understanding says that a multi grid light line complementing along with an MDF line will be super profitable. And the total CapEx will be low. The asset term will be very different compared to a Conti line. So we are not looking at per line more than 100 crores of CapEx, and we are looking at turning out two fifty, 300 cubic meters out of that 100 growth of CapEx.

44:06 And we are looking at an asset turn of one is to two almost in case of tactical board. So our approach would be very different, and we would set up the first line somewhere next year or next to next year depending on the bandwidth of the operating team. Okay. And secondly, with respect to plywood, you mentioned steel and plywood was also in the office. How has the been the acceptance in the market? What sort of Honestly, we've only done trials. The commercial full scale production is starting somewhere in November. So we are really, really looking forward to it, and I feel that, you know, that will really change the ready made furniture segment, and eventually, every company would like to offer. And I think Greenply would be the first company to do that in India on scale where we can do pre lamp plywood at scale for the furniture makers.

45:00 Got it. And lastly, sir, you have appointed a chief strategy officer. His background seems to be corporate restructuring and acquisition business acquisition. So anything in the offering with respect to acquisition on the card near term? Not not really. That's not the reason that we've got it. He's a nice professional and, you know, obviously, has high experience on that m and a, but nothing in particular that, you know, we want to acquire something that's why we've gotten. He's a great resource. The team and chairman felt that, you know, he's the right person. The board felt the same. Hence, he's been hired to contribute to this company. Got it. Thank you. Thank you. And he's also involved in the IT and the purchase function other than strategy. So, you know, that's also something where he'll be focusing.

45:51 Got it. Thank you, sir. Thank you. Ladies and gentlemen, we request you to limit your question to one per participant. And if you have a follow-up question, you may rejoin the queue. The next question is from the line of Asim from DAM Capital. Yes. So just one question. So if you could just repeat the plywood margin guidance for the full year. So you touched 10% this quarter. Basically, I just want to understand if this is in hand, I can continue over Q3 and Q4, even the initiatives you have done at the plant level, but you'll also need to tap into outsourcing to get about this 10% volume growth. So what is the approximate margin you're targeting for this year? And with the old time that coming in, what can that go to margins in the in the next couple of years?

46:42 See, I think the first thing that you guys... Speaking, do 10% plus. So, you know, hopefully, our top line should be, you know, 600 crores plus going forward every quarter, and we should sustainably deliver 10. That was the initial target. And then we told everybody that, you know, there should be no reason why this company does not do 11, 12, or higher numbers. That is... That will come for a couple of reasons. One, when we overall hit 600 type of a number, the overall scale comes in our plywood segment, and we are able to achieve that number. That is one reason. The other reason is that the new manufacturing that we've set up, that is also going to start saving some cost for us. That hasn't come in yet.

47:28 Towards the end of the year, that should also start contributing. So, yes, I think in h two, if you personally ask me, I'm looking at 10% plus for h two. And we are looking at the overall year also that how we can touch them in the overall year. Obviously, that will be the goal for this year. And going forward, if that is what we can achieve sustainably this year, then next year definitely will be double digit plus only how we can further improve there. Got it, sir. Thank you, and all the best. Thank you. Thank you. The next question is from the line of Jojo Raju from Tirthan Capital. Please go ahead. Yeah. Thanks for the opportunity, sir. I have a question on MDF side line. So are we seeing any imports coming back in a big way?

48:16 Because we have seen a news that certain companies from Vietnam, Thailand and Indonesia have received this BI certification. So what is the outlook on imports for the next second half or, let's say, the next one year? Honestly, even if imports are slightly increased, the total quantum what it used to be and where it is, I think there's a huge gap there. So I don't think that, you know, we are getting worried or challenged because of that. And also the geopolitics and the war and overall freight in a product like MDS is not supporting imports. So, you know, that way also, mentally, are relieved. And for us, again, today, you see my MDS capacity is very, very small compared to this organization's name and strength.

49:06 So, you know, we are not bogged by that. Anybody sitting with three, four, five lines must be really bogged with that, but we are not bogged with that because we feel key. Our overall capacity is pretty much today, honestly. So we should just focus on our brand. We should focus on our network, and we'll easily be able to pump this this capacity in the market. Okay. Got it, sir. And just one clarification on the Summit JV. So Greenply Greenply will not commit any CapEx for the CapEx for the next round for the hardware business? And will Greenply increase its stake in the future if hardware entity reaches a sustained profitability? See, if the company becomes very profitable and Greenply's balance sheet has a lot of free capital, who would not want to grow their money?

49:55 You know? We would also want to invest and grow the capital. And that is a provision and understanding from the partner's side. See, the partner's plant is next to Greenply's plant. So for life, the partner wants support from us in terms of the Indian know how running brand support, etcetera. So, you know, there's no reason that, you know, we'll fight or we'll not increase our stake, etcetera. But all of this will only be on the judgment of how Greenply's balance sheet is doing at that point of time and how that JV is performing. For now, we are removing the drag of the losses every quarter. We still have 19%. On the upside, we will get some brand charges every quarter for them to use our brand. Another upside is that all our dealer distributors will have another product from the house of Greenply, which will increase their margin, which will give them more share, visibility in the market. So, you know, I am looking at many pluses, still a 20% stake, good vibe in the market, good name because of the work happening at the sales end for this brand, and removing the drag totally from the books and focusing on this MDF and plywood growth and then adding chipboard also and, again, strengthening the growth journey for Greenply. So this is how we are looking at this transaction as of today.

51:15 Thank you. Ladies and gentlemen, we request you to limit your questions to one per participant. The next question is from the line of Praveen Agarwal, an individual investor. Please go ahead. Yeah. Hi. My question is continuing on this MDF industry team. Like, you know, we are... Our next line is coming at around 200,000 CBM, and we're spending around $4.25 crores. At 15% margin, 80% utilization, we're looking at an EBITDA of around 80 crores at 31,000 pricing. And if I take fifteen year useful life, you know, we have to take off $30.35 crores out of it. So we remain at 45 crores. So so ROCE looks like 10%.

52:01 So I'm I'm trying to understand why is in industry more and more people are still investing at 10% ROCE kind of a asset. And what's your view? How long... I mean, by basic back of the envelope calculation, it will be 20% EBITDA margins to get to a 15% ROC. So where am I yeah. So I think you were... Your voice was a little muffled, but I think I got your question. So I think there is no new entrant who's coming. So for example, Alexa decided four years ago that they want to do MDF. And three years ago, they did that when we put in the started construction. So they had no point. They had no situation to backtrack out of this. Same way, an existing industry players, I mean, you know, you have to keep growing. You're riding a tiger. You don't... The tiger has to keep growing. Otherwise, we are going to be eaten. I mean, every cost is going to keep go go... Going up year on year. Right? So people have to keep growing for people who the core segment is. But I think new entrants are moving out. And I've told you before also that I'm very confident on a three year, five year basis when we look at this MDF industry.

53:11 I think we are very confident of 18% type plus ROC. But on a short term basis, if you see it, it does not, you know, satisfy us. It does not satisfy anybody. Yesterday, the return levels are very low. And because the return levels are so low, if you see, we've made a conscious improvement in the asset term ratio in the second line when we've invested, you know, to address this concern. So... And just one... Follow-up, please. So in terms of volumes, you continue to see 20% plus volume for the industry as a whole practically continue for next three, five years? Yeah. Yeah. Yeah. For sure. For sure. I see that happening. I see some of the smaller players buying their own natural debt.

53:59 I see the demand catching up because of us performing so badly. I think there is no, you know, no new entrant or large entrant who's getting attracted to this category. That's also very good, and I think will help us. And I think another year, year and a half from today, I think everybody should start making that incremental number with everybody seen for a short period. And then again, everybody will add capacity, and then again that whole cycle will keep happening. But on a long term, three, five, seven years, when we see this industry, I am I am very confident Greenply can turn out 18% plus ROCE. Thanks a lot. That's it from my side. Thank you. Thank you. Ladies and gentlemen, that was the last question for the day. I now hand the conference over to the management for the closing comments.

54:49 Thank you all for taking time to participate on this call. In case of any further clarification or queries, please feel free to reach us. Thank you. On behalf of Asian Market Security Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.