Century Plyboards (India) Limited — Q3 FY26

Century Plyboards (India) Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=arMmQxjfNgM Published: 3 months ago

0:01 1 second Good day ladies and gentlemen. Welcome to Century Plyboards India Limited's Q3 FYI26 earnings conference call. As a 0:09 9 seconds reminder, all participant lines will be in the listenon mode and there will be an opportunity for you to ask questions after the management's opening remarks. 0:17 17 seconds Should you need assistance during the conference call, please signal an operator by pressing star then zero on your Touchstone phone. Please note that 0:24 24 seconds this conference is being recorded. I now hand the conference over to Mr. Navin Agraal, head institutional equities SKP 0:32 32 seconds securities limited. Thank you and over to you sir. 0:36 36 seconds Good afternoon ladies and gentlemen. I'm pleased to welcome you to this financial results conference call on behalf of Century Plyboards and SK securities. 0:45 45 seconds We have with us Mr. Sanjay Aarat MD and CEO Mr. Kesha Bajanka executive director Mrs. Nikita Bansal executive director along with Mr. Arun Jillasara CFO, Mr. 0:58 58 seconds Novran Sin, COO, plywood business, Mr. 1:01 1 minute, 1 second Santas, CEO, MDF and particle board business, and Mr. Vishu, CEO, laminates business. We'll have the opening remarks 1:10 1 minute, 10 seconds from Mr. Sanjay Agarwal followed by a Q&A session. Thank you and over to you Mr. Aaral. 1:17 1 minute, 17 seconds Thank you Naven. Thank you. You are doing a wonderful job for us. 1:21 1 minute, 21 seconds Thank you. Yeah. So, good afternoon everyone. 1:26 1 minute, 26 seconds and a very warm welcome to our Q3 FY26 earning conference call. 1:33 1 minute, 33 seconds Before we begin, I would like to remind you that today's discussion may contain forward-looking statements which are subject to risks and uncertaintities. 1:46 1 minute, 46 seconds This call is not intended as a solicitation to invest. 1:51 1 minute, 51 seconds The financial results and investor presentation have already been shared and are available on the stock exchange websites. 2:02 2 minutes, 2 seconds The company delivered a strong and broad-based performance during the quarter with healthy growth across all key business segments. 2:12 2 minutes, 12 seconds This performance highlights the structure strength of our business model, strong brand equity 2:21 2 minutes, 21 seconds and the tangible benefits of our continuous efforts to improve productivity and operational efficiency. 2:31 2 minutes, 31 seconds Q3 is not directly comparable to Q2 as Q3 typically experiences softer demand 2:40 2 minutes, 40 seconds relative to Q2 due to seasonality associated with festive period 2:48 2 minutes, 48 seconds at a consolidated level. The company recorded its quarterly revenue of 1350 crores 2:55 2 minutes, 55 seconds representing a year-on-year growth of 18.4%. 4%. 3:02 3 minutes, 2 seconds This growth was driven by sustained demand across product categories and robust performance from our newly commissioned units. 3:13 3 minutes, 13 seconds On the 9th month basis, FYI26 revenue grew 17.3% 3:21 3 minutes, 21 seconds yearonear, demonstrating our ability to sustain momentum despite a challenging macroeconomic environment. 3:33 3 minutes, 33 seconds On the profitability front, we achieved our consolidated AITA excluding forex of 170.5 crores. 3:44 3 minutes, 44 seconds The AITA margin X4X improved to 12.6% compared to 10.7% in the corresponding quarter last year. 3:55 3 minutes, 55 seconds This improvement was by higher volumes operating leverage and the benefits of our ongoing cost optimization initiatives. 4:05 4 minutes, 5 seconds Overall, the quarter reflects not only strong growth but also a significant improvement in the quality of earnings. 4:16 4 minutes, 16 seconds Segmental performance. Let me now walk you through the performance of our key business segments. 4:23 4 minutes, 23 seconds Plywood segment. 4:25 4 minutes, 25 seconds The plywood business achieved quarterly revenue of 710 cr with 14.9% 4:33 4 minutes, 33 seconds yearon-year growth. This performance was supported by healthy volume growth and an expanded distribution reach. 4:43 4 minutes, 43 seconds A beta margin stood at 15.1%. 4:48 4 minutes, 48 seconds Supported by operating leverage and stable input costs. 4:54 4 minutes, 54 seconds Lemonade segment. The lemonade division continued its improving trajectory reporting its quarterly revenue of 183 5:03 5 minutes, 3 seconds cr. Revenue grew 9.6% yearonear and 13% on 9 month basis. 5:13 5 minutes, 13 seconds AITA margin stood at 7.7% driven by better cost absorption and an 5:20 5 minutes, 20 seconds improved product mix. Going forward, we expect a steady improvement in both volumes and profitability as the 5:27 5 minutes, 27 seconds business benefits from strong bron recall and enhanced manufacturing scale. 5:34 5 minutes, 34 seconds MDF segment the MDF business continued to deliver strong growth with revenue increasing 5:41 5 minutes, 41 seconds 19.1% year on year. 5:45 5 minutes, 45 seconds Growth was driven by higher volume and improved capacity utilization across plants. 5:52 5 minutes, 52 seconds A beta margin stood at 12.1% compared to 10.7% in the corresponding quarter last year. 6:01 6 minutes, 1 second Particle board segment with improved capacity utilization and higher sales volume. The segment 6:08 6 minutes, 8 seconds achieved its highest ever quarterly sales of rupees 65 crores with AITA at break even. 6:18 6 minutes, 18 seconds Financial overview. 6:20 6 minutes, 20 seconds From a financial perspective, Q3 reflects consistent improvement in both scale and earning quality. Our continued 6:28 6 minutes, 28 seconds focus on operational excellence and discipline capital allocation has enabled us to maintain healthy return 6:36 6 minutes, 36 seconds ratios. We remain committed to investments in brand building, technology upgrades, and distribution expansion to support long-term growth. 6:49 6 minutes, 49 seconds Looking ahead, we expect the growth momentum to continue across all major business segments. The minim the 6:57 6 minutes, 57 seconds medium-term outlook for the building material and interior solutions industries remains positive supported by rising urbanization, increased 7:05 7 minutes, 5 seconds disposable incomes, and the growing preference for branded and premium products. with a diversified product portfolio, 7:14 7 minutes, 14 seconds strong brand equity and expanding distribution network and upcoming capacity additions. Century 7:23 7 minutes, 23 seconds Flyboards is well positioned to deliver sustained growth in coming quarters. 7:28 7 minutes, 28 seconds We will continue to focus on value creation through operational efficiency, prudent financial management and 7:36 7 minutes, 36 seconds responsible growth. With shareholder return remaining central to our strategy, 7:44 7 minutes, 44 seconds that concludes our management commentary. We will now open the floor for questions. 7:51 7 minutes, 51 seconds Thank you very much. We will now begin the question and answer session. Each participant is requested to limit themsel to a maximum of two questions. 8:00 8 minutes Time permitting, we will respond to any further questions that you may have that remain unanswered. 8:06 8 minutes, 6 seconds Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question, you may 8:13 8 minutes, 13 seconds press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will 8:21 8 minutes, 21 seconds wait for a moment while the question Q assembles. 8:32 8 minutes, 32 seconds We'll take our first question from the line of Rahul Agarwal from Ikiguay Asset. Please go ahead. Hi Rahul. 8:41 8 minutes, 41 seconds Hi sir. Good afternoon. Thank you so much for the opportunity. Yes sir. 8:45 8 minutes, 45 seconds Uh two questions. Firstly is you know some bit of indication on how do you look at fiscal 27 across segments on you 8:52 8 minutes, 52 seconds know on growth and margins. That's the first question. 8:59 8 minutes, 59 seconds Okay so I think we haven't published any numbers on FI27 yet but when you look at FI26 9:08 9 minutes, 8 seconds we've had a very strong growth and it has been largely in line with trends. So I think 527 is likely to look similar if not better. 9:18 9 minutes, 18 seconds Uh anything specific on the MDF side? Uh in terms of our growth uh what kind of volume would you target or should it be similar 20%. 9:27 9 minutes, 27 seconds Like you know our long-term growth ambition is 12,000 cr by 531. So that includes an annualized stagger of 18% 9:34 9 minutes, 34 seconds plus. So next year also I think we'll see a robust growth in MDF. But for the time being till we don't freeze up our numbers, I can't give guidance on next year. 9:44 9 minutes, 44 seconds Sure. Rahul, we are excited. We are excited about pictures. 9:50 9 minutes, 50 seconds Okay. And second question was on capacity. Uh just on plywood and MDF. Uh I think we're still to add some capacity 9:58 9 minutes, 58 seconds on the existing plants. So wanted to know how much of that is left which will get computed in 27 and then uh you know 10:06 10 minutes, 6 seconds on the up capex which you've announced for 1100 crores if you just run through your broader thoughts uh you know in terms of how would these plants be uh 10:15 10 minutes, 15 seconds better versus existing plants in case there is some efficiency or you know different SKUs how do you plan to source timber and you know how do you plan to 10:23 10 minutes, 23 seconds fund it so these were the questions on capex thank you so should I first So on the plywood capacity Kisha or you want Sure. Sure. Go ahead. 10:33 10 minutes, 33 seconds Yeah. So on the plywood capacity throughout this year we've been doing internal expansion. So if you will see 10:41 10 minutes, 41 seconds we've been from where we started this year we've been growing and in Q4 we 10:46 10 minutes, 46 seconds will be at almost 4 lakh uh 30,000 uh PBM in this uh quarter because we've 10:56 10 minutes, 56 seconds been doing expansion in Kandla. We've been doing expansion in Gojhati. We've been doing expansion in uh Joka. Uh but 11:03 11 minutes, 3 seconds next year we have two uh major expansions planned. One is our Husharpur plant which is coming up. Uh it should 11:11 11 minutes, 11 seconds be operational in Q3 in um in the next financial year and uh the other is that 11:19 11 minutes, 19 seconds we are expanding our Chennai unit. So uh that also should be operational by Q3 11:25 11 minutes, 25 seconds next year. So I think um with existing capacities expansions that we are doing we will be able to sustain H1 and in H2 11:34 11 minutes, 34 seconds we will have two additional capacities coming in. uh all these expansions are being done with a view of where we want 11:41 11 minutes, 41 seconds to reach in 5 years and even in UP which uh Quesa will elaborate more on we also planning a plywood plant there out of um 11:50 11 minutes, 50 seconds the entire thing there would be about we are planning 90,000 CDM eventually in uh 11:57 11 minutes, 57 seconds UP but obviously we may start and gradually increase it to 90,000 so overseas 12:04 12 minutes, 4 seconds right just just on Hoshpur and Chennai what is the CBM capacity you'll add 12:10 12 minutes, 10 seconds so uh currently we have done 60,000 in Hosharpur but we will start operations 12:17 12 minutes, 17 seconds with 30,000 and minimum is 32,000 and then eventually increase it to 60 we'll put machines worth uh 60,000 but we will 12:26 12 minutes, 26 seconds gradually increase it and in terms of um Chennai currently we are at 12:34 12 minutes, 34 seconds it will be it'll be almost one lakh if I'm not wrong like uh in CBM I usually talk in NA so in CBM it should be one 12:43 12 minutes, 43 seconds lakh it's a little higher than the UP plant thanks for that yeah yeah and on the balance one lakh is not additional it's total 12:52 12 minutes, 52 seconds yeah and on the MS side I think we'll be able to unlock 70,000 cubic meters additional 13:00 13 minutes once we able to uh to extend the line I think that will be within Q1 month of the next financial year itself and post 13:08 13 minutes, 8 seconds that we will be limited by total capacity which will be around 6 lakh 25,000 cubic mage um as far as the Uttar Pradesh project 13:17 13 minutes, 17 seconds is concerned that we'll have a MDF capacity of in excess of three lakh cubic meters again and the time horizon 13:24 13 minutes, 24 seconds for that we would be estimating at about 2 and a half years from the date from which we have land in currently we are waiting for approvals to actually get 13:33 13 minutes, 33 seconds the land in our possession And how do you plan to fund it? 13:41 13 minutes, 41 seconds Funding out I think it is a dynamic scenario. Currently we have very strong internal approvals. So going forward as and when we finalize the funding plan we shall get back to you. 13:52 13 minutes, 52 seconds All right. Perfect. Thank you so much. I'll get back in the queue. Thank you. All the best. 13:57 13 minutes, 57 seconds Thank you. We'll take our next question from the line of Balaji Vinad from Nafa Asset Managers Private Limited. Please go ahead. 14:06 14 minutes, 6 seconds Yeah, good afternoon to the management. Hi, good afternoon. Good afternoon. 14:11 14 minutes, 11 seconds Uh uh Sergi just wanted to understand that this incremental capacity that's been announced for MDF uh the you know 14:18 14 minutes, 18 seconds this 330,000 cubic m uh entire thing is going to be in UP is my understanding correct? 14:26 14 minutes, 26 seconds Yes. 14:28 14 minutes, 28 seconds Uh okay. So uh you know my sub question is you know uh North India pricing was much better compared to South India as 14:36 14 minutes, 36 seconds far as MDF is concerned. So now you know with the capacity being added uh so we can expect cutthroat price war uh to 14:45 14 minutes, 45 seconds commence in North India as well uh you know because if you see over the last say 4 to 5 years uh if you look at all the listed companies the entire capital 14:54 14 minutes, 54 seconds employed in MDF segment is roughly 3,500 crores including you and today it is earning less than fixed deposit. uh so 15:02 15 minutes, 2 seconds you know uh with that in mind and with an 85% uh capacity increase that has been announced are we seeing uh such a 15:10 15 minutes, 10 seconds demand for MDF uh because uh you know uh IT sector is weakening and of course that will have some kind of second third 15:18 15 minutes, 18 seconds order impact on the housing demand uh etc. Uh so just wanted to understand this uh uh you know thought process in 15:26 15 minutes, 26 seconds terms of this uh uh severe capacity expansion are so is MDF getting into a telecom industry like situation where uh you know there are three players and 15:35 15 minutes, 35 seconds they went into a cutthroat pricing war for more than a decade uh looks like that can get replicated uh in MDF industry. 15:43 15 minutes, 43 seconds So I think you've asked a lot of questions with that but I'll try to answer whichever I understood. Um the first thing is that you know it is uh not uh it is not fair for us to commit 15:52 15 minutes, 52 seconds on composite uh competition and their returns but as far as we are concerned I think for the current year we are at a 24% growth trajectory and going forward 16:02 16 minutes, 2 seconds we believe that MDF still has a lot of room to grow for the current year we have guided for 25% plus growth and I think that we will be able to achieve 16:10 16 minutes, 10 seconds that um as far as um as far as the returns are concerned currently being we 16:18 16 minutes, 18 seconds are at a decent for the current quarter 12% a bit up this is with a lower base because of the festive season and after 16:27 16 minutes, 27 seconds flooding situation happened in Punjab which caused the highest of September going forward I think we are well on line to achieve our aspiration of 15% a 16:35 16 minutes, 35 seconds bit and then build on that so with these two with this 25% plus growth and a 15% plus I think we are in reasonably 16:43 16 minutes, 43 seconds healthy position uh in a hypothetical situation you know 16:52 16 minutes, 52 seconds we have seen uh you know the government of India actually uh uh reverting and kind of going back on QCOs uh etc on a 17:01 17 minutes, 1 second lot of product categories of course that's not happened in MDF but in a habit situation if that were to happen uh then we are going to have one more 17:08 17 minutes, 8 seconds player in the form of imports once again you know which is currently subdued uh you know any any thoughts on if that has been factored in into this 17:16 17 minutes, 16 seconds currently the pricing that is there if you looked at imports even earlier never constituted more than 7 8% of the total 17:25 17 minutes, 25 seconds sales of MDF in the country and having said that the prices like you rightly said because of the intense competition that has taken place because of our 17:33 17 minutes, 33 seconds precient capacity addition over the course of the past two years which is unlikely to be repeated in the foreseeable future prices have actually 17:41 17 minutes, 41 seconds bottomed out I don't feel that as much of a challenge However, having said that, I think BIS is here to stay. The Indian consumer deserves a good product and the 17:49 17 minutes, 49 seconds government of India has ensured that that happens. I don't think they're going to walk back from that. 17:55 17 minutes, 55 seconds Let me explain a little bit. You see in in next 5 years, our chairman says that in next 5 years or say 10 years, lot of 18:03 18 minutes, 3 seconds capacity of MDF will come in India. You believe that in 10 years? Do you believe that sir? 18:12 18 minutes, 12 seconds Definitely that in 10 years there will be lot of capacity addition isn't it correct? Yes. 18:19 18 minutes, 19 seconds So if there will be capacity addition there are two ways either new players will come or if the existing players 18:28 18 minutes, 28 seconds come in advance new players will be deterred they will not come. So there will be a there may be a fight of little 18:35 18 minutes, 35 seconds bit some for some time or we believe that we will get a period of say year or two year in between where we will be 18:43 18 minutes, 43 seconds making more money but otherwise yes every two year or so there will be a fight for two three years and again two years will be nice but ultimately the 18:52 18 minutes, 52 seconds capacity addition will be done by just one or two or three players that's a good thing to happen for an industry so 18:59 18 minutes, 59 seconds that is the if you look at uh steel industry it's not passing through a good phase but lot of addition is coming 19:07 19 minutes, 7 seconds cement industry lot of addition of capacity is coming and lot of capacity is unutilized but still everybody makes some profit so that is how it's going to 19:16 19 minutes, 16 seconds be in the MDF industry also and MDF is a growing industry it's growing at 20% peranom it has shown that it has the 19:23 19 minutes, 23 seconds possibility so and even then the cloud is also growing we have a projection that next year 5 to 7 7% increase will 19:31 19 minutes, 31 seconds be there in cloud growth will be there. So we believe that yes all this will help the company to 19:40 19 minutes, 40 seconds grow in long term. In short term there may be issues which nobody can deny and that could be there in any industry. If 19:48 19 minutes, 48 seconds you look at short term you cannot plan we are planning for next 50 years. 19:55 19 minutes, 55 seconds I hope I have been able to make you clear. Yeah. Yeah. 19:58 19 minutes, 58 seconds Thank you so much. Just one last thing is uh KFG mentioned that you know prices have kind of bottomed if uh if you could 20:06 20 minutes, 6 seconds throw some light on you know whether you know it's refer referred to south India or north India or you know both put together 20:14 20 minutes, 14 seconds you see why we say prices have bottom there is only one reason the prices are not going down nobody is talking there 20:22 20 minutes, 22 seconds is nothing happening in the market and still we are selling and there is an AITA so that itself is the proof that 20:28 20 minutes, 28 seconds the Prices have bottomed capacities are still unutilized in certain uh with some many manufacturers. 20:37 20 minutes, 37 seconds So that means prices have bottomed they will not go down further. 20:44 20 minutes, 44 seconds Okay. And we really expect the prices to go up actually a little bit. And the raw material prices will go down because the 20:51 20 minutes, 51 seconds plantation which has happened across the country we have done very elaborate survey across all fields. 20:57 20 minutes, 57 seconds Lot of plantation has happened. The prices of raw material has to go down. 21:02 21 minutes, 2 seconds Nobody can stop that. Yeah. It's taking its own time. That's the reality because it takes time to grow. 21:10 21 minutes, 10 seconds Thank you Sanj. Thank you K. Wish you all the best. Thank you. 21:15 21 minutes, 15 seconds Thank you. Next question is from the line of Rahan Sayyad from Trinetra Asset Managers. Please go ahead. 21:23 21 minutes, 23 seconds Yeah. Good afternoon. 21:27 21 minutes, 27 seconds Uh I'm sorry to interrupt. Can I use your handset mode please? Yeah sure. Just give me a minute. 21:39 21 minutes, 39 seconds Uh is it here now? Yes, please go ahead. 21:43 21 minutes, 43 seconds Yeah. Uh, so sir my first question is around I want to just understanding regarding your your guidance that you 21:50 21 minutes, 50 seconds have given regarding MDF margin. So your so the current 9 month margin X4X for 21:57 21 minutes, 57 seconds MDF stand at 13.4% 4% and your FI 2020 26 guidance target at a higher 14 14 15% 22:06 22 minutes, 6 seconds range. So with the quarter C margin coming in at 12.1% have rightly put at its sub cause of softening demand in 22:13 22 minutes, 13 seconds quarter C. So what specific triggers such as raw material softening or a higher capacity utilization from the new Andhra Pradesh plant will reach this gap cont. 22:26 22 minutes, 26 seconds So I think um we are looking at a higher margin in the current quarter because of two things. Firstly like I mentioned there was a flooding situation in Punjab 22:34 22 minutes, 34 seconds in the last quarter that led to slightly higher prices for north plant which is now eased out. Secondly we will be looking at higher capacity utilization in the current quarter. Q4 is 22:43 22 minutes, 43 seconds traditionally always better in Q3 as far as demand is concerned. So I think that these are going to help us look at slightly higher margins for the quarter. 22:52 22 minutes, 52 seconds Lastly, chemical prices have also stabilized and I think that is also going to aid in the pursuit of higher margins. 23:00 23 minutes Uh could you please repeat last time what you have said? 23:05 23 minutes, 5 seconds Chemical prices have also stabilized and this is also likely to margins. Uh okay. 23:12 23 minutes, 12 seconds And my second question is around just want an understanding regarding your CFS segment volatility. So the CFS segment 23:20 23 minutes, 20 seconds saw a 43.3% YI revenue jump this quarter. So but uh AITA margin X4EX dropped to 18.8% from 23:29 23 minutes, 29 seconds 19.9% the same period last year. So could you explain the cost pressures or change in the service mix that led to 23:37 23 minutes, 37 seconds this margin contract despite the higher output? You have case of some idea you can use. 23:47 23 minutes, 47 seconds Is adding CFS now? CFS. 23:51 23 minutes, 51 seconds Uh Arun, you have some idea you can explain or otherwise we will explain later. 23:56 23 minutes, 56 seconds So please note down then the name we will call you later on to explain. 24:01 24 minutes, 1 second Uh sure. Yeah, this is good. I have one question. I will come back and back in. 24:08 24 minutes, 8 seconds Uh Rahan, you're through with your question, right? Yeah. Yeah, I'm done with my question. Can I repeat your question again? 24:16 24 minutes, 16 seconds No, they will call you. This is regarding CFS now. Yeah. Yeah. CFS segment a little bit. 24:21 24 minutes, 21 seconds Yeah. Yeah. So CFS actually we are not updated very much very frankly. 24:26 24 minutes, 26 seconds Uh I should be but really I'm not updated right now. So we will call you our investor relations when we will call you and update you. 24:36 24 minutes, 36 seconds Sure. Okay. Yeah. Okay. Yes. Thank you. 24:42 24 minutes, 42 seconds We'll take our next question from the line of Sneha Tala from Noama. Please go ahead. 24:48 24 minutes, 48 seconds Hi, good afternoon team and congratulations. Hi. Yeah, thank you. 24:54 24 minutes, 54 seconds Just couple of questions now. Firstly on a laminates front you know we are seeing a lot of product changes there while we don't see volumes you know gone down by 25:02 25 minutes, 2 seconds 7% 15% usually we've seen a huge jump in you know average realization um and you know margins are also you know sequentially you know slightly 25:10 25 minutes, 10 seconds improving. So what is the outlook and how do we read this segment and you know how do we see the growth in this particular segment coming in 25:17 25 minutes, 17 seconds so as we discussed earlier as well in lness we are confident of a 15% plus growth for the year and I think that 25:26 25 minutes, 26 seconds this is based on both domestic as well as export demand as far as the export market is concerned it is larger sizes 25:35 25 minutes, 35 seconds and because it is larger sizes the perilization will always be higher so that could be the reason for the ASP 25:42 25 minutes, 42 seconds having said that domestic is also likely to start firing again from Q4 itself or or from early next year. A combination 25:50 25 minutes, 50 seconds of both we looking at 20% growth for next financial year. 25:56 25 minutes, 56 seconds Uh understood that is quite helpful. And what sort of margins because we are currently seeing margins moving around 9 odd% which earlier it used to be double digit of around 14 to 15 odd%. 26:08 26 minutes, 8 seconds uh double digit margins next year for sure. 26:11 26 minutes, 11 seconds Sure. Noted. Uh second uh question was what's the magic which is happening in plywood segment? You know constantly seeing 15% plus growth. What I basically 26:21 26 minutes, 21 seconds want to understand is uh uh you know what what would be the industry level growth at this point of time. I know our industry numbers are very difficult to 26:29 26 minutes, 29 seconds find. uh but u uh you know how much of market share increase we would have seen in last two years and how much is the further hope to see that kind of 26:37 26 minutes, 37 seconds increase happening like how confident are we to continue the 15% plus for how many years 26:44 26 minutes, 44 seconds hi um so the thing is uh with respect to plywood the industry feel like you said 26:52 26 minutes, 52 seconds it is very difficult but from whatever study that we keep doing uh it's somewhere between 6 to 7% is the plywood 26:59 26 minutes, 59 seconds industry growth So it is not that the industry is not growing uh because of other products etc. The industry is 27:06 27 minutes, 6 seconds growing, we are growing better because we are obviously our endeavor has to be to increase our market share and uh 27:14 27 minutes, 14 seconds where we look at it I believe is that today um at a industry level uh we are 27:22 27 minutes, 22 seconds actually in the last two years or rather I would say before covid we were at uh 4% 4 and a half%. 27:31 27 minutes, 31 seconds Today I don't know what we are today at the end of this year but I know what we were last year we were at around we these are all estimate we around 8 8 and 27:40 27 minutes, 40 seconds a half%. So we've doubled and more in the last since precoid to now. Um where 27:48 27 minutes, 48 seconds is my where do we want to take it? We obviously want to double it more. Um we are doing everything we can. I think 27:55 27 minutes, 55 seconds that's the vision that we are working towards. So I think uh it's not magic. I think it's 28:04 28 minutes, 4 seconds a lot of hard work and a lot of uh focus towards this that is delivering these 28:12 28 minutes, 12 seconds numbers. Uh we definitely have confidence that we will uh do everything unless and until something really 28:19 28 minutes, 19 seconds drastic happens in the market uh which is not predictable but we will put in our 120%. 28:28 28 minutes, 28 seconds Let me chip in SA a little bit. Uh you we have told earlier that we keep on doing something new. Some new 28:37 28 minutes, 37 seconds experiments are always on and we actually fail more then we succeed but out of the five experiments even if one 28:46 28 minutes, 46 seconds succeeds then it gives us the the growth we are looking at because with the old systems nothing can be 28:54 28 minutes, 54 seconds gained in today's type of economy. Today chat GPT has become the most important uh thing for everybody. Everybody goes 29:01 29 minutes, 1 second to chat GPT five times a day. Now before going to a doctor actually you know all the details about whatever you have. So 29:09 29 minutes, 9 seconds we have succeeded like that and for future also we are quite excited because there are too many things happening and there are too many possibilities now. 29:17 29 minutes, 17 seconds Earlier it was but there are too many possibilities 29:24 29 minutes, 24 seconds now. We are keeping on doing new new experiments. Some of them succeed and that is what gives us this kind of a success. And another thing I'll tell you 29:33 29 minutes, 33 seconds right now the division uh of plywood is in a momentum good momentum. So that 29:40 29 minutes, 40 seconds momentum is also helping us and that was uh uh great uh thanks team for that. Just lastly on the MDF front now we've again put up a new capacity. 29:51 29 minutes, 51 seconds When is the hope that we have when current capacities will see margin revival or industry will actually see margin revival because of these 29:58 29 minutes, 58 seconds capacities like I think every other participant we are really concerned on the roy front. Uh so um which particular quarter is the one where you see turnaround happening in realization. 30:10 30 minutes, 10 seconds So although you know we are not fortune tellers but I think that going forward margin recovery is definitely on the 30:18 30 minutes, 18 seconds cards. The reason like you have rightly pointed out is a lot of capacity has been added but the way the capacity added was added in the last couple of 30:26 30 minutes, 26 seconds years I don't think that is likely to sustain new capacity additions have slowed down and going forward to a 20% 30:32 30 minutes, 32 seconds plus scar as far as demand scenario or demand growth is uh the equilibrium should be reached maybe also go so next year year and a half so during this time 30:41 30 minutes, 41 seconds period you should see margin recovery exactly which month which quarter which week is difficult to predict Thank thanks to your team and all the best. 30:53 30 minutes, 53 seconds Thank you. Thank you SA. Thank you. 30:56 30 minutes, 56 seconds We'll take our next question from the line of Bhavin Rupani from Invest. Please go ahead. 31:03 31 minutes, 3 seconds Yeah. Good afternoon sir and thanks for the Hi. Yeah. Yeah. Hi. 31:08 31 minutes, 8 seconds Hi sir. Uh sir uh question related to MDF. So our capacity as an on FI25 31:15 31 minutes, 15 seconds annual report it says 6 lakh 27,000 CBM whereas our press release we have released yesterday it says 561. So how should one reconcile that? 31:25 31 minutes, 25 seconds So basically the capacity expansion that we were likely to do or that we will be doing in Q1 that was likely to take place in the current year. However due 31:34 31 minutes, 34 seconds to robust demand we have been unable to take that expansion. So this will be adding close to 70,000 cubic m of 31:40 31 minutes, 40 seconds capacity and that expansion will most likely happen in Q1 of next year. So this discrepancy is due to that. 31:50 31 minutes, 50 seconds So and this is at our south plant. 31:52 31 minutes, 52 seconds Yes. So in Budwe our current line is 28.8 m and we are going to be moving to 33.8 m line with a 5 m extension. So 32:01 32 minutes, 1 second that will be happening to one of next year. 32:05 32 minutes, 5 seconds All right. Uh next is on our uh existing expansion. So first of all wanted to understand what is the rational behind 32:12 32 minutes, 12 seconds this Uttar Pradesh expansion. Uh uh are there any other players in this region as well and also wanted to understand on 32:19 32 minutes, 19 seconds the raw mat availability and proximity uh at this plant. 32:24 32 minutes, 24 seconds So Uttar Pradesh is the largest and most perennial source of raw material as far as most of India is concerned the 32:31 32 minutes, 31 seconds exception of maybe Pradesh and currently there are no MDF plants that are located within Uttar Pradesh. So it is a huge market opportunity and in line with the 32:40 32 minutes, 40 seconds same we are putting up a plant there and uh we will update you as and when we acquire the land and post that within next two to two and a half years we 32:49 32 minutes, 49 seconds should be in a position to set up a unit there. 32:53 32 minutes, 53 seconds All right. And in case of uh this MDF plant, what is our machine make? Uh we are yet to decide. 33:03 33 minutes, 3 seconds All right. Uh if you can just elaborate on what would be the capex outlay if we choose between Chinese or European. So 33:10 33 minutes, 10 seconds how big is the difference percentage terms? 33:13 33 minutes, 13 seconds It is not a very big difference because uh you are talking about the main press. 33:18 33 minutes, 18 seconds The main press contri contributes about 20% of total project cost. So in that there could be a delta of 15%. 33:29 33 minutes, 29 seconds Fair enough. Okay. Uh and uh so on this plywood uh so we have committed almost 33:36 33 minutes, 36 seconds 330 crores for 90,000 cbm of expansion for Uttar Pradesh. So if we'll just look at the capex intensity of this plant, it 33:44 33 minutes, 44 seconds is far higher versus our MDF plant. So how should I understand this? So what is the reason behind this? 33:53 33 minutes, 53 seconds Uh sorry, can you repeat your question? 33:57 33 minutes, 57 seconds KEX intensity per CBM for our plywood plant is higher versus I made a mistake. 34:03 34 minutes, 3 seconds It is actually 1 lakh 20 cbm because we are doing 1 lakh na. So it is 1 lak 20 34:12 34 minutes, 12 seconds cbm and not 90,000 cbm. 34:19 34 minutes, 19 seconds Okay. uh ma'am even if we do 1 lakh 20,000 it comes to somewhere around 27,000 rupees per CBM which is higher 34:27 34 minutes, 27 seconds versus what we have announced in Uttar Pradesh which is 25,000 rupees per CBM sorry I didn't get it I'm talking about 34:36 34 minutes, 36 seconds Uttar Pradesh only yeah so if you look at our capacity plywood capacity that we have announced 34:43 34 minutes, 43 seconds in 1 lakh 20 against which we are uh doing capex of 330 cr 330 cr right Yeah. 34:50 34 minutes, 50 seconds Right. So per CBM it is somewhere around 27,000. Right. Yeah. 34:58 34 minutes, 58 seconds Right. And if we compare it with MDF for 3 lakh 30,000 CBM we are putting we are doing expense of 800 crores which means per CBM it is 25,000 rupees. 35:10 35 minutes, 10 seconds So how come our plywood plant is more expensive versus uh MDF? 35:17 35 minutes, 17 seconds I think different capacities you are comparing to to 25 27,000 but 35:26 35 minutes, 26 seconds um I would like to I would like to point you see in private whenever we come up with a capacity we create a capacity for 35:35 35 minutes, 35 seconds a larger size currently all the ground expansions that you have been seeing which are normal cost they because of the infrastructure has been created what we need to add on is debottling 35:45 35 minutes, 45 seconds equipment So the shed the peeling etc etc is ready and what we add on is normally a hot press and a dryer by doing this going 35:52 35 minutes, 52 seconds forward future capex becomes much cheaper. So any new plant does have a certainly higher kx when it is being 35:59 35 minutes, 59 seconds established. However going forward this plant can actually ramp up to a much higher capacity than what is currently being shown. I hope that answers the question. 36:09 36 minutes, 9 seconds Right. Then what would be our brownfield optionality over here at Uttar Pradesh? 36:12 36 minutes, 12 seconds After both this expansion of MDF and plywood for MDF it would be difficult to expand further for plywood you would definitely be able to scale the unit up. 36:23 36 minutes, 23 seconds Uh would it be possible for you to put any numbers over here? 36:28 36 minutes, 28 seconds No, currently it would not but if you look at the history of other units you'll get a semblance of the same. 36:36 36 minutes, 36 seconds Perfect. And so just last one question on MDF. Uh we have seen margin decline both yearon year and QoQ and Q3. Uh how 36:45 36 minutes, 45 seconds should one understand the reason behind it? 36:49 36 minutes, 49 seconds I think there's not a margin decline year on year. You see u there was a forex impact last year. We had a 36:56 36 minutes, 56 seconds positive forex fluctuation 154 quarter where this year we have had a slight forex loss. If you look at it, 37:04 37 minutes, 4 seconds beta just trade without forex. Uh this year we're at 12.1%, last year same quarter we at 10.7%. So you're absolutely right. Quarter and quarter 37:12 37 minutes, 12 seconds slightly lower. The predominant reason for this is because of slightly lower operating leverage as well as flood situation in Punjab which I briefed 37:20 37 minutes, 20 seconds about going forward. Uh we are hoping that with better operating leverage with better capacity utilization we should have a stronger quarter. 37:30 37 minutes, 30 seconds All right. Perfect sir. Thank you so much. 37:35 37 minutes, 35 seconds Thank you. Before we take the next question, would like to remind participants to ask a question, please press star one on your phone. 37:43 37 minutes, 43 seconds Next question is from the line of Kesha Loti from HDFC Securities. Please go ahead. Hi, thank you for the opportunity. 37:50 37 minutes, 50 seconds Yeah, I want to understand on Hi sir. 37:55 37 minutes, 55 seconds First thing I want to understand on Ply expansion if I understood correct. 37:58 37 minutes, 58 seconds Husharpur is a 60,000 CBM expansion. out of that 30,000 CBM will come in Q3 FY27 and balance when it will be coming and 38:06 38 minutes, 6 seconds secondly the Chennai expansion which company highlighted what is the tit size of that and what is the size of the expansion imply 38:16 38 minutes, 16 seconds so the thing is guys one thing I should tell you all that we are now once these new expansions come in we are planning 38:23 38 minutes, 23 seconds to today we outsource uh senic MR which is our water resistant 38:30 38 minutes, 30 seconds senic plywood which is about um I would say 20% of our 38:40 38 minutes, 40 seconds okay 8% of our overall plywood revenue is tenic MR or whatever we outsource so 38:46 38 minutes, 46 seconds we are now planning to make it in-house in say the next one year's time so for that we need additional capacity because 38:54 38 minutes, 54 seconds of which you are going to be finding that the capacity expansion is quite massive that we are doing in the next one year uh compared to what we've done 39:04 39 minutes, 4 seconds in the past. Um having said that see with Husharpur we will start with 39:10 39 minutes, 10 seconds 30,000. Uh it is very difficult right now for me to say how and uh when we will reach uh 60,000 uh full capacity. 39:23 39 minutes, 23 seconds It may take one year. It may take two years. U but we are planning to start with 30,000. It will make the plant will 39:30 39 minutes, 30 seconds be viable with that 30,000 as well because 30,000 to 60,000 there is very there's only two machinery that we need 39:38 39 minutes, 38 seconds to add additional. So smart are very heavy it's just a uh very less capex 39:45 39 minutes, 45 seconds cost that we actually add into and as far as Chennai and uh UP goes um 39:55 39 minutes, 55 seconds Chennai uh capex I think V can get back to you um I don't have it in memory right now total capex that we are doing 40:04 40 minutes, 4 seconds um and is there any other question I've missed answering So Chennai is a one lakh CBM expansion 40:12 40 minutes, 12 seconds by Q3 FYI 27 right actually uh that time I got the CDM calculations wrong it will not be one 40:19 40 minutes, 19 seconds lakh it will be actually uh one second no it will be more 40:26 40 minutes, 26 seconds 1 lak 25 1 lakh 25,000 any 40:38 40 minutes, 38 seconds 1 lakh 50,000 CBM 40:49 40 minutes, 49 seconds hello yeah so China is 1 lakh 50,000 cbm new capacity coming in Q3 FY27 total total we already at 75 or 80,000 40:58 40 minutes, 58 seconds we are taking it to one lakh system understood got it uh one booking 41:06 41 minutes, 6 seconds question on MDF What is the EP plant capacity right now? 41:12 41 minutes, 12 seconds The current capacity for Andra is 2 lakh 47,000 mters. It will bump up to 3 lakh 15 post uh the extension. 41:22 41 minutes, 22 seconds The reason I am asking because if I understand right is 313 if Andra is 214. 41:28 41 minutes, 28 seconds So your total capacity right now is 527 KCBN while press 47 not 240 247 41:37 41 minutes, 37 seconds a 247 got it 2.47 47 lakhs. 41:42 41 minutes, 42 seconds I understood right and one last question uh this particular good margin will be 15% when are we expecting this to reach 41:51 41 minutes, 51 seconds and what is the normalized margin of MDF industry in your view? 41:57 41 minutes, 57 seconds Um in my view over any 3 to 5 year horizon period we would have looked at 25% red margin for MDH. However, 42:05 42 minutes, 5 seconds considering the current challenging demand scenario, I would say that a normalized return of MDF would be closer to 20% a bit. Alongside that, for 42:14 42 minutes, 14 seconds particle board, I think maybe by Q4 of next year, we should be able to target steady state margins. 42:22 42 minutes, 22 seconds Okay, that is good. Thank you so much. 42:25 42 minutes, 25 seconds Thank you. Ladies and gentlemen, to ask a question, please press star one on your phone now. 42:40 42 minutes, 40 seconds Participants who wish to ask a question may please press star and one on their phone. 42:46 42 minutes, 46 seconds We have a follow-up question from the line of Rahul Agarwal from Ikigai Asset. Please go ahead. 42:52 42 minutes, 52 seconds Yeah, thank you for the followup. Uh just yes, one one question on the capital expenditure side, right? From a cash 42:59 42 minutes, 59 seconds outflow perspective, could you help us uh just understand how much would you you know I think fiscal 26 is going to 43:06 43 minutes, 6 seconds be about 400 crores. So if you clarify if this is correct and then 2728 how are you going to spend this uh this capex could you just help us understand that? 43:15 43 minutes, 15 seconds Thank you. Now, it depends on when we get the land a lotment. Once we have the same, we will be taking a uh more uh 43:24 43 minutes, 24 seconds detailed view of how this expenditure will play out and we can share details. 43:29 43 minutes, 29 seconds Currently, till we don't have the land in hand, it's very difficult to give you any sort of a backup. 43:35 43 minutes, 35 seconds See this land we have been trying for a long time. Now, it seems that yes, we will be able to get it. until unless the land is there we are not putting our 43:43 43 minutes, 43 seconds minds into how to how will we manage the funding but certainly if the funding is 43:50 43 minutes, 50 seconds not managed nothing will happen so it will be certainly you'll plan it but it will take some more time right can I say bulk of the capex will 43:59 43 minutes, 59 seconds happen in fiscal 28 is that fair to fair statement again it is uh not correct for us to 44:07 44 minutes, 7 seconds comment on this at this point in time once we have more clarity we shall the same. Sure, I understand that. Uh, all right. Thank you so much. 44:15 44 minutes, 15 seconds Thank you. Thank you, Rahul. Yeah. Thank you. 44:19 44 minutes, 19 seconds Participants who wish to ask a question are requested to press star and one on their phone now. 44:33 44 minutes, 33 seconds So I think as there are no further questions I would now like to hand the conference 44:40 44 minutes, 40 seconds over to Mr. Sanjay Garval for closing remarks. Over to you sir. 44:44 44 minutes, 44 seconds Thank you. Thank you everyone for your insightful questions and continued interest in the company. We are 44:52 44 minutes, 52 seconds encouraged by the strong performance across our business segments and remain confident about sustaining this growth 44:58 44 minutes, 58 seconds momentum in the coming quarters. We appreciate your trust and support and we look forward to engaging with you again 45:06 45 minutes, 6 seconds after our next quarterly results. Thank you. Have a great day. 45:11 45 minutes, 11 seconds Thank you very much. On behalf of SKP Securities Limited, that concludes this conference. Thank you for joining us ladies and gentlemen. You may now disconnect your lines. Thank you. 45:21 45 minutes, 21 seconds Thank you. Thank you. Thank you also.