Greenlam Industries Limited (GREENLAM) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Greenlam Industries Ltd. Q1 FY27 Earnings Conference Call. 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. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashok Sharma, Chief Financial Officer of Greenland Industries Limited. Thank you, and over to you, sir.

Thank you. Good morning to all, and I welcome to the Quarter 1 FY27 Earnings Call of Greenland Industries. I am joined by Samas Agarwal, our VP Finance, and HGA team, our Investor Relations Advisor. I'm sure you have the opportunity to look at the results and the investor presentation which are available on the stock exchanges and on the company website. I'll give you business update of Q1 before I hand over the call to Samath. We are pleased to report that we have started the year with a revenue growth of 18% on year-on-year basis and taking our consolidated revenue for the quarter to nearly 800 crores. The performance was broad based with most of the business segment reporting revenue growth during the quarter and with continuing growth momentum both for the domestic and the international market. Three of the major developments during the quarters were worth highlighting. Our chipboard business turned EBITDA positive for the first time with an operating profit of 3.4 crore before forex, and losses in plywood and allied segment is continued to narrow. Moving on to West Asia conflicts, the ongoing West Asia conflicts continue to keep input prices Currency rate and trade costs volatile during this quarter. This is also led to delay in container and vessel availability and freight cost, a significant hike in the freight cost. As a direct consequence relates to this, nearly 27 crore of export shipment got postponed out of this quarter. This is purely a timing matter and the revenue is not lost. It is simply moving into the current quarter. Also, the shipment in sea are taking Taking more time to reach destination, leading to overall To maintain the fiscal discipline and mitigate the impact of price rise, we have passed down the increase in the raw metal prices to the customers. As communicated earlier, we have done the price hike twice, at the beginning of April and May, and when the prices are started softening, we have reduced some prices at the beginning of June and again at the beginning of quarter two. Overall, on a net basis, we have passed down 7 to 8 percent. This is mainly the price hike in the chemical which constitutes nearly one-third of our raw material prices, while the prices of other raw materials remain constant. On the logistics side, I would like to highlight that the Middle East market is around 6-7% of our total business. So we don't foresee any material impact on our top line, rather it should grow. The domestic demand remained stable during the quarter retail and distribution led business held up well, while there were some challenges in the project business due to overall cost of increase in the entire building material industry. Moving on to the segment-wise details, in the laminate, our revenue from operation revenue for the quarter stood at 596 Crore, a growth of 7% on year-on-year basis. Sales volume for the quarter was at 4.62 million seats with a capacity utilization of 80%. Softness in the volume and the revenue. This is due to the export shipment which got postponed out of the quarter. Adjusted for this, the underlying demand trending, this business remains friendly. International business performed particularly well during the quarter, reinforcing the benefit of strong global footprint which we have built over the years. On the capacity expansion side, We are adding two new press lines of the laminate which are on track and which are expected to start commercial production by Q4 of this year. With the addition of this new capacity, we will be able to increase the capacity of specific category of laminate which are reaching near to optimum capacity utilization. I'll move on to the other plywood and allied segment. Revenue from operation during the quarter grew by 20% on year-on-year to 106 crore, and EBITDA loss for the forox fluctuation narrowed to 5 crore from 9 crore in the quarter 1 of last year. The plywood business, on the other hand, continued to ramp up with sales volume growing 19% on year-on-year basis and capacity utilization of 39%. Our distribution network is expanding, and we have taken some price hike at the start of April, in phased manner. We expect that plywood segment will break even in this year. Moving on to a panel and a light segment. This has been the... Standout performer of the quarter revenue stood at 95 crore, a growth of nearly 200% on year-on-year basis. Capacity utilization is improving every quarter and moved to 61% from 30% in the Q1 last year. Average realization has also increased driven by price increase taken and the product mix. Happy to share that this business turned positive during this quarter with a profit of 3.4 crore before forex fluctuation as against loss of 10 crore in Q1 last year. Our newly introduced HMR category which was introduced in quarter 4 of last year continue to gain good traction and we will introduce more premium products in this category going forward. We will continue to scale this business and improve the share of melamine-faced chipboard in the overall scale of chipboard. We expect this business to maintain a capacity utilization of around 70%. As far as the outlook for the FY27 will largely be the year in which we will be sweating our existing assets. Apart from the laminate touchline which is already announced, we do not have any plan for any large capacity addition, and our capex for the year is budgeted around 130-135 crores, which includes 70 crores towards the laminate expansion. That's all from my side. I will be happy to take your question post our announcement of financial performance. I will now hand over the call.

Thank you, sir. Good morning, everyone, and thank you for joining the call. I'll take you through the financial numbers. Coming first to the quarter 1 numbers on a console basis, the net revenue grew by 18% and stood at almost 800 crores, precisely at 797 crores, as compared to 674 crores of quarter 1 of last year. On a sequential basis, revenues were lower by 7%, in line with the usual trend in which Q1 is usually lower as compared to the fourth quarter. Gross margins were largely flat at 52.9% in the quarter as compared to 53.1%, despite sharp increase in the input and the freight costs. On a sequential basis, margins grew by 1.4 basis point on the back-off price increase passed during the quarter. Gross profit in absolute terms grew by 18% on Y-On-Y basis to 421 crores in this quarter as compared to 358 crores in Q1 of last year. EBITDA margins before forex fluctuations grew by 210 basis points at 10.2% as compared to 8.1% of Q1 last year. This was mainly on account of revenue growth, cost controls, operating leverage in decorative veneer, engineered floor, and chipboard business. EBITDA Forex fluctuations, sorry, EBITDA before Forex fluctuations in absolute terms grew by 48% to 81 crores in this quarter as compared to 55 crores in quarter 1 of last year. Forex losses were a small value of 1 crore as against 11 crores of Q1 in last year, and finance cost was down by 25% to 20 crores as compared to 26 crores of Q1 in last year. This is largely because some part of the forex was... Accounted for as a finance cost in Q1 of last year to the extent of 3.5 crores. Net profit didn't cost us to that 21 crores as against a net loss of 15.5 crores in quarter 1 of last year. In this quarter, the higher operating profit along with lower forex and interest cost led to the better flow through to the bottom line. I'll now take you through the segmental performance. First, on the laminate and allies. The Lamerate business saw a growth of 7% on Y&Y basis to 596 crores in this quarter, as compared to 555 crores in Q1 of last year. EBITDA margins before forex fluctuations were at 13.9%, growth of 70 basis points on Y&Y basis. Production volumes were 4.9 million sheets and a utilization of 80%. Sales volumes were 4.62 million sheets, which were lower by 6% on Y&Y basis, and this is largely on account of postponement of shipment on exports, export shipment which got postponed in the quarter. The average realization for the quarter on the laminate business was 1,240 per sheet, growth of 14% on Y&Y basis. Coming to the next segment, which is plywood and allies. This segment largely includes private business, decorative vineyards, engineered floors, and engineered doors. Revenue for this segment grew by...

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Ladies and gentlemen, the lines for the management got disconnected. Please stay connected while we reconnect them. Ladies and gentlemen, the management is back on line. We may continue, sir.

Apologies, the line I think somehow got dropped. I'll continue on the financial numbers. From the plywood and allied segment, which included plywood, decorative veneers, engineered floor and engineered doors, the revenue for the segment grew by 20%, 206 crores as against 88 crores in Q1 of last year. EBITDA losses before Forex narrowed to 5 crores, as against 9 crores in Q1 of last year. The production volumes for a plywood business was 1.83 million square meters and a capacity utilization of 39 percent, as against 28 percent in Q1 of last year. Plywood sales volumes were 1.66 million square meters, a growth of 19 percent. And average realizations was up by 4% to 276 rupees per square meter. The next segment, which is panel analyze, and this is largely the chipboard business that we have. The chipboard revenue for the quarter grew, and it's almost quadrupled to 95 crores in this quarter. EBITDA before forex fluctuations turned positive, so that's a good piece for this segment, at 3.4 crores, as against a net loss of 10 crores in Q1 of last year. Production volumes were at 44,838 cubic meters and a utilization level of 61%, as against 30% in Q1 of last year. Sales volume for the quarter was 41,418 cubic meters, growth of 167% on Y&Y basis, and average utilization was 22,764 per CBM, with a growth of 15% on Y&Y basis. On the balance sheet front, the working capital cycle improved by 3 days at 56 days as compared to 59 days in Q1 of last year, and net debt was at 934 crores as of the June. Thank you, and that's all from my end. We can now open the floor for questions.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star N1 on their touchtone 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 will wait for a moment while the question queue assembles. The first question is from the line of Vansheesha from EVNA Advisors. Please proceed.

Yes, sir. Am I on to it? Yes, sir.

Yeah, please go.

Sir, how is the container availability? So, do we see weaker performance in Q2 SI27 due to container availability issues?

Container availability and vessel availability remains a challenge as of now. That is the reason which we have told that around 25-30 crores of export moved on to this quarter. Whether this will continue in this quarter for the full quarter or whether it will get resolved, it is very difficult to comment as of now. But if this continue for this entire quarter, then it may have impact on the export sales.

I understood, sir. Okay. Thank you, sir. That is it from my side.

Thank you. Thank you. A reminder to all participants, anyone who wishes to ask a question, may press star N1 on their touchtone telephone. I repeat, anyone who wishes to ask a question, may press star N1 on their touchtone telephone. The next question is from the line of Sneha from Nuwama. Please proceed.

Hi, good morning, team, and thanks a lot for the opportunity. Just a couple of questions from my end. Firstly, with respect to, you know, you stated on the call that you've already started taking, reducing the prices in this particular trade. Do we see that, you know, when we are reducing prices substantially or when we are increasing, there is a good amount of de-stalking or de-stalking taking place? Generally, 5 to 10% more here and there doesn't really matter and, you know, the trade continues in a specific way. That's the first one.

So, in terms of price reduction, this is the reduction in increase, it's entirely depending upon the raw material, as I mentioned that on the April and May, we have increased the price, and since the price got softened towards the beginning of the June, so that's how we have reduced the prices at the beginning of the June and at the beginning of the July. So, In terms of whether it will have a de-stocking or not, I believe it will not have much impact on this. Because of the nature of the business, you need the stock on a continuous basis, and at any moment of time, we do not push the stock into the channel. It's entirely based on the requirement. So, we do not feel that it will have a negative impact. Rather, I feel when the price is now becoming more affordable, it will have a good impact on the secondary movement.

Understood. So, what you mean is even the OEMs, the way they purchase or even in the exports angle, whatever the purchasers have been going on, three or four increases, the same way it just continues.

We believe so.

Understood. My second question was related to your tribute segment. Where are we in terms of, you know, the percentage of pre-laminated business? We've, of course, seen the segment, you know, toning around positive at this point of time. But what are your end targets here? What kind of pre-lamination can we do and what kind of utilization can we achieve? And, of course, margins, where can we take this forward?

Yeah, so we are fairly good at this prelim in terms of that. Pre-LAM, I will not be able to tell you the percentage on the call, but we are fairly, and it is going as per our plan in terms of whatever we have planned, it is moving on as per the plan, and we are hopeful that by the year end also, we will overachieve what we have targeted. And as I mentioned that we have introduced HMR category in the quarter four of last year, end of quarter three, which is also getting good traction in the market in terms of that. And we will launch some more premium category in this segment also. So going forward also as a percentage of our overall product mix will be much better in comparison to what we are as of now.

And lastly, on your plywood business, you know, I know we've launched the premium segment and it's been quite a while that we've launched this particular segment, but despite that, we continue to make losses here. Any strategy of turning this around? Are we looking at mid-end segment, you know, which is what, you know, rest of the larger players have already done in this particular segment eventually to have a sizable scale and, you know, start making money. Any thoughts here?

So not as of now. So if you just to tell you in terms of plywood also, it's a growing every quarter on quarter, though the pace of growth could have been better in terms of that. And even the EBITDA losses is also coming down. We are very hopeful that in this year we will do the EBITDA break-even in terms of that. In terms of strategy, we want to focus right now on this segment which we have, rather than moving on to another segment. So right now we are focused on this and we are very hopeful that we will be able to break even in this year.

God, thanks a lot, team, and all the best.

Thank you.

Thank you. A reminder to all participants, anyone who wishes to ask a question, may press star and run on their touchtone telephone. The next question is from the line of Bhavin Cheda from Inam Holdings. Please proceed.

Hello, sir. Overall, good numbers in a difficult environment. So, a few questions. First, on the price hikes, when you mentioned that there has been a price reduction, In June as well as July. So this is across all segments or particular. So basically you have three main segments like laminates, plywoods, and chipboards. So price hike and price decline has happened all across or did you mention a general price hike and reduction?

So, in terms of this price hike was mainly necessitated on account of increase or fluctuation in the prices of chemical, which is predominantly used in the more usage in the laminate as well as in the chipboard segment. So, this what we have talked about, this is the price it was in the laminate and the chipboard segment. The other category which doesn't have more percentage of chemical, so there is no impact in those categories, mainly the plywood and the wood category.

Plywood category has not seen either price hike nor decline.

We did the price hike at the beginning of April because some of the prices have gone up, but in that the price hike was modest in comparison to laminate and the chipboard category. Since the uses of or the chemical content in the laminate and chipboard is much higher in laminate, It is as high as like 35%. And similarly, in the chipboard category, also it ranges in that same range. So the impact of cost increase was higher in these two categories. So this was increased in the April and May both, and slight reduction has been done in June, July. Yeah.

Next one is you said that plywood segment will do a beta break-even this year. So when it turns positive, it would be a beta-positive or break-even for the entire fiscal or in that particular quarter exit?

The entire year will be difficult. It is for that quarter.

And, obviously, next year would be a positive one. Third one, sir, you have also reclassified previous year volume numbers on the quarter basis. So, what has changed in across division?

And this you are talking about which you will...

I think the presentation mentioned laminates, I think laminates volume were also reclassified of the quarter four as well as I think basically the chipboard volume was also reclassified, so has the certain classification changed?

No, we will touch base with this offline. So this is more in terms of the laminate sheets and board category. So that we will touch base offline and explain it to you. Sure.

And last one, engineered wood flooring and doors, what was the revenue number and what was the loss number then?

For the floors and doors?

Yeah, engineered wood flooring and engineered wood doors.

So, this is a revenue, both put together is around 29 crore, and both put together the EBITDA loss of 1.2 crore.

Okay, thank you, sir.

Thank you. The next question is from the line of Pranav Mehta from Aquarius. Please proceed.

Yeah, good morning, sir. Thank you for taking my question. Sir, I wanted to understand on the debt repayment side. So, how is debt going to reduce over next, let's say, two to three years?

In this year, since we have the capex of this expansion, capex for the laminate and as well as the past capex, so we expect capex to be in the range of around 125, 130 crore. So obviously, we don't expect debt to come down in a significant manner. However, we expect that it should come down by close to around 100 or crore. And from the next year onwards, no major CapEx plan has been announced. So majority of the cash flow will be used to reduce the debt. So we see that debt to come down in next two, three years in a significant time.

Sir, on the laminate Apex front, the timelines remain the same, right? Are you expecting any delays or retornment of the laminate Apex?

No, it's online only. As we have given the results also, we have already placed the order for the equipment, and we expect that since these all equipments are domestic in nature, so we expect the... This commercial production by quarter, four of this year.

Sure, sir. And, sir, on the plywood side, so you have mentioned that you will be slowly taking this from South India towards West and Central India. So, by when can we expect Pan-India launch for the plywood business?

No, it has already started in the last year. So, for the except north, which we do not intend to start as of now, our products are available into the west and eastern part of central India.

Okay. And, sir, you will be going more aggressive on these regions because I believe you were more focused on servicing the South Indian market, but the growth will be driven, incremental growth will be driven from these regions, right?

Yes, this region will be new, starting from zero, so obviously the growth here will be better.

Okay, and so my last question was on chipboard. So in chipboard, how are you seeing things? So, since three capacities have come from organized layers in a span of one and a half years, so have you started seeing some unorganized to organized shifts happening? How are things planning out there?

I believe so, because if you see the companies are doing good, the products, since the product is good, we are reaching out to newer and newer segment, and previously the unorganized segment, the product was, the product what we are offering was not there. In the HMR category, we started for the first time only. So product acceptability is quite high among the clients wherever we are going as of now. So we believe that the shift will happen because of the premium product category or the good product category. And overall, all the company, all the organized company will take effort in terms of reaching out to customers.

Sure, sir. That's it for myself. Thank you. Thank you.

Thank you. The next question is from the line of Dheeraj Shah from Philip Capital. Please proceed.

Yeah. Good morning, sir. Thanks for the opportunity. Sir, my question is regarding the laminate size. So, as we have seen, I know almost 6 to 7 percent. This line is the sales volume of laminate. We wanted to check still. We are guiding 10-12% growth on the laminate side for the good year.

Yeah, that growth was on the revenue side, so, and what you are telling is for the volume. So, if you see in the, even in this last quarter also, there was a growth of 7.4%, and we have already mentioned that nearly 30 crore worth of export has moved to quarter. If you add that, then probably we are very much near to the figure what we have given. But we still maintain that we will be able to grow in that range.

Okay, and sir, this last one question, again on the laminate side, how much we have, you know, de-grown in the domestic market on the laminate side, particularly? As you mentioned that real estate, you know, division, because of the high dormitory, they have not taken, you know, the sales dispatches, how much we have de-grown?

So, the volume de-growth was 7.5%, 7.5%.

This is more on the domestic side, sir?

Yeah, this is the domestic side.

Okay, okay. So, do you think we were starting due to this quarter onwards that will also start growing as things have started normalizing at least, you know, on the geopolitical front also?

Yeah, we believe the quarter one was quite a confusing one in terms of not only for us, the entire industry or let's say entire building material product categories, there was price increase on continuous basis like we did too, and then there was because of the fluctuation in the raw metal prices, we did pass on and we reduced the prices. There is a lot of confusion in between. We believe now with more clarity in the market, demand should improve.

Okay. Thank you so much, sir. That's it from my son.

Thank you.

Thank you. The next question is from the line of Roshan Nair from Antic Stockbroking. Please proceed.

Yeah, thanks for the opportunity. So my question is on good business. So what is the sustainable margin that we should be looking at for the next one to two years and what capacity utilization is required to achieve the normalized margin?

So, we achieved around 61% capacity utilization in the quarter one, and, of course, we would like to increase the capacity utilization, which will happen going forward in quarters to come. The EBITDA margin will depend upon the capacity utilization, what product mix we able to achieve in terms of that. And I can say that on a full capacity utilization, on a better product mix, it can achieve a margin of 18-20%. But that will happen over a period of time, we believe.

The second question is, what is the cumulative dramatic inflation that has happened over the last two quarters and what proportion has been already passed on to customers?

So, in the raw metal crisis, most of the inflation happened or the fluctuation happened in the chemical crisis. And in the chemical also, it is, depending upon which chemical it is, it is ranging from, let's say, 30-40 percent to 70-80 percent, the prices did increase and then it is got retracted also towards the beginning of June. And again in July, because of the war starting again, the prices again started moving, but now again the prices are coming. So the picture is a bit hazy in terms of that. And to answer in terms of what the, so we have passed on the entire impact of the price increase into the market of raw metal price increase. Other than the chemical, which is wood and the paper, we have not seen much of a fluctuation in that.

I understand. That's helpful. Thank you. Thank you.

Thank you. The next question is from the line of Utkarsh Nopani from Anandrathi. Please proceed.

Good morning, sir. Sir, my first question is regarding the laminate segment. Sir, if you can guide, what would be the expected volume growth and the margin guidance for the remaining nine months of FY27?

So, of course, it is difficult to give for the quarter-on-quarter guidance in terms of that. So, as we have already said that in the laminate, the overall revenue growth is in the range of around 10 to 12 percent. We still stand by that, even though the first quarter growth was close to around 7 percent, but we still stand by that it can grow 10 to 12 percent.

And also, because of plant fortalities in the raw material prices, which has been prevailing, it is difficult to give a margin of outlook as of now.

So margin, but in the past, we have already stated that laminate can grow at around 15-16% of the margin.

Okay. And so, like for particle board, like you have guided that we are looking forward to update at 70% utilization in FY27. So, can you also please give some guidance for the plywood? What would be the expected utilization level in FY27 for plywood segment?

We are at around 40% in the quarter one. We believe it should be close to 50% for the year.

Okay. And sir, like you mentioned that the plywood segment is likely to break even in FY27. So, is it likely to happen towards the end of FY27? And by when it is likely to break even at that level, sir, the plywood segment?

So, I think it's again difficult to give even though we want it to break even in the, let's say, quarter two itself, but it's difficult to tell whether it will happen in this quarter or some other quarter. And in terms of fat level, once it breaks even at the EBITDA level, and then the next stop will be at fat level. So, we are hopeful that let's see how this year goes by, and then probably we can see that whether we will be able to break even at the fat level in the same year, or will it move to next year?

Okay, and sir, lastly, sir, like if you can just help us understand what would be the current market rate of phenol, melamine, and urea, sir? That's it on my side, sir.

I think we will come back to you offline, so I will come back to you.

Okay, sir.

Thank you. The next question is from the line of Arsene, from Dam Capital. Please proceed.

Yeah, hi, Ashokan Samad. So, two questions. One on particle board capacity. So, at your current rate, you should be at 70% utilization by Q4 of this fiscal. And I guess in FY28, you would perhaps average at about 75-80% for the year. So, any thoughts on capacity augmentation ahead, green speed or brown field, or any rough plan that internally you guys are thinking about?

Not as of now, this one. So if I, as of now, the capacity utilization, what we are telling, this includes both the plain chipboard as well as the prelim chipboard. Our intention is to sell more and more prelim chipboard, but since right now we are having enough capacity, so as of now we are selling even the plain chipboard also. So, going forward, as and when we reach up to near to the full capacity utilization, we want to increase our pre-lamp shipboard share, and once we reach, then probably we will take a call. We are cognizant of this fact that we need to take some moment of time, but we still want to, because it's only 4-5 quarters, we want to see how it progresses, and then we will take a call.

So, basically, the current capacity should be sufficient for at least to FY29, and you will just look at increasing the value-add mix once you reach that 80 to 90% capacity utilization, right? That's how you do look at it.

Largely, yes, yeah.

Largely. Okay, and second question, basically, on debt reduction, you said 100 crores will be reduced in FY27 despite the 130 crore odd capex. And what, besides laminates, that's the only capex you're doing this year, right? So, 130 crores is just for laminates?

So, no, no, 130 crores is not for laminates, Asim. This is, 70 crores is towards laminates. Some part of it is towards the greenfield project payments that is still pending, some large tailwinds. And then there are some regular capex that happens every year. So, about 70 plus 40 odd crores of my regular capex and then 10, 20 crores of the past payments. So about 135 crores of the net net outflow on account of the capex.

And you will cut debt by 100 crores also this year. That's what the plan is.

That's what the plan is. Yes, right.

Okay, next year, broadly, you said that debt will be the focus in terms of cutting debt over the next two fiscals, by 28 and 29. Any rough number that you are targeting, how much that will come down by?

So largely it will be as per the repayment schedules that we have for the debt, and next year it will be slightly upwards of 150 odd crores, which is FI 28, but that will be largely following the repayment schedules.

So, whatever will be the cash flow, apart from the regular capex or maintenance capex and the working capital, those will be used in reducing the debt.

In any way, something is cash accumulated, so on a net basis, the debt will be lower, whether I pay it or I keep a cash on my books. So, net will be lower.

Thank you.

The next question is from the line of Tushar R from Omega Portfolio Advisor. Please proceed.

Thank you for the opportunity for your seat board positive margin in this tough time. I could see that just relative comparison of seat board in the prelim segment is I think near about 65 to 70 percent if I'm not mistaken. Just wanted to know, in terms of this prelim, we'll be able to, what are our plans in order to, you know, at least maintaining that going forward. That was the first question. And secondly, on the plywood segment, when I'll be planning to reach near about Rs. 20 per SQM, more or less the average of the market, the listed peers. Those are my questions, sir.

So, in terms of...

So on the chipboard prelim mix, as we said earlier, currently capacity utilization standard 61%. And for the year, as sir already said, we may average out around 70%. The idea here remains that, you know, how you optimize your product mix, which is a higher share of the prelim plus HMR that we launched, plus some of the new value add that we will launch going forward. And the entire, you know, the plan is to really Maximize on the value-add products, maximize on the pre-laminated bobs, and then, you know, look for a good profitable business here. Does that answer you, Tushar?

So, basically, we are near about, I think, 22,700 or so. Is there any good headroom to grow from here till 24,000 or so? That would be my question. To the chipboard and also on the margin front, when are we seeing that 18% margin in the chipboard?

So, 18% will happen once we reach to close to the optimum capacity utilization. And by that time, which we believe that it should happen in the FY29, and of course, everything will depend upon if the raw metal prices also behave. But we believe that if everything goes as per the plan, we should see the optimum capacity utilization in FY29, and by that time the margin also should improve to that level.

And also, Tushar, from the headroom perspective on the realizations, yes, there is a lot of headrooms which is there, provided, and if you look at all the large developed economies where chipboard is used, there is a lot of value add in the chipboard business which people are doing globally, which possibly right now is not there in the Indian markets, and obviously our endeavor being the leader in the markets to bring such value products to the market. And we are very sure that, you know, as we move ahead on the capacity utilization, improving the prelim mix, the realization should improve as we go ahead.

Okay. So on the plywood front, what are targets in terms of EBITDA terms? So as about, you know, near about Rs.20 per SQM. When are we seeing that number in plywood segment? And so in the laminate, the high dimension laminate would be what percentage of our sales? And also in the geographical contribution, what would be the Europe and US? I'm asking from the point of the voyage taken for the tail. That would be my question, sir.

Swarith, you saw this in terms of geographical continent or country-wise, we will not be able to give the details. We don't give the details in the public domain. In terms of plywood, 20 rupees per square meter, you are talking about the EBITDA or what? So, 20 rupees, which will be close to around 8, 8.5% EBITDA. I believe we are at 270, 275 rupees per square meter as of now. So, which means around 8% of EBITDA, which we are talking. As I mentioned earlier on the call, we are expecting EBITDA break-even in this year, and then going forward, it will appear. But we believe what number you are talking is achievable. Of course, this number can be achieved once the capacity utilization moves on from what level we are. At least 80, 85 percent or 90 percent capacity utilization is needed to achieve that, which will happen over a period of time.

So, in the plywood, you have not mentioned that, the higher dimension or the larger laminates, sorry, laminates would be what percentage of our sales in the laminate business?

The higher dimension, it's not only the higher dimension, it's also the thickness and the board business, which contribute because we are into the both higher dimension laminate, which in terms of sheets as well as board. So it's a mix of everything which is there.

Okay. So if I were to ask that the value added segment would be what percentage of the laminate?

It is close to 50%.

Okay. Thank you, sir. That was brilliant.

Thank you. A reminder to all participants, anyone who wishes to ask a question, may press star and one on their touchstone telephone. The next question is from the line of Kumar Saurabh from Scientific Investing, Peaceful League.

Hello, congratulations on a good set of numbers in a tough quarter, sir. My question is, last quarter we had guided for 18% growth rate for this year, and we have done that despite of a differing of export of 27 crore. So, one question, do we look on target to achieve that growth number, and do you see it coming more from volume side, how much of volume and realization will contribute to this growth?

Kumar, we continue to believe that we will be able to achieve the target which we have given, but you must appreciate that in this tough environment, it's difficult to give that in terms of exactly volume and value difference, but we are hopeful that we will be able to achieve the target what we have given for the year.

Sure, sir. And, sir, it's great to see in panel we have really scaled the business. However, at a gross margin level, despite of, you know, scaling the revenue, we didn't see any kind of margin improvement. Usually when capacity utilization improves, you know, there is some operating levels close at COGS level, EBITDA level. So is it like bulk of our margin improvement is expected to happen below the gross margin level or this quarter things were tough in terms of chemical prices you suggested and when market normalizes we will see this kind of margin improvement at all the levels?

It should happen at all the levels.

Okay, okay. And, sir, third question is, what is the peak capacity utilization across these businesses? Like, is 80% the, you know, peak utilization in laminates, or we can go 90, 100, and same for other businesses? Despite of the mixed change and all, in a generic sense, what is the peak utilization these businesses can achieve?

So, in the laminate and chipboard, we can achieve 100%, or in the laminate in the past, we have achieved more than 100% also. In the plywood, yes, you can achieve 85%, 90%, or maybe 100%, but since we are also in this journey, we will be able to see once we reach there. In the other category, which is primarily the decorative veneer floors and doors, so there in the decorative veneer, it's more of a demand or how much order you can generate, but we believe that we can reach up to 60-65 percent. In some quarters, some months, we were very near to that also. We believe it's difficult to reach 100% because a lot of manual work is getting involved, a lot of manual requirements are there. We believe it's difficult to reach 100%, but yeah, you can reach 50-60% or maybe 60-65%.

Got it. And then my last question is, like, some years could be good for one segment back, but on a long-term basis, when you plan these projects and investments across these three, four segments, if you can explain from a ROI and payback perspective, how are the ROIs and payback in each of these segments and which is having your best ROI and if you can educate on each of these segments from a long-term perspective?

Probably this is a longer subject. We can touch base some other moment of time because we need to go segment to segment, product to product category. Probably this is a longer subject which needs much longer time. We can touch base some other time.

Sure, sir. I will reach out to the IR team for the same and wish you all the best for the coming quarter, sir. Thank you.

Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. Over to you, sir.

Thank you all. Thanks for taking out the time and coming to this call.

Thank you, everyone. In case you have any more questions, do feel free to connect back to us or to SGA. We'll be more than happy to answer. Thank you.

Thank you. On behalf of the ELAM Industries Limited, that concludes this conference. Thank you for joining us and you may now disconnect your line. Thank you.