G
Greenpanel Industries Ltd
NSE:GREENPANEL
Greenpanel Industries Ltd
NSE:GREENPANEL
Price:
228.91
INR
3.06%
Market Closed
Market Cap:
₹28.1B
Add Note
Add Target
Capture your thoughts and set a target
Decide at what price you'd be comfortable buying and we'll help you stay ready.
Based on
Margin of Safety
0%
10%
20%
30%
40%
50%
Your Price Target
Linked to
current price
· In Buy Zone
Loading
Note attached
Choose the stock you wish to monitor with a price target
Popular Picks
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
Bank of America Corp
NYSE:BAC
|
US |
|
Mastercard Inc
NYSE:MA
|
US |
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
Pfizer Inc
NYSE:PFE
|
US |
|
Nike Inc
NYSE:NKE
|
US |
|
Visa Inc
NYSE:V
|
US |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
Coca-Cola Co
NYSE:KO
|
US |
|
Verizon Communications Inc
NYSE:VZ
|
US |
|
Chevron Corp
NYSE:CVX
|
US |
|
Walt Disney Co
NYSE:DIS
|
US |
|
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
Ladies and gentlemen, good day, and welcome to the Greenpanel Industries Limited Q4 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rishab Barar from CDR India. Thank you, and over to you, sir.
Good day, everyone, and thank you for joining us on Greenpanel Industries Limited's Q4 and FY '25 Earnings Call. We have with us today Mr. Shobhan Mittal, the Managing Director; Mr. V. Venkatramani, the CFO. Before we begin, I would like to state that some statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainty. A detailed statement in this regard is available in the result presentation that was sent to you earlier.
I would now like to invite Mr. Shobhan Mittal to begin the proceedings of the call. Over to you, sir.
Thank you, Rishab. Good evening, everyone, and thank you for joining us to discuss Greenpanel's operating and financial performance for quarter 4 FY '25. And this domestic sales volumes fell by 25% year-on-year. This was on account of discontinuing sales of commercial-grade MDF in anticipation of implementation of BIS QCOs. In quarter 4 FY '25 was nil as opposed to 4,924 cubic meters in quarter 4 FY '24. Export volumes were higher by 34% at [ 14,458 ], on a low base of 10,804 cubic meters. MDF domestic realizations were higher by 7.4% year-on-year at [ INR 3,114 ] cubic meters. Domestic realizations increased due to increase in mix of value-added products to 50% as compared to 44% in quarter 4 FY '24. And also due to the discontinuation of lower-priced commercial-grade MDF.
Export realizations were higher by 9.6% year-on-year at INR 22,389 per cubic meter. MDF EBITDA margins at 16.3% were higher quarter-on-quarter due to EPCG scheme incentives. Plywood volumes were lower by 12% year-on-year. EBITDA margins at 12.1% were higher due to write-back of provisions for turnover discounts. Plywood realizations at INR 270 per square meter were higher by year-on-year due to reasons mentioned earlier.
Post-tax profits for the quarter were lower by 1% at INR 29.3 crores as compared to INR 29.81 crores in the corresponding quarter. Net working capital at 36 days has shown an increase of 8 days year-on-year due to lower turnover and higher inventory levels. Net debt stands at INR 165 crores as on 31st March 2025, increase of INR 336 crores for the expansion project.
I'd now like to provide a summary for the financial performance for FY 2025. MDF domestic volumes fell by 6%, of which commercial grade MDF contributed 3%, domestic MDF revenue fell by 9.7% due to lower volumes and a 3.7% fall in realizations. MDF EBITDA margin at 11.7% fell due to a 3.7% fall in domestic realizations and a 23% price increase in wood prices year-on-year, which impacted EBITDA margins by 6.7%. Gross margins of the company fell by 900 basis points to 46.9%. EBITDA margins at 10.9% were lower by 615 basis points and post-tax profits at [ INR 17.1 crores ] were lower by 9%.
Commercial production has started in the expansion project, and we expect capacity utilization to ramp up over the next 3 to 4 quarters. We expect an improved performance in FY '26 with the addition of thin MDF in our product portfolio. Domestic furniture manufacturing industrial prospects will receive a boost with the expected implementation of BIS QCO from February 2026. This should also lead to increased demand for financial manufacturing and raw materials like MDF and Plywood.
Mr. Venkatramani will now run you through financials in realtor detail, post which we will have a Q&A session. Thank you.
Good evening, and thank you for joining us to visit the Q4 FY '25 financial performance of Greenpanel. Net sales during the quarter were INR 338.94 crores compared to INR 396.08 crores during the corresponding period. MDF sales in value terms fell by 15.3% at INR 305.17 crores and contributed 90% of the top line. MDF Domestic volumes fell by 25% while export volumes were up by 34%. MDF domestic revenues were INR 272.80 crores, while exports contributed INR 32.37 crores.
Domestic realizations were higher by 7.4% year-on-year at INR 31,214 per cubic meter, while export realizations are higher by 9.6% at INR 22,389 per cubic meter. Blended MDF realizations were higher by 5.8% at INR 29,961 per cubic meter. Uttarakhand MDF unit operated at 80% and Andhra Pradesh plant operated at 50% with blended capacity utilization at 60% on proportionately increased capacity of 661,899 cubic meters.
Plywood sales saw degrowth of 5.3% at INR 33.77 crores. Plywood sales volumes were lower by 12% at 1.25 million square meters and the unit operated at 42% during the quarter. Plywood sales realizations were higher by 8% at INR 270 per square meter due to reasons mentioned earlier. In Q4 FY '25, gross margins were lower by 911 basis points year-on-year at 44.6%. EBITDA margins were up by 189 basis points at 15.9%. EBITDA value stood at INR 53.85 crores and post-tax profits at INR 29.39 crores.
That concludes my presentation. Please start the Q&A session. Thank you.
[Operator Instructions]
The first question is from the line of Keshav Lahoti from HDFC Securities.
As you have highlighted in all call, you AP plant is running at 50% capacity utilization. Now possibly, you have increased the capacity also by brownfield expansion. So how are the plan to ramp up? I understand you will probably add a new product portfolio in MDF but possibly this utilization will go down further. And by adding up this unit, what part of your cost will increase based on employee depreciation and interest relationship?
So on account of volumes, we are expecting about from the existing lines, Line 1 and Line 2, we're expecting about 11%, 12% growth in terms of volumes in the coming year. And because the first quarter is quite muted for the new line. So we're expecting about 72,000 cubic meter capacity utilization over the year from the new line. So combined as a company, this would give us about a 30% volume growth, including the production considered for the new line. So this is where we would stand -- is what we expect to stand in for the current year.
You said something 72% utilization. What was that? I missed it.
No, I said the volume expected from the new line would be 72,000 cubic meters. So that is what we are expecting.
On the numbers that I mentioned to you are the domestic numbers, and we are expecting about 80,000 cubic meter additional volume coming from the export business. So resulting in a total volume of about 550,000 cubic meters.
Got it. Sir, there sort of one-off income in both Ply and MDF in at this time. Can you please quantify it?
Yes. In MDF, it has come from EPCG incentives. So that contributed INR 35 crores during the quarter. And on the Plywood side, we have written off turnover discount provisions to the extent of INR 1.25 crores.
Can you give me more idea about EPCG center, like how it will it be coming in upcoming quarters or coming year?
Yes. So the total incentive expected from EPCG scheme is about INR 86 crores. We have accounted for INR 35 crores in FY '25. So the balance of about INR 51 crores is expected over FY '26 and FY '27.
Okay. So you will be recognized in each quarter proportionately kind of thing?
Yes, proportionate to the sales executed against those.
Got it. And what is the status of the import in India?
No, imports have come down significantly. So I think April was about 1,100 cubic meters.
And how you see the trend going forward?
We don't expect to see any significant increase in imports.
The next question is from the line of Parth Bhavsar from Investec.
A few questions on exports business. We are targeting around INR 80,000 crores. I wanted to get an idea on what sort of margins did we make -- like indicative margins that we make in Q4?
So it was not INR 80,000 crores, Shobhan actually said 80,000 cubic meters.
Yes. Volumes would be 80,000 cubic meters for FY '26.
Yes, approximately about 84,000 cubic meters. And the margins in Q4 were approximately about 1.75%.
Okay. Okay. Got it. Got it. So sir, like if we adjust for this EPCG business, so like quarter-on-quarter, our profitability in MDF was almost flattish. Is the right way to look at it, for MDF?
That's correct.
The next question is from the line of Pankaj Parab from Molecule Ventures.
My first question is regarding the realization trend. So imports are now out of the way. And I think 29% should be the lowest we have ever seen. So can we assume some improvement going further as well in the realizations?
See, as far as FY '26 is concerned, we don't expect to see any significant improvement in the realizations. There could be some small improvement in realizations. But our primary focus would be on expanding volumes both in the existing plants as well as the new plant.
Okay. And my next question is regarding the RM cost, particularly in Southern India. So how is the RM cost is behaving there? And how we see any increase and expect it to reduction in our RM cost?
Yes, we have started seeing some reductions from April. So I think we would probably expect to see around 5% to 7% fall in timber prices during FY '26. So this is a very preliminary estimate. I'll probably be able to give you better estimate post quarter 1.
Okay. That's fine. And sir, any comment here on the underlying demand side for the MDF segment?
Shobhan, can you please take that question?
Yes. So what we are noticing is, of course, that the import concentrated segments are, of course, shifting towards the domestic side. Market demand for the general growth of the MDF industry continues to remain strong as opposed to other industries at 15% to 20%. And what we foresee is that there are no major additional capacities also coming in.
So with the fact that imports are going to be quite muted and the market is on a growing trend. And the fact that no large additional capacities are coming online in the next financial year, the benefit of this should shift towards the existing producers.
The next question is from the line of Yash Sonthaliya from Edelweiss Public Alternatives.
So I have 3 questions. So my first question is, like you said, our new capacities coming for thin MDF, which will be replacing some of the imports, which will take it to the demand, which is currently getting imports. So can you give me some -- what's your perspective, like what will drive this switch of market share from imports to ours? Will it be cost? Will it be [indiscernible] efficiency for the domestic manufacturers to take from us or quality, what will drive it?
So I would say it's not primarily imports. It is also some of the competing companies are already prevailing in the thin MDF segment. Of course, being in the south of India and being highly focused on imports being a price-sensitive segment and the fact that imports are getting restricted, so that would definitely result in opening up a certain percentage of the market share for our industry. And we already have a fairly large and strong network of distribution who are currently focused on the thick panels.
And at the moment, they are obviously satisfying the requirement of thin panels from other sources. But the fact that now the Greenpanel as a company is in a position to offer the entire product portfolio, the fact that we're located in the south of India, having a competitive advantage in terms of freight also with respect to serviceability and resulting in working capital reduction, inventories reduction for our dealers and channel partners. There would be a preference shift towards us, which would result in us gaining market share in this segment for sure.
Understood. Very clear. And second question to Venkat, like, if you can help me with supply demand specific to South, like what is the supply scenario and demand? And broadly, how much demand is in South in supply, very broad numbers are up, if possible.
Okay. There are only about 3 or 4 MDF manufacturers present in South India. So we have Greenpanel, Century, Rushil Decor and one unorganized company. So the total supply would be about -- one second. Sure. About 1.3 million cubic meters and approximately 35% to 40% of the demand is generated from South India.
Of the total domestic demand, right?
Of the total domestic, correct.
And like you already alluded, there is no capacity coming for next year, but any news from your side, anyone who just announced the capacity, which maybe will come 2, 3 years after? Any announcement, which may you know, from organized?
Well, not from the unorganized but we know that the action is in talk with regards to installing a line in the South of India.
Okay. A new greenfield CapEx or just a line in the existing...
No, the action doesn't exist in the South of India from a production aspect. So it would be a greenfield CapEx.
Understood. Understood. And one last question from my side, like for last 1 year or realization in MDF has not increased, with regards to the increase in raw material prices. So what would be the current differentiation between the prices of MDF compared to low-end plywood or imports? And what it used to be in '23 or '22, a normalized year?
Venkat, can you get that?
Yes, I got the question, but I don't really have the numbers for Plywood.
We can tell you from an import aspect where it would stand. Domestic manufacturing generally -- I mean, ends up being above -- and depending on the thickness and the product category, anywhere between 8% to 12% more expensive than the imports coming into the country. But that is at the port level. The moment you start transporting imported material for the inland with local freight incurring, it starts reducing the difference.
Local trade and transportation costs.
Yes.
Sorry. Local freight and warehousing cost.
Currently, it is miniscule, but earlier before this timber price increase and our price being flat earlier the difference used to be same or it should -- it used to be higher?
Difference used to be around 18% to 20%.
The next question is from the line of Tanmaiy Mohita from Locus Investment Group.
So I just have a bookkeeping question...
Sorry, you are not audible.
Sir, can you connect on the handset mode? I believe you are connected on the hands-free mode.
Actually, I've had a few bookkeeping questions. One was your value-added mix for the quarter and the year and OEM looks for the quarter and the year. And second, was the online growth realization. Do you expect -- I mean, the export realization from the export plan to sort of increase going forward and if I just basically tell you any reason why you see that exports will be better going forward?
Okay. As far as the value mix is concerned, for the quarter, it was 50% in volume terms and 62% in value terms, and the figure was similar for the full year also.
Shobhan, do you expect any improvement in the export realization?
No. So as a company, now that we have the thin panel in our product portfolio, and this generally tends to be about, I would say, anywhere about 25% to 30% higher price in the export side. So on a sort of average basis, our export realizations will improve. And this is not factoring in any price increases in the existing product segment that we are catering to. Of course, any dollar movement against the rupee would result in better realization in rupee terms as well. And with an improved mix of thin and thick panels, overall realizations per cubic meter and export are expected to improve for us.
And just one last question on where you expect the capacity to sort of -- you will start shaping in and when it can start contributing to the overall volumes.
So we are targeting a capacity utilization of 35% for FY '26.
But yes, but I think we should start getting a substantial contribution of the capacity from quarter 2 of this year because at the moment, the line is still under the control of the plant supplier, and it is still under the optimization phase because it's, let's say, a very technologically advanced line, and it's a very high-speed line. Hence, it takes -- it's a longer period of optimization. So we foresee that by quarter 2, we should have the line handed over to us and we retracting a fair amount of output coming out of it.
The next question is from the line of Rishab Bothra from Anand Rathi Share and Stock Brokers.
Just wanted to understand if you on the P&L front. Has there been a reduction in employee cost and other operating expenses for the quarter as compared to last year?
Yes. Like we have mentioned in earlier quarters, we have been reducing the admin expenses especially as far as branch operations are concerned. So we look at it, I think admin expenses and employee expenses put together have come down by approximately INR 15 crores this year. And employee cost in spite of 8% increment last year, have remained almost fixed year-on-year.
Got it. And with respect to EBIT margin, I think improvement in Plywood is far better than MDF. So is there a raw material proportion? Or is it something else to it?
Yes. Like I mentioned, it's primarily come from a reduction in overhead expense.
Okay, okay. And lastly, sir, if you could explain the tax Impact execution, there is no tax out-go or tax expense for the quarter. So what is this pertaining to?
Yes. So we have received income tax refund, which was shared by Greenply. I think it probably came in October. So that's why tax expense is almost negative for the full year. And where we go for the quarter. And the second factor, the new plant started commercial production in the last quarter. So in income tax, if plant has been operational for less than 6 months, we get income tax depreciation for 6 months.
So while we are charging only 3 days or 4 days depreciation in the books of account, we are getting a 6% depreciation reduction in -- sorry, 6 months depreciation reduction in income tax. So both those factors have contributed to keeping the tax impact, very low in FY '25. But for FY '26, I would probably expect a tax rate of around 20%.
Okay. And lastly, sir, what would be the normalized depreciation and interest for next year onwards? And in next quarter onwards?
I would say, approximately about INR 100 crores to INR 102 crores.
The next question is from the line of Udit Gajiwala from Yes Securities.
Sir, in opening remarks you stated that you are looking at around [ INR 550,000 ] kind of vol sales volume number for this year and domestic should grow by 30%. So basically, what gives us the confidence that we'll be able to expand the market share at this quantum given that there are a lot of players who are a bit aggressive now with new capacity?
Okay. So you'll have to break up that figure. So what we are saying is on the existing 2 lines, one at Uttarakhand and at Andhra, we are targeting a 10% to 12% volume growth this year. And we are targeting a 35% capacity utilization in the new plant. So here, if you look at it, we'll primarily be producing the in MDF. And until very recently, almost 60% of the thin MDF was being imported into India. Now imports have come down substantially. So during March and April, it has been approximately about 1,100 cubic meters per month. So we think a large part of that market share can be catch up by us.
Got it. And sir, secondly, I mean, on margin front, right? So if we eliminate the benefit of EPC that we are getting. So on a steady state, what kind of operating margins can we see for MDF in FY '26 and also for Plywood?
I think, I would be looking at approximately a 12% margin in MDF and a 7% to 8% margin in Plywood. Of course, excluding the EPCG incentive.
Right, right, right. Okay, sir. Understood. And sir, I'm sorry to again come back to this one, the EPCG benefits will be taking that impact quarterly as per the sale or the balance...
That's correct.
So for 7, 8 quarters for 2 years, like you mentioned, so for 8 quarters in...
Yes, it could be anywhere between 6 to 8 quarters.
The next question is from the line of Bhargav from Ambit Asset Management.
Just to understand this EPCG thing in more detail. Is it fair to say that it is actually a waiver on the import of -- it's a custom duty whenever which we would have paid on plant and machinery for MDF CapEx?
That's a right.
Okay. So as such, if we continue to incur more and more CapEx, this actually can be a sort of a recurring income, right, for us?
No, we won't be incurring any recurring CapEx. So our CapEx has been completed as far as the new land is concerned. So that's why I could put a fixed figure to it that the total is INR 86 crores. We have accounted for INR 35 crores in FY '25 and the balance INR 51 crores is expected to accrue over the next 6 quarters.
And the INR 35 crores has been also received cash in FY '25, right?
It has been accounted for in although it was for the full year because we could account for this incentive only after the plant was commissioned.
Okay. Okay. And in terms of the cash flow, how much charges...
Although the export obligations were completed earlier, we could only account for it in quarter 4 after the installation was completed and commercial production commenced.
Just to clarify, EPCG obligation can be distanced at a company level? It is not specific to the plan that you have saved beauty of. So because we had an ongoing export business from our previous lines we were able to discharge the obligation even before this line had gotten commissioned. The new line has gotten commissioned.
Understood. And secondly, sir, if you look at the last one year, Greenply has been making a lot of inroads into MDF led by sort of disruptive pricing. But now that they have reached optimum utilization revenue, is it fair to say that there will be a lot more price discipline now going forward?
Yes, you can say that, yes, we're already noticing that.
Okay. So from here on, I mean, it is that reduction pricing may not hold now that there BIS also and optimal utilization has been reached, right?
Correct. So due to the BIS implementation, so we also see the facts from the unorganized segment minimizing coming -- going forward because when the new standards are declared and won we've got into notification, for compliance, there will definitely be a cost increase on account of the unorganized players. And that would result in lesser price cutting power on their part or even to the extent of passing on some of the cost in the market, minimizing the difference between the organized segment.
Sure. And just last clarification on this balance INR 50 crores that is spending on the export grant, which will be accrued over the next 2 years, we can assume that the cash flow will also be commensurate, right?
No. There is no cash flow impact as such. Basically, by importing the machinery under EPCG scheme, we have awarded a cash outflow. We are discharging the export obligations against that custom duty sales.
So you haven't paid the custom duty and hence, there is no cash flow impact?
Correct. Yes.
We already saved this cash flow at the time of capital expenditure.
Okay. So to that extent, there was an increase in CapEx, which is now working reversed assets is that the right way to look at?
I couldn't get that. What did you say?
So, what I'm trying to say is [Foreign Language] we would not have a custom duty, but still you would have accounted as a payable, which are reversing?
SP-10 Correct. Correct. That's correct. That's right.
The next question is from the line of Utkarsh Nopany from BOB Capital Markets.
Sir, my first question is on your volume growth side. So if you see from March quarter, we had -- our domestic MDF volume has degrown by 25%. So can you please explain the rationale why we have registered such kind of a sharp degrowth in our volume?
So as mentioned in the comments, in quarter 4 last year, because of the BIS compliance, we had 0 sales of commercial grade MDF, which we had discontinued consciously as opposed to almost 40,000 cubic meters of of commercial grade sales in the corresponding quarter last year.
Okay. Sir, like if we have discontinued the commercial grade sales, is it not likely that our domestic volume is also likely to get impacted in the coming quarters' time? And we are expecting our domestic volume to grow or existing line volume to grow by 11% to 12%? So I wanted to understand that how we are confident of growing our existing line volume by 11% to 12%?
Yes. Because the consumption, whichever segments or customers were consuming the commercial-grade MDF, now we'll have to satisfy the requirements with BIS compliant MDF. So demand has not gone anywhere. It is just a matter -- the case is that it will now get replaced by BIS compliant MDF, which are satisfied by commercial grade MDF. Because on noting all non-BIS compliant MDF anymore. So the demand continues to remain there. And even if it chose to fulfill this by way of imports, it would also again have to be BIS supplied to India. That's the whole point of the QCO being in place.
Okay. And sir, like in the current June quarter, do we expect our volume to grow at around 11%, 12% rate on a Y-o-Y basis?
We are seeing at the moment, the unorganized segment is not fully compliant because there is a let's say, a great period for the BIS compliance. So of course, the first quarter looks to premium use to say, but it's -- the first quarter is still a bit muted. But we found like this to grow over the full financial year with the numbers that we are talking about.
Yes, fine. Got it, sir. And second thing, sir, on margin. Like if we exclude the benefit of then our margin has some pressure on a quarter-on-quarter basis, it has gone below 5% level. And we are guiding that our margins to go up to around the 12% level in FY '26. So wanted to understand that why we are so hopeful that our margin should recover to such a good level in FY '26, when we are seeing a margin pressure even on a Q-on-Q basis?
The rest why we are expecting an improvement in the margins. One is we are focusing 10% to 12% growth in domestic volumes from the existing plants. So improving capacity utilization at the older [plants] will have a positive impact on the margin. We are expecting wood prices to come down this year compared to what they were last year.
And the third point is there will be very small increase in fixed costs with the new plant. No. So I'm expecting an annual increase in fixed cost of only about INR 5 crores to INR 6 crores for the new plant. So it will basically have a much higher operating margin as compared to the existing plants.
Okay. And sir, if you can just provide the rate of timber price for the March quarter, what it was for North, South and blended basis and what it is right now in the current June quarter?
I won't be able to give you for the June quarter right now. So we will discuss that for the Q1 numbers. So at the moment, I'll just give you for the March quarter. For the North plant, timber prices were INR 7.15 per kg. And for the south plant, it was INR 6.23 per kf -- sorry, sorry, sorry, that was for quarter 3. For quarter 4, north was INR 6.44 and South was INR 6.22. So these are the purchase rates and the consumption rate was INR 6.67 or North and INR 6.38% for South.
Next question is from the line of Rishab Bothra from Anand Rathi Share and Stock Brokers.
This question, with respect to consumption pattern, how has been the case mix with respect to a retail level and B2B level? I mean who are our name buyers contractors? Or is it the OEM industry?
Okay. So if you look at it in terms of sales network -- it's primarily B2C because almost 85% of our sales happens to the channel. And only about 15% is to the OEM manufacturers. But if you look at it in terms of consumption, a majority of the MDS, you'll just have until processing ready-made. And since the consumption terms, it's more B2B.
Got it. And sir, to deferment of raw materials, is it the auctioning happens at the timber procurement sites? Or how do we make sure that we are adequately placed with raw materials so that capacity doesn't remain idle?
See, depending upon requirements, we decide how much volume should be purchased from each area. So if the requirement is small, we purchased from a local area, which may be within a radius of 30 to 50 kilometers from the factory. And if you require larger volumes, we go over a larger area, which could be, say, 150 to 200 kilometers or in extreme case, even 400, 450 kilometers from the plant.
Okay. But do we have contract arrangements with farmers because we are now not so from press and these are all plantation grade. So how does...
We have a network of contractors who procure most of the material enough for us Apart from that, we have a few farmers to come directly to the plant and supply the material. But that would br a small proportion of the total.
The next question is from the line of Karan Bhatelia from Asian Market Authority.
Sir, just wanted your clarification and thought process on the margins for the -- now if you see in the fourth quarter, we are 0 commercial grade like we are selling 0 of the low-margin product, assuming that the value-added portfolio percentage remains the same, what will give us the confidence of a double-digit margins?
As I commented earlier, there are 3 factors. One is the improved capacity utilization in the existing lines. The second is all in good prices. And the third is I mentioned that fixed cost will be very low at the new plant. We will be adding on approximately INR 5 to INR 6 crores of fixed average for the new plant. So these are the 3 reasons why we are expecting a better operating margin compared to quarter 4.
And the Q4 export margins were at 1.75%. And at [ INR 80,000 ], what could be this margin profile, assuming that majority is in MDF exports?
No, majority may not be in MDF imports. So I won't comment on that till we see at least 2 quarters of export performances from the new line. So basically, depending upon how wood prices behave. Now margins are expected to be slightly better as compared to quarter 4. But since I don't know how raw material prices will behave exactly. At the moment , what I'm estimating is about a 6% to 8% reduction in oil prices next year. So as each quarter goes, we'll get a better idea. So I'll probably have a better estimate in quarter 1.
Okay. Okay. And what are the sales and marketing expense for the year come by?
I think we would be spending approximately about INR 20 crores.
The next question is from the line of Udit Gajiwala from Yes Securities.
Sir, if you can just illustrate what will be the CapEx cost for the coming fiscal?
So we are not expecting any major CapEx. So I would say approximately INR 25 crores of the balance CapEx towards the new line. And maybe if we decide to do some small CapEx for the existing business, I would put that at a maximum of about INR 10 crores to INR 15 crores.
So not more than INR 40 crores, INR 45-odd crores for the full year?
No, I would say not more than INR 30 crores, INR 35 crores, yes.
The next question is from the line of Arun Baid from ICICI Securities.
Yes. If you could just tell us what's the ballpark expected realization for the new thin MDF line in India?
Sorry. New thing MDF line in India?
Yes. The ballpark expectation of realization there?
So Arun, you see today, our realizations are close to about 30,000 cubic meters, which is a combination of prelaminated value-added products, et cetera. But -- so if I talk about the thin MDF line on a per cubic meter basis, this would be about 15% to 20% higher.
But you shouldn't put that 15% to 20% on that 30,000 cubic meter because initially, a majority of the sales will be of the industrial product -- and so for thin MDF industrial MDF sales is approximately about 25,000 to 26,000 per cubic meter.
So would it be fair to say that blended basis have a similar your value mix there also?
See, it may take some time for the value mix because even for the existing lines, it's possibly taken us about 15 years to build up a 50% mix of value-added products. So I wouldn't say it would take such a long time, but for the new plant to have the same mix of value-added products, it's possibly a 3-year exercise.
And just 1 clarification. I'm not clear. So we were saying that we expect about 11%, 12% growth in our India business on the volume front right? This year, what are your plan?
Pertaining to the older plants, pertaining to the older plants.
And plus [ 84,000 ] from the new line in India? Am I, correct?
No, [ 72,000 ] from the new line in India from export.
And 11% growth on the India business on the existing loans, right? export, we went with 80,000 CBM. So we did roughly around 70,000 CBM this year. So basically, we are not expecting any major from exports to new line?
We've -- at the moment, we've taken a very muted number for the -- from the new line for the exports. I mean this is, of course, a conservative number for time being. And the -- it should be -- we are focusing on opening up the markets and exploring the markets on this as well. But at this point of time, because the line is not yet fully certain and timber prices are also not very clear to us. And so the moment from the new line, we've not allocated a very large capacity for the export market.
Next question is from the line of Keshav Lahoti from HDFC Securities.
Sir, what was the production grade non-BS compliant sale in FY '25? And secondly, this sale possibly will be now be BIS compliance. So it's quite possible whatever the same you might be doing that might be now split between all the players?
See, if like I mentioned, for the commercial grade MDF, sales was little in quarter 4, okay? But if you compare FY '25 with FY '24, it was almost similar. The 2 years were almost similar, approximately 70,000 cubic meters each year. Now post implementation of BIS, neither domestic players, non importers can sell noncompliant BIS material in India. So Nobody can manufacture or sell commercial-grade MDF in future yes.
Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments.
Thanks, everyone, for joining this call, and we look forward to speaking to everyone after the next quarter. If anyone has any further questions, please feel free to reach out to us. Thank you, and good evening.
Thank you and, everyone good evening to you.
Thank you very much. On behalf of Greenpanel Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.