Greenpanel Industries Ltd (GREENPANEL) Q4 FY23 Earnings Concall Transcript

Greenpanel Industries Ltd (NSE:GREENPANEL) Q4 FY23 Earnings Concall dated May. 08, 2023.

Corporate Participants:

Shobhan Mittal — Managing Director & Chief Executive Officer

Vishwanathan Venkatramani — Chief Financial Officer

Analysts:

Rishab Barar — Analyst

Harsh Shah — Dalal & Broacha — Analyst

Shrenik Surendra Bachhawat — LIC Mutual Fund — Analyst

Udit Gajiwala — Yes Securities — Analyst

Achal Lohade — JM Financial — Analyst

Sneha Talreja — Nuvama Wealth — Analyst

Karan Bhatelia — Asian Markets Securities — Analyst

Darshit Vora — RoboCapital.in — Analyst

Praveen Sahay — Prabhudas Lilladher — Analyst

Utkarsh Nopany — Haitong Securities — Analyst

Hrishikesh Bhagat — Kotak Asset Management — Analyst

Nikhil Gada — Abakkus Asset Management — Analyst

Monish Ghodke — HDFC Mutual Fund — Analyst

Nikhil Agarwal — VT Capital Markets — Analyst

Bhavin Rupani — Investec — Analyst

Rishab Bothra — Anand Rathi Shares and Stock Brokers Limited — Analyst

Kushagra Bhattar — Old Bridge Capital — Analyst

Rajesh Ravi — HDFC Securities Limited — Analyst

Koushik Mohan — Ashika Institutional Equity — Analyst

Hiten Boricha — Sequent Investments — Analyst

Sanjeev Goswami — Fractal Capital Investments LLP — Analyst

Ashish Kumar — Infinity Alternatives — Analyst

Arun Baid — ICICI Securities Limited — Analyst

Ritesh Shah — Investec — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Greenpanel Industries Q4 and FY ’23 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.

Rishab Barar — Analyst

Good day, everyone, and thank you for joining us on Greenpanel Industries Q4 and FY ’23 Conference Call. We have with us today Mr. Shobhan Mittal, Managing Director; and Mr. V. Venkatramani, 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 uncertainties. A detailed statement in this regard is available in the results presentation that was sent to you earlier.

I would now like to invite Mr. Shobhan Mittal to begin the proceedings of the call. Thank you, and over to you, sir.

Shobhan Mittal — Managing Director & Chief Executive Officer

Thank you, Rishab. Good morning, everyone, and thank you for joining us to discuss Greenpanel’s operating and financial performance for quarter four, FY ’23. MDF sales volume rose by 10%. Export volumes grew by 89%, while domestic volumes fell by 7%. MDF EBITDA margins at 22% were impacted by higher export volumes, steep increase in raw material costs, higher brand spends, primarily on account of IPL, which was skewed towards the last quarter and price cuts taken in exports.

Plywood volumes were lower by 17.1% and operating margins of 0.4% were impacted by lower volumes and increase in raw material costs. Post-tax profits for the quarter were lower by 14% at INR68.93 crores, as compared to INR80.59 crores in quarter four, FY ’22 due to reasons mentioned above.

Net working capital at 17 days have shown a reduction of 6 days quarter-on-quarter. Net debt has reduced by INR42 crores during the quarter and stands at negative INR187 crores, as on 31st March 2023. We paid INR11 crores towards MDF expansion project during quarter four, aggregating to INR50 crores during the year to-date.

Mr. Venkatramani will now run you through the financials in greater detail, post which we will have a Q&A session.

Vishwanathan Venkatramani — Chief Financial Officer

Good morning, everyone, and thank you for joining us to discuss the Q4, FY ’23 financial performance of Greenpanel Industries. Net sales during Q4 was INR440.58 crores compared to INR460.26 crores during the year-on-year period. MDF sales fell by 1% at INR386.02 crores and contributed 88% of the top line. MDF export volumes grew by 89% at 42,927 cubic meters. Domestic volumes were down by 7% at 94,338 cubic meters, and overall MDF volumes were up by 10% at 1,37,265 cubic meters.

MDF domestic revenues were INR311.10 crores, while exports contributed INR74.90 crores. Domestic realizations were lower by 1% at INR32,978 [Phonetic] per cubic meter, while export realizations were lower by 21.5% at INR17,450 [Phonetic] per cubic meter. Blended MDF realizations were lower by 10.2% at INR28,122 [Phonetic] per cubic meter. Uttarakhand MDF operated at 85% and AP plant operated at 77% Part 1 AP plant operated at 77% with blended capacity utilization at 80% on enhanced capacity of 6,60,000 cubic meters. Plywood sales had degrowth of 22.6% at INR54.56 crores. Plywood sales volumes were lower by 17.1% at 2.04 million square meter, and the unit operated at 70% during the quarter. Plywood sales realizations were up by 6.3% at INR268 per square meter. In Q4, FY ’23, gross margin fell by 662 basis points year-on-year at 53.7%. EBITDA margins were down by 1,150 basis points at 19.2%. MDF export realizations were lower by 10% year-on-year due to price cuts in exports. EBITDA stood at INR84.75 crores due to reasons already mentioned by Mr. Mittal. PAT was lower by 14% due to fall in EBITDA and reflected gains due to deferred tax write-off aggregating to INR29.36 crores. I’ll now update you on the performance details for FY ’23. Net sales grew by 12.2% at INR1,778.55 crores. MDF sales increased by 15.4% at INR1,534.58 crores, while plywood sales were lower by 4.7% at INR243.97 crores. Gross margins were up by 38 bps at 58.1%. Gross margin in value terms was up by 12.9% at INR1,032.76 crores. EBITDA margins were lower by 320 basis points at 24.5%. EBITDA in value terms fell by 0.8% at INR435.87 crores. Post-tax profits were up by 7% at INR256.51 crores. Overall, MDF sales volumes were up by 2.4% at 5,06,743 cubic meters with blended capacity utilization of the 2 plants at 78% of enhanced capacity compared to 87% in the year-on-year period. Dispatches for plywood were lower by 7.7% at 8.58 million square meter with capacity utilization at 74% compared to 81% in the corresponding period. Gross debt to equity stands at 0.16% [Phonetic], as on 31st, March 2023 compared to 0.30% [Phonetic], as on 31st, March 2022. Net debt, as on 31st March stood at negative INR187 crores compared to positive INR144 crores, as on 31st, March 2022. That concludes my presentation. Please open the floor for the Q&A session. Thank you.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session.[Operator Instructions] The first question is from the line of Harsh Shah from Dalal & Broacha. Please go ahead.

Harsh Shah — Dalal & Broacha — Analyst

Yeah. Thanks for the opportunity. A couple of questions from my side. Any update on the representation we have made to levy the duty on the imported MDF? And a related question, if hypothetically, if the duty is levied, what would the difference in pricing go down to?

Vishwanathan Venkatramani — Chief Financial Officer

The matter is still, let’s say, under consideration by the various ministries. The Commerce Ministry has made the recommendation, the Finance Ministry has not yet decided. Cases like ours have actually been taken up also in the Tribunal Court and the Supreme Court, where both the Tribunal and the Supreme Court have upheld that the Finance Ministry will need to take a decision on this, and until such time, provisional assessment of duty should be assessed. However, the same — because the government machine takes time for implementation, however, the same has not yet been implemented. So it’s very difficult for us to give any clarity, as to when and if the duty implementation will happen.

With regards to the pricing, I mean, it’s clear to say that if duties do come into picture, then, in my opinion, imports will not be a major threat anymore.

Harsh Shah — Dalal & Broacha — Analyst

Okay. And on the plywood division, any sort of guidance you want to give for FY ’24 because when I look at the margin, I think it’s probably a disappointment in this quarter. So how should we look at for FY ’24?

Vishwanathan Venkatramani — Chief Financial Officer

No. So — there is — we are restructuring our plywood business model in certain ways, and we are quite confident of double-digit volume growth in the plywood business with margins between 8% to 10% in the current financial year.

Harsh Shah — Dalal & Broacha — Analyst

Okay. And just last one question. I believe in Q2 or Q3, we have seen some sort of slowdown in onboarding distributors in the MDF segment. So how has been the situation? And if you could give in terms of the number of distributors year-on-year, what has been for FY ’23 as in — versus FY ’22?

Vishwanathan Venkatramani — Chief Financial Officer

What we have done in the last — because when we have certain distributors and dealers in our network, we also commit a certain geographical region or a number of operating dealers in that area are committed based on the business model. What we did in assessment in the last financial year was assess dealers that we were — were not very active or not very regular or were not in sync with our business model or business growth strategy, and hence, we decided to sort of discontinue businesses — business operations with such dealers. And that is the reason why you see a dip in the active dealer numbers that we have because we are now in the process of reappointment of such and expansion of the dealer network, again, it’s a replacement exercise.

Harsh Shah — Dalal & Broacha — Analyst

And if you could give a number, how many distributors we have for the full year FY ’23 — as on FY ’23?

Vishwanathan Venkatramani — Chief Financial Officer

About 2,300.

Harsh Shah — Dalal & Broacha — Analyst

Okay.

Vishwanathan Venkatramani — Chief Financial Officer

Yes.

Harsh Shah — Dalal & Broacha — Analyst

Okay. That’s it from my end.

Operator

Thank you. A request to all the participants, please restrict to two questions per participant. If time permits, please come back-in the question queue for a follow-up question. The next question is from the line of Shrenik Surendra Bachhawat from LIC Mutual Fund. Please go ahead.

Shrenik Surendra Bachhawat — LIC Mutual Fund — Analyst

Hi, sir, thanks for the opportunity. Sir, I wanted to understand that currently, have you taken any price cuts in MDF segment in domestic to get back certain volumes? And if not, is there any breaking point that [Indecipherable] we will have to take a price cut in domestic market, if ADD doesn’t come through?

And my second question is, is there any specific reasons for plywood volumes being so weak for this quarter?

Shobhan Mittal — Managing Director & Chief Executive Officer

Sorry, can you repeat the last part of your question? I didn’t understand that.

Shrenik Surendra Bachhawat — LIC Mutual Fund — Analyst

So what — as our plywood volumes are down 17%, is there any specific reason for weak plywood volumes this quarter?

Vishwanathan Venkatramani — Chief Financial Officer

I’ll answer — the first question with regards to the price cuts in the MDF. No, we have not taken any price cuts in the MDF. And as of now, even if — even now we are operating in an environment, where there is no protection from imports coming into the — coming into the country, but we do not intend on taking any price cuts. And there’s no defined, that’s a breaking point, where we’ll have to resort to taking a price cut in the MDF business. So that’s definitely not on the cards given the current economic scenario.

With regards to the plywood volumes, yes, there was pressure on the market side. We refrained from taking any price cuts and passing on any discounts, which has resulted in this reduction in the plywood volumes, but we are confident of revising this in the coming year. And as mentioned earlier, we’re looking at a double-digit volume growth in the plywood segment as well.

Shrenik Surendra Bachhawat — LIC Mutual Fund — Analyst

Sir, could you give some more details there that how do you get the confidence of double-digit volume growth in FY ’24?

Shobhan Mittal — Managing Director & Chief Executive Officer

Sorry, can you repeat that?

Shrenik Surendra Bachhawat — LIC Mutual Fund — Analyst

Sir, I’m just asking that, what gives you the confidence about double-digit volume growth in plywood, as the raw material prices continue to increase. And so prices continue to increase. And so what are we doing to get a double-digit volume growth, I’m trying to understand?

Vishwanathan Venkatramani — Chief Financial Officer

There is — we feel that the plywood — we are very, very positive about our plywood business. It is a business of focus for us. And given our current infrastructure and the distribution network, the fact that the Company has spent on establishing a brand, which is important for the plywood industry, we foresee that this would not be a challenge in the coming year.

Shrenik Surendra Bachhawat — LIC Mutual Fund — Analyst

And is there inflation continuously impacting or inflation has — starting to — in the raw materials for plywood, how is in recession times [Phonetic]?

Vishwanathan Venkatramani — Chief Financial Officer

No. See things have stabilized and — and towards — to a very slight extent corrected as well.

Shrenik Surendra Bachhawat — LIC Mutual Fund — Analyst

Okay. Thank you so much.

Vishwanathan Venkatramani — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Udit Gajiwala from Yes Securities. Please go ahead.

Udit Gajiwala — Yes Securities — Analyst

Yeah. Thank you, sir, for taking my question. [Technical Issues].

Operator

Udit, sorry, to interrupt you, but your voice is not coming very clear. May I request you to speak?

Udit Gajiwala — Yes Securities — Analyst

Am I audible now?

Operator

Sir, we can hear you, but then your voice is breaking. Can you come in a better reception area, please?

Udit Gajiwala — Yes Securities — Analyst

I hope this is better.

Operator

Go ahead, sir.

Udit Gajiwala — Yes Securities — Analyst

Sir, could you throw some light on the trajectory of the MDF volume growth that you foresee for [Technical Issues] and saying that [Phonetic] what further price realizations could come down also [Technical Issues]?

Shobhan Mittal — Managing Director & Chief Executive Officer

See the voice is not good at all anymore.

Operator

Udit, sorry to interrupt…

Vishwanathan Venkatramani — Chief Financial Officer

I think you mentioned — what we mentioned was that what kind of volume growth we are looking at for MDF in the current year and whether we are looking at any cut in prices, is that correct?

Udit Gajiwala — Yes Securities — Analyst

That is right.

Vishwanathan Venkatramani — Chief Financial Officer

Okay. So the MDF volume growth we are looking in between 12% to 15%, and we are quite confident of achieving this in terms of the volumes of MDF. And as discussed in an earlier question as well, we have no plans of any price cuts in the MDF business at this point of time.

Udit Gajiwala — Yes Securities — Analyst

Okay. So sir, do we — so I just concluded that your margins could remain between this band of 25% to 86% [Phonetic] or we could see contraction on a full year basis?

Vishwanathan Venkatramani — Chief Financial Officer

Yeah. With regards to margins, we are quite confident in the 23% to 25% range.

Udit Gajiwala — Yes Securities — Analyst

Got it, sir. I’ll come back in the queue, sir. Thanks.

Operator

Thank you. The next question is from the line of Achal Lohade from JM Financial. Please go ahead.

Achal Lohade — JM Financial — Analyst

Good morning. Thank you for the opportunity. Sir, in terms of the IPL impact, the A&P impact, can you specify what is the extent of impact in the fourth quarter? And when you say 23% to 25% EBITDA margin, what is the A&P spend we are assuming there?

Vishwanathan Venkatramani — Chief Financial Officer

Okay. So IPL impact, so there were actually three different spends. One was the IPL impact. We also were doing some branding efforts in the India Australia test series, and we were also sponsoring the Pretoria Capitals. So the combined impact was about INR7 crores in quarter four.

Achal Lohade — JM Financial — Analyst

Understood. And would that be a recurring one? Or this is more like..

Vishwanathan Venkatramani — Chief Financial Officer

Yeah. It will be recurring. So I think if you look at brand spends, I think we’ll be in the range of about 2.5% for FY ’24.

Achal Lohade — JM Financial — Analyst

Got it. My next question is in terms of the industry capacity, if you could give your perspective on the same in terms of what is the capacity India has as of March ’23 and by March ’26. What kind of increase are you looking at? And accordingly, what the capacity utilizations could be for players in FY ’26 for the industry, as a whole?

Vishwanathan Venkatramani — Chief Financial Officer

Okay. We had about 2.3 million cubic meters at the end of FY ’22. And I think over the next three [Phonetic] years, including FY ’23, we’ll see approximately 1.15 million cubic meters capacity getting added to the market. But there could be some new capacities coming in from unorganized players, so which I’m not aware about.

Achal Lohade — JM Financial — Analyst

So this 1.15 is only the organized players addition you are considered, sir?

Vishwanathan Venkatramani — Chief Financial Officer

Yeah. That’s right.

Achal Lohade — JM Financial — Analyst

Got it. If you could give us a sense in terms of export margin, how would that be in, let’s say, 4Q and full year FY ’23?

Vishwanathan Venkatramani — Chief Financial Officer

See I don’t have it readily available, Achal. I’ll come back to you on that.

Achal Lohade — JM Financial — Analyst

Sure. And just one more question, if I may, with respect to price difference in terms of the thick and thin MDF compared to the imports, as we speak?

Vishwanathan Venkatramani — Chief Financial Officer

Okay. So currently, it would be on a range of about 10% to 20%. So if you look at the landed cost, there would be a difference of about 18% to 20%. But if you look at — compare the prices, if they were to affect delivery and the customers go down, then probably the range would be somewhere between 10% to 12%.

Operator

Thank you. Sorry to interrupt you, Achal, I request you to join the queue again for a follow-up question. A request to all the participants [Technical Issues]. The next question is from the line of Sneha Talreja from Nuvama Wealth. Please go ahead.

Sneha Talreja — Nuvama Wealth — Analyst

Good morning, sir, and thanks a lot for the opportunity. Just wanted to understand on the industry aspect, you mentioned the industry capacity to be 2.3 million cubic meters. What would be the industry size? And what would have been the growth rate in FY ’23, if at all, you can you just elaborate that?

Vishwanathan Venkatramani — Chief Financial Officer

Okay. So it was approximately about 1.75 million cubic meters at the end of FY ’22. And during the year, we estimate that approximately another 2.25 — sorry, approximately about 2,25,000 cubic meters to 2,50,000 cubic meters would have been added to the market during FY ’23.

Sneha Talreja — Nuvama Wealth — Analyst

And in terms of — I mean, crores, if at all, you can mention even value terms, that will be really helpful?

Vishwanathan Venkatramani — Chief Financial Officer

See it’s very difficult to mention in value terms because the unorganized does not provide full invoices to its customers. So it’s difficult to give a growth in value terms because you have prices ranging from — if you look at our realizations, our blended realizations would be around 33,000 for the domestic segment. Whereas if you look at some of the competitors, they are probably around 24,000 to 25,000.

Sneha Talreja — Nuvama Wealth — Analyst

Right. But the volumes include the unorganized part also, right? The one that you mentioned, 1.75?

Vishwanathan Venkatramani — Chief Financial Officer

Correct. That’s correct,

Sneha Talreja — Nuvama Wealth — Analyst

Understood, sir. And is it fair to assume that this particular quarter, the decline that you saw in the domestic market was also because of some amount of imports replacing the domestic volumes, domestic players volume?

Vishwanathan Venkatramani — Chief Financial Officer

See I wouldn’t say it’s replaced, I would say, rather it took away growth from the organized players. We did lose market share. So if you look at — if you compare quarter three to quarter four, we didn’t lose any volumes. In fact, I think we have achieved about an additional 1,000 cubic meters volumes during Q4, as compared to Q3. So I would say, we could not get the growth that happened during the market in the last quarter.

Sneha Talreja — Nuvama Wealth — Analyst

Understood, sir. That was helpful. Thanks a lot, sir, and all the best.

Vishwanathan Venkatramani — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Karan Bhatelia from Asian Markets Securities. Please go ahead.

Karan Bhatelia — Asian Markets Securities — Analyst

Hi, sir. Thank you for the opportunity. Am I audible?

Shobhan Mittal — Managing Director & Chief Executive Officer

Yeah. Good morning, Karan. Please go ahead.

Karan Bhatelia — Asian Markets Securities — Analyst

Yes. Sir, you mentioned about 12% to 15% volume growth in FY ’24, so can we further split it into export growth and domestic growth?

Vishwanathan Venkatramani — Chief Financial Officer

See, I think we are targeting double-digit growth — sorry, I would say, a low double-digit growth in the growth in the domestic segment and more than a 20% growth in the export volumes.

Karan Bhatelia — Asian Markets Securities — Analyst

Right. That was helpful. And sir, how much has been the timber prices on a Y-o-Y basis in North and South because all these while I believe the inflation was only in North, but in last three months to four months, we have seen some escalation in South as well. So any comments over there?

Vishwanathan Venkatramani — Chief Financial Officer

Could you please repeat that question?

Karan Bhatelia — Asian Markets Securities — Analyst

Sir, on the timber cost escalation in North and South market on a Y-o-Y basis?

Vishwanathan Venkatramani — Chief Financial Officer

On a Y-on-Y basis. So at the end of Q4 — or rather for Q4, FY ’23, timber prices in North were ranging between INR5.5 per kg to INR5.6 per kg, whereas a year ago, it was about INR4.3 per kg to INR4.4 per kg. For the South, it was about INR3.8 a kg to INR3.9 a kg, whereas in Q4 last year, it was around INR3.10 per kg to INR3.20 per KG.

Karan Bhatelia — Asian Markets Securities — Analyst

Okay. And prices are expected to now cool off? Or we’ll continue to see some more escalation going ahead? Thank you. That’s it from my side.

Vishwanathan Venkatramani — Chief Financial Officer

I don’t think we are expecting any immediate cool off in prices. But yes, we expect stability in prices.

Karan Bhatelia — Asian Markets Securities — Analyst

Okay, sir. Thank you.

Operator

Thank you. The next question is from the line of Darshit from RoboCapital.in. Please go ahead.

Darshit Vora — RoboCapital.in — Analyst

Hello. Yeah. Am I audible?

Vishwanathan Venkatramani — Chief Financial Officer

Yeah. Please go ahead.

Darshit Vora — RoboCapital.in — Analyst

Yeah, thank you. So thank you for taking my questions. Actually, I just have one question. So I just need a view on revenue and both EBITDA and PAT margins going forward in the next two years, three years and also for specifically FY ’24, if you can? And also the key driver, which is like presume it is plywood and MDF itself?

Vishwanathan Venkatramani — Chief Financial Officer

Okay. Like we mentioned earlier, we are targeting a 12% to 15% volume growth in the MDF segment. And no, I think at the moment, we are not looking at any price growth, although, we will also endeavor to improve the values by increasing the mix of value-added products. And if you’re looking for three year guidance, our endeavor would be to have an annual growth rate of about 10% to 15% in the MDF segment. And we expect margins to be stable in the range of 23% to 25% we mentioned earlier. Although, those margins are expected to come under pressure when the new capacity comes into commercial production because of lower capacity utilization expected on the enhanced capacity.

Darshit Vora — RoboCapital.in — Analyst

Right. Okay. Yeah. Thank you.

Vishwanathan Venkatramani — Chief Financial Officer

Thank you.

Operator

Thank you. Next question is from the line of Praveen Sahay from Prabhudas Lilladher. Please go ahead.

Praveen Sahay — Prabhudas Lilladher — Analyst

Yeah. Thank you for taking my question. The first one is related to the MDF. In the last four quarters, if I look at the utilization level of the plants were quite fluctuating from 74% to 81%. So is there any seasonality on the Q-o-Q basis? And secondly, to the MDF, you are taking capacity expansion by 25%. So how you are looking at export and the domestic mix way forward?

Vishwanathan Venkatramani — Chief Financial Officer

Okay. Like we mentioned earlier, we are targeting a 12% to 15% volume growth in the current year, and it will be our endeavor to have the entire capacity — current capacity utilized before the new unit comes into commercial production.

Praveen Sahay — Prabhudas Lilladher — Analyst

And how is the export and the domestic mix you are expecting?

Vishwanathan Venkatramani — Chief Financial Officer

Like mentioned, we are looking at low double-digit growth in the domestic volumes and 20% plus growth in the export volumes.

Praveen Sahay — Prabhudas Lilladher — Analyst

Okay. And is there a seasonality, sir, in the quarter-on-quarter?

Vishwanathan Venkatramani — Chief Financial Officer

No, there’s not really any seasonality in the MDF business because it’s all related to the interiors. So climatic conditions do not really impact the business.

Praveen Sahay — Prabhudas Lilladher — Analyst

Okay. And the next one is related to EBITDA per CBM, which has reduced for a quarter. So where you are seeing in the coming years, EBITDA per CBM number?

Vishwanathan Venkatramani — Chief Financial Officer

Okay. So if you look at the current quarter, I think it was to a significant extent also impacted by the adverse mix of domestic exports. So if you look at quarter 3, we had 79%, 21% share of domestic and exports. While in this quarter, the share was 69% domestic and 31% export. So that had a significant impact on the margins. But going forward, we expect EBITDA per cubic meter to be in the range of 6,500 per cubic meter to 7,500 per cubic meter.

Praveen Sahay — Prabhudas Lilladher — Analyst

Okay. Great, sir. And lastly, sir, on the capex number, if you can guide for ’24, ’25? Thank you.

Vishwanathan Venkatramani — Chief Financial Officer

Okay. We have spent approximately INR50 crores in FY ’23. And I think probably a similar amount will be spent in FY ’25. So I would estimate that most of the balance, approximately about INR500 crores will be spent in FY ’24.

Praveen Sahay — Prabhudas Lilladher — Analyst

Okay. Thank you, sir. All the best.

Vishwanathan Venkatramani — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Utkarsh Nopany from Haitong Securities. Please go ahead.

Utkarsh Nopany — Haitong Securities — Analyst

Yeah. Hi, good morning, sir. Sir, my question is on MDF. So if we see like we have enhanced our MDF capacities from 1.4 lakh to 6.6 lakh, I mean, despite that..

Vishwanathan Venkatramani — Chief Financial Officer

Utkarsh…

Shobhan Mittal — Managing Director & Chief Executive Officer

Utkarsh, you are not audible. Could you please repeat that question?

Utkarsh Nopany — Haitong Securities — Analyst

Sir, like my question is on MDF segment. So we have increased our MDF capacity from 5.4 lakh to 6.6 lakh and despite that, our volume has been in the domestic market hovering around 90,000 lakh to 1 lakh CBM over the past seven consecutive quarters. And like given a lot of new MDF capacity is likely to come in the domestic market in the current fiscal, what gives us the confidence that we will be able to clock low double-digit kind of a volume growth in FY ’24?

Vishwanathan Venkatramani — Chief Financial Officer

Okay. So if you look at it, domestic competition has not really had any impact on our performance. It’s more imports, which have impacted our domestic performance. And I think going forward, imports will face challenges because of uncertainty over the imposition of ADD or [Indecipherable] CVD, and their buyers would also be turning conservative because they will not like to take on additional risks on account of any additional duties on their account. So I think yes, going forward, domestic manufacturers will get a significant share of future market growth.

Utkarsh Nopany — Haitong Securities — Analyst

Sir, again, I’m coming on to this question. So if we see the annual import in FY ’23 will not be more than 2 lakh, 2.5 lakh CBM, whereas in this fiscal, we are expecting significant amount of capacity to get added. So seeing a lot of supply side pressure coming in the domestic market, how we are confident that we can clock volume growth in FY ’24?

Vishwanathan Venkatramani — Chief Financial Officer

Okay. So like I mentioned earlier, what is giving additional market share to imports, it’s primarily because they are coming at a significantly lower price. But if we look at other domestic players, they are not at the same price, as imports. So new capacities, yes, those new capacities will be operating at low capacities. They will look at a larger share of exports. But they won’t really look at gaining market share by cutting prices because I think everyone in the industry is more or less of the view that cutting prices does not give you increased market share because as soon as one cut prices, others follow suit within the same day or the next day. So I don’t think the increase in domestic capacity will really significantly impact our volumes. impact our volumes.

Utkarsh Nopany — Haitong Securities — Analyst

Okay. And sir, second question is on the pricing side. So if we see the spread between the domestic and the export MDF realization, it is currently at a record high level in this March quarter. So do you expect the spread to remain at the current level? Or this spread might narrow down going forward?

Vishwanathan Venkatramani — Chief Financial Officer

See, it’s come down to some extent in the current quarter. So we are taking new orders at prices, which were slightly higher, as compared to the March quarter. But yes, going forward, this will significantly depend upon how imports are — whether imports continue to grow or whether imports will decline in the future. Because just like imports are having an impact in India, they are also having an impact on our export markets, most of which are located in the Middle East. So a significant impact — increase in export realizations will depend on future imports from countries like Vietnam, Thailand, Indonesia, Malaysia, etc.

Utkarsh Nopany — Haitong Securities — Analyst

Okay. Thanks a lot, sir.

Vishwanathan Venkatramani — Chief Financial Officer

Thank you.

Operator

Thank you. Next question is from the line of Hrishikesh Bhagat from Kotak Asset Management. Please go ahead.

Hrishikesh Bhagat — Kotak Asset Management — Analyst

Hi. Good afternoon — good morning. Thank you for the opportunity. So my first question is when we — well, how should we look at this investment in A&P spend. Now if I understand historically, MDF has been largely a B2B or where the product is sold to OEM. So has there been any change in acceptance that we require or in retail level increasing acceptance that we require investment on the A&P spend [Indecipherable] or is it just probably spend to create a platform for probably in future if we want to diversify on the retail any product on the B2C side?

Shobhan Mittal — Managing Director & Chief Executive Officer

No. I think awareness in the market for MDF has definitely increased. People are now aware of what the product is. And now it is no longer, let’s say, a commoditized product. And brand — going forward, we perceive that going forward, a brand would play a very important role in the [Indecipherable] or the overall business growth. And we, obviously, in the pricing premium in the market that we will be able to obtain, as opposed to other competition in the unorganized segment. So — and as a company, as we mentioned earlier as well, we feel that this spend would bring mileage not only on the MDF business, but also on our private business as well. And hence, we were waiting for the right moment and the right opportunity to start this activity. And we saw that IPL would be a good platform to initiate this and we had — we started this accordingly.

Hrishikesh Bhagat — Kotak Asset Management — Analyst

Okay. And secondly, when we spoke about probably somewhere around 7% to 10% difference between imported MDF and domestic, this is for which grade of MDF?

Shobhan Mittal — Managing Director & Chief Executive Officer

So we are primarily talking about the plain MDF, which is a primary product that is being imported into the country. And when I say plain MDF, it is also the basic grade of MDF, which is called the industrial grade. As we mentioned, this difference to be around 10% to 20% depending on the geography of where we are comparing. But it would be primarily for the plain MDF.

Hrishikesh Bhagat — Kotak Asset Management — Analyst

Okay. Thank you.

Shobhan Mittal — Managing Director & Chief Executive Officer

Thank you.

Operator

Thank you. Next question is from the line of Nikhil Gada from Abakkus Asset Management. Please go ahead.

Nikhil Gada — Abakkus Asset Management — Analyst

Yeah. Hi. Thanks for the opportunity. Sir, my first question is on the MDF margins for the quarter. Can you sort of break it up for us in terms of how much of an impact was because of the mix between exports and domestic? And how much was because of the RM inflation that we have seen in timber prices?

Vishwanathan Venkatramani — Chief Financial Officer

See if you look at the mix of domestic and exports, like I mentioned, in comparison to Q3, the domestic mix was 69% versus 79% [Phonetic] in Q3. So that had an impact of approximately 250 basis points on the margins.

Nikhil Gada — Abakkus Asset Management — Analyst

Okay.

Vishwanathan Venkatramani — Chief Financial Officer

And raw material costs did not have a significant impact on the overall margins. But yes, again, it would be in the range of about 100 basis points to 120 basis points.

Nikhil Gada — Abakkus Asset Management — Analyst

Understood. And regarding this, I understand in terms of the impact of imports, but because of the RM inflation, do you try to or you’re planning to take any price increase in the market to sort of arrive just fall [Phonetic]?

Vishwanathan Venkatramani — Chief Financial Officer

See at the moment, I don’t think pricing is an issue. We are not looking at increasing prices currently because we have capacity in hand, which has to be exhausted before the new capacity comes into production. So I think we would primarily be looking at market share gains rather than increase in prices.

Nikhil Gada — Abakkus Asset Management — Analyst

Understood, sir. And sir, just on this guidance for 24% around — 23% to 25% EBITDA margins, when you gave the numbers of volume, so basically, the export mix comes to be 25% for FY ’24. So this 23% to 25%, is this guidance as [Indecipherable] signed — or do you feel that if, let’s say, the ADD comes in, this can go further higher?

Vishwanathan Venkatramani — Chief Financial Officer

See, this is keeping into condition, the existing market conditions. So if there’s any sort of new duties coming in on imports, we would definitely be looking at a significant increase in the domestic volumes.

Nikhil Gada — Abakkus Asset Management — Analyst

Sir, I’m talking about margins, sorry.

Vishwanathan Venkatramani — Chief Financial Officer

So yes, increase in domestic volumes would have a favorable impact on the margins.

Nikhil Gada — Abakkus Asset Management — Analyst

Got it, sir. And sir, my second question is on the plywood part. You mentioned that we are doing some restructuring in the business. Could you sort of give some understanding of what we are trying to achieve over here?

Vishwanathan Venkatramani — Chief Financial Officer

When we say restructuring, basically, there is a — in the entire sort of distribution network with regards to how the sales team is operating. We are relooking at the entire business model because initially, we were — we were not very — let’s say, we were not inclined towards any further investment or substantial material growth in this existing capacity that we had. But now we’re of the opinion that this is an important business for us. Our aim is to settle the existing capacities, run it at a consistent full capacity for six month to eight months. And then, we are even inclined to look at further opportunities of growth in our existing capacities by way of maybe new investments as well. So hence, we are relooking at the plywood business model in a — with a — in a different light.

Nikhil Gada — Abakkus Asset Management — Analyst

Got it, sir. And sir, last question, for the time line for the MDF expansion, which was, I assume 2Q, FY ’25. So it’s still the same time line or are there some extension?

Vishwanathan Venkatramani — Chief Financial Officer

Yes. That’s very much on track. We would start receiving machineries in towards the middle of the year [Technical Issues].

Operator

Sir, can you hear us. Hello? Participants please stay connected. [Technical Issues] Ladies and gentlemen, thank you for your patience. We have the line for the management reconnected. Sir, you may go ahead.

Vishwanathan Venkatramani — Chief Financial Officer

Sorry, apologies about that. No. So the time line for the new project still stands as initially communicated.

Nikhil Gada — Abakkus Asset Management — Analyst

Got it, sir. And sir, just last on the value-added mix, if you can highlight this 4Q FY ’23 for MDF versus last year?

Vishwanathan Venkatramani — Chief Financial Officer

You’re wanting [Phonetic] Q-on-Q?

Nikhil Gada — Abakkus Asset Management — Analyst

Sir, Q-on-Q and year-over-year would be great, sir?

Vishwanathan Venkatramani — Chief Financial Officer

Okay. So Q-on-Q, the mix was about came — it was about 15% share in domestic volumes and 62% in value terms. And if we look year-on-year, it was 39% in volume terms and 46% in value terms.

Nikhil Gada — Abakkus Asset Management — Analyst

46% in value. Okay. That would be all, sir. Thank you for answering all my questions, and all the best. Thanks.

Vishwanathan Venkatramani — Chief Financial Officer

Thank you.

Operator

Thank you. Next question is from the line of Monish Ghodke from HDFC Mutual Fund. Please go ahead.

Monish Ghodke — HDFC Mutual Fund — Analyst

Hello. Thank you for the opportunity. Sir, why are plywood realizations have come down on a Q-on-Q basis when timber prices are going up?

Vishwanathan Venkatramani — Chief Financial Officer

Yeah. It was primarily because of a change in product mix. So our volumes had come down in the decorative veneer segment. And decorative veneer realizations are approximately 2.5x price of normal plywood sheet. So that had an impact on the blended realization for plywood.

Monish Ghodke — HDFC Mutual Fund — Analyst

Okay. And sir, what would be our plywood EBITDA margin for FY ’24?

Vishwanathan Venkatramani — Chief Financial Officer

We are targeting 8% to 10% EBITDA margin for FY ’24.

Monish Ghodke — HDFC Mutual Fund — Analyst

Okay. And volume growth?

Vishwanathan Venkatramani — Chief Financial Officer

Again, we are targeting a double-digit volume growth in plywood.

Monish Ghodke — HDFC Mutual Fund — Analyst

Okay. And sir, what is your view on timber prices for FY ’24 and ’25 for North and South?

Vishwanathan Venkatramani — Chief Financial Officer

in plywood.

Monish Ghodke — HDFC Mutual Fund — Analyst

Okay. And sir, what is your view on timber prices for FY ’24 and ’25 for North and South?

Vishwanathan Venkatramani — Chief Financial Officer

When you say — we are expecting the timber prices to be stable at the current levels. We don’t see any major hikes in timber costs in the current financial year.

Monish Ghodke — HDFC Mutual Fund — Analyst

Okay. Okay, sir. Thank you.

Vishwanathan Venkatramani — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Nikhil Agarwal from VT Capital Markets. Please go ahead.

Nikhil Agarwal — VT Capital Markets — Analyst

Good morning, sir, and thank you for the opportunity. Sir, my question was on the export realizations. They have, again, like fallen down quarter-on-quarter. I believe that is on account of the price cuts you had taken in December. But like are we seeing any bottoming out of the realizations because like we heard there was some rumor that some player has increased prices in the international market? So are we seeing that this is the bottoming out of the realization?

Shobhan Mittal — Managing Director & Chief Executive Officer

Yes. We already have taken price increases in the export segment ourselves as well. But due to the backlog of orders that we have in our books, we would probably start seeing the effect of that from quarter two.

Nikhil Agarwal — VT Capital Markets — Analyst

Okay. Got it. And sir, what sort of price hikes have you taken? Can you quantify that?

Shobhan Mittal — Managing Director & Chief Executive Officer

Between 8% to 10%.

Nikhil Agarwal — VT Capital Markets — Analyst

Okay. Okay. Got it. And sir, what currently between the organized and unorganized players, what would be the price differential?

Vishwanathan Venkatramani — Chief Financial Officer

See, it’s very difficult to mention the price difference between organized and unorganized players, primarily because some of the unorganized players do not provide a full invoice to their customers. So it ranges between — anywhere between INR22,000 to INR25,000 per cubic meter.

Nikhil Agarwal — VT Capital Markets — Analyst

Okay. Got it. And sir, currently, like last question, what is the demand situation currently? How is it panning out in quarter one?

Vishwanathan Venkatramani — Chief Financial Officer

Demand is reasonably good. So I think we are guiding for the estimates for the current year on the basis of that.

Nikhil Agarwal — VT Capital Markets — Analyst

Okay. Got it. That’s it from me. Thank you so much.

Operator

Thank you. The next question is from the line of Bhavin Rupani from Investec. Please go ahead.

Bhavin Rupani — Investec — Analyst

Yeah. Hi, sir. Thank you for the opportunity. My majority of the questions have been answered. I have just one question related to plywood. So sir, as compared to Q4 last year, EBITDA per unit has declined from INR2.6 [Phonetic] to INR1 in the current quarter. Sir, can you tell us some of the reasons behind such a sharp drop from the decline in volumes during the year?

Vishwanathan Venkatramani — Chief Financial Officer

Yes. There were three reasons. One, was — volumes as compared to…

Operator

Sir, sorry to interrupt you. Sir, your voice is not coming clear. I will have to disconnect and reconnect. Participants, please stay connected while we rejoin the management back to the call.

Ladies and management, thank you for your patience. We have the line for the management reconnected. Sir, you may go ahead.

Vishwanathan Venkatramani — Chief Financial Officer

Yes. So there were three reasons for the lower margins year-on-year in the plywood business. First was the fall in volumes. The second was the increase in, sorry, the wood cost. And the third was, we took some inventory losses into account based on the prevailing prices in the domestic market. So all those three factors had an impact on the plywood volumes. But the inventory loss is a one-off item. So I don’t expect that it will have any impact in future quarters.

Bhavin Rupani — Investec — Analyst

Sir, would it be possible to quantify the inventory losses?

Vishwanathan Venkatramani — Chief Financial Officer

It would have an impact of about 4% on the Q4 margins.

Bhavin Rupani — Investec — Analyst

Okay, sir. That’s helpful. Thank you.

Vishwanathan Venkatramani — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Rishab Bothra from Anand Rathi. Please go ahead.

Rishab Bothra — Anand Rathi Shares and Stock Brokers Limited — Analyst

Yes, sir, I just wanted to have the volumes — full year volumes for MDF, both export and domestic and the value as well.

Shobhan Mittal — Managing Director & Chief Executive Officer

Okay. So for the current year, domestic volumes were 385,000 and export volumes were 122,000. And for FY ’22, domestic volumes were 373,000 and export volumes were 122,000.

Rishab Bothra — Anand Rathi Shares and Stock Brokers Limited — Analyst

And in value terms?

Shobhan Mittal — Managing Director & Chief Executive Officer

And in value terms, domestic sales this year were INR1,287 crores. Export sales was INR247 crores. Total was INR1,535 crores. And last year, domestic was INR1,097 crores, exports INR232 crores, total was INR1,329 crores.

Rishab Bothra — Anand Rathi Shares and Stock Brokers Limited — Analyst

Okay, sir. Thank you, sir.

Shobhan Mittal — Managing Director & Chief Executive Officer

Thank you.

Operator

Thank you. Next question is from the line of Kushagra from Old Bridge Capital. Please go ahead.

Kushagra Bhattar — Old Bridge Capital — Analyst

Yeah, hi. Thanks for the opportunity. Just two questions. One is on the margins in the exports business. So you said you’ll come back. But just a right way — just want some perspective as to the right way to think about it. So last quarter you said you did around INR18,640 crores — sorry, INR18,640 per CBM realizations and you made around INR1,300 per CBM EBITDA. And now given that the prices have come down by almost INR1,200 per CBM for the fourth quarter, it would have eaten away a majority of the absolute EBITDA per CBM as well. And hence, margins would be close to breaking even or negative. And is that correct way to think about it? And the resultant question is that, it also becomes your cost for the plain MDF somewhere around INR17,500 per CBM.

Vishwanathan Venkatramani — Chief Financial Officer

Okay. See, if we look at the export business, you are correct, margins have come down significantly and currently, they are in low-single digits. But there would definitely not be negative because we do not take any orders, which should have a negative impact on the business.

And excuse me, what was the second part of your question?

Kushagra Bhattar — Old Bridge Capital — Analyst

So effectively, if it’s in low-single digits or probably 1%, 2% only in this particular quarter, that also kind of shows that INR17,500 per CBM is your cost for plain MDF broadly at current utilization levels?

Vishwanathan Venkatramani — Chief Financial Officer

No, it would not be — yes, if you take all the costs. So it’s not just raw material or the COGS, it includes the entire cost, including ocean freight costs, clearing and handling expenses and distribution costs. So it covers — if you cover all the costs, yes, it should be close to that range.

Kushagra Bhattar — Old Bridge Capital — Analyst

Got it. That’s helpful. And then the second question is on — one clarification and a follow-up on that clarification. One is, you said 12% to 15% growth and which implies — which is a mix of low-double-digit for the domestic and almost 18%, 20% for the exports. Is that correct?

Vishwanathan Venkatramani — Chief Financial Officer

Yes. I mentioned low-double-digit growth for the domestic business and 20%-plus growth for the export business.

Operator

Thank you. Sorry to interrupt you. A request to all the participants, please restrict to two questions per participant. The next question is from the line of Rajesh Kumar Ravi from HDFC Securities. Please go ahead.

Rajesh Ravi — HDFC Securities Limited — Analyst

Hello.

Operator

Go ahead.

Rajesh Ravi — HDFC Securities Limited — Analyst

Yeah. Hi, sir. My question pertains to, first, could you share what was the B2C sales in Q4 and in FY ’23, the MDF?

Vishwanathan Venkatramani — Chief Financial Officer

What’s the question, I can’t get you?

Rajesh Ravi — HDFC Securities Limited — Analyst

Sorry. B2C retail sales for your MDF in FY ’23 and in Q4, mix?

Vishwanathan Venkatramani — Chief Financial Officer

Okay. So if you look at Q4, it was roughly about 90-10 retail versus OEM. And for the entire year, I’ll confirm that later, but I think it would have been approximately between 85% to — 83% retail and the balance OEM.

Rajesh Ravi — HDFC Securities Limited — Analyst

Okay. And sir, second, coming to the capacity you mentioned to 225,000, 250,000 CBM got added in FY ’23, right? But are you counting the two, three mainstream [Phonetic] Greenply and the Century’s capacities in that? Or these are beyond that?

Vishwanathan Venkatramani — Chief Financial Officer

No, that I’m considering in FY ’23 to ’25.

Rajesh Ravi — HDFC Securities Limited — Analyst

Okay. And this…

Vishwanathan Venkatramani — Chief Financial Officer

Even the expansion which happened in FY ’23, I think came almost towards the end of March. Those I’m considering in the FY — the 3-year period from FY ’23 to ’25, when I said 2.3 million, it’s up to FY ’22.

Rajesh Ravi — HDFC Securities Limited — Analyst

Correct. Correct. No, no. The additional in FY ’23, you mentioned 0.25 million CBM. That is what I was trying to understand, which all capacity.

Vishwanathan Venkatramani — Chief Financial Officer

No. As I was saying that — I was not commenting on new capacities. I was saying that the volume growth that we had in the market.

Rajesh Ravi — HDFC Securities Limited — Analyst

And sir, when you’re targeting 10% sort of volume growth in the domestic market, given that Greenply new capacity has come up and Century’s also added capacities, at least these two capacities will be operational for full year. And given that even imports for available will be for the full year versus four, five months last year, what sort of domestic growth number that you’re looking at, the industry growth, whereby you can manage a 10% growth?

Vishwanathan Venkatramani — Chief Financial Officer

Yes. We are looking at a 15% growth in domestic volumes.

Rajesh Ravi — HDFC Securities Limited — Analyst

Number for FY ’23, sir? 1.75 million cubic meters you mentioned was the demand in FY ’23, right?

Vishwanathan Venkatramani — Chief Financial Officer

I couldn’t get your question. Could you please repeat that?

Rajesh Ravi — HDFC Securities Limited — Analyst

Sorry. FY ’23, demand, what was the demand and growth in FY ’23?

Vishwanathan Venkatramani — Chief Financial Officer

Okay. That I mentioned was approximately between 225,000 to 250,000 cubic meters.

Rajesh Ravi — HDFC Securities Limited — Analyst

Okay. Okay. I’ll take that offline. Lastly, if you could just give us one — when you say this export realization, sir, for you, this is FOB or CIF realizations that you book?

Vishwanathan Venkatramani — Chief Financial Officer

This is CNS.

Rajesh Ravi — HDFC Securities Limited — Analyst

Included in that.

Vishwanathan Venkatramani — Chief Financial Officer

Yeah.

Rajesh Ravi — HDFC Securities Limited — Analyst

Okay. Great, sir. Thank you. I’ll come back in queue.

Vishwanathan Venkatramani — Chief Financial Officer

Sure.

Operator

Thank you. Next question is from the line of Koushik Mohan from Ashika Stock Broking. Please go ahead.

Koushik Mohan — Ashika Institutional Equity — Analyst

Hi, sir. Thanks for the opportunity. I just wanted to understand a couple of things in your numbers. Sir, this last 12 months capacity utilizations you have given as 74%. What are you guiding for the coming years? And why was there is a very big dip in the capacity utilization?

Vishwanathan Venkatramani — Chief Financial Officer

See, if you — there was not really a big dip in capacity utilization. So if you are comparing it with earlier years. So previously, we had a capacity of 540,000 cubic meters, and we added 120,000 cubic meters in FY ’22. So at the moment, we are operating you can say 100% of the capacity prior to expansion. It’s not really a dip in capacity utilization. We are operating at the old capacity. We have not been able to utilize the additional capacity.

Koushik Mohan — Ashika Institutional Equity — Analyst

Okay, sir. And how about your guidance for the coming years? Because you have guidance on the revenue side is going to be around — it will be on the double-digit side and 15% plus. So how about the capacity utilizations?

Vishwanathan Venkatramani — Chief Financial Officer

So assuming we achieve our guidance, so we would be somewhere around 85% to 86%.

Koushik Mohan — Ashika Institutional Equity — Analyst

85% to 86% quarter. Okay. And sir, average realization per — how much will be the average realization?

Vishwanathan Venkatramani — Chief Financial Officer

So we are looking at cable realization, say, in the domestic business. And like Mr. Mittal mentioned earlier, we have already seen an 8% to 10% increase in export realizations in the current year. So that should have a small impact on the realizations going forward. So there will be some slight improvement in the realizations, but it will be more or less what we achieved in quarter four.

Operator

Thank you. A request to all the participants, please restrict to two questions per participant. Koushik, I’ll request to join the queue again for a follow-up question. The next question is from the line of Hiten Boricha from Sequent Investments. Please go ahead.

Hiten Boricha — Sequent Investments — Analyst

Hi, sir. Good morning. Sir, the first question is on the MDF — sorry, plywood. So you guided the volume growth of double-digit in the plywood segment. Can you make it more clear? What kind of volume growth is it we are looking at higher side of 18% to 20% or somewhere between 12% to 15%, which you have guided in the MDF segment?

Vishwanathan Venkatramani — Chief Financial Officer

So it’s around 10% volume growth.

Hiten Boricha — Sequent Investments — Analyst

10%. Okay. And sir, my second question is on the capex. We are doing a capex of INR500 crores, which is, I guess, on the — it is of MDF of 2.31 lakh capacity. So how will our debt look like at the end of the year? And what will be our post capacity after concluding this capacity, what would be our capacity look like post this capex?

Vishwanathan Venkatramani — Chief Financial Officer

Okay. We have an existing capacity of 660,000 cubic meters, and we are adding another 230,000 cubic meters. So post expansion, our capacity will be 890,000 cubic meters. And the new capacity is expected to be commissioned in Q2 FY ’25.

Hiten Boricha — Sequent Investments — Analyst

Okay. And sir, on the debt side?

Vishwanathan Venkatramani — Chief Financial Officer

Excuse me?

Hiten Boricha — Sequent Investments — Analyst

On debt side, sir, how will our debt look like by end of this year? So, is it…

Vishwanathan Venkatramani — Chief Financial Officer

We will be taking new debt for the expansion. So it will depend on how shipments progress. But I think as our gross debt would probably be about INR300-odd crores in the — at the end of FY ’24.

Hiten Boricha — Sequent Investments — Analyst

Okay. Okay, sir. That’s it from my side. Thank you.

Operator

Thank you.

Vishwanathan Venkatramani — Chief Financial Officer

Thank you.

Operator

Next question is from the line of Sanjeev Goswami from Fractal Capital. Please go ahead.

Sanjeev Goswami — Fractal Capital Investments LLP — Analyst

Yeah. Good afternoon, sir, and thanks for the opportunity. Sir, I have a couple of questions. First is, if I look at my domestic realization, that is still at 80% premium to the export realization. So first question is, why are we not looking at reducing the prices in the domestic market and capturing the market share and the marketplace before a new capacity has come up rather than competing in the export market and reducing the realizations?

Vishwanathan Venkatramani — Chief Financial Officer

Okay. So cutting prices does not work in the domestic market. It does not help you to gain additional market share because as soon as one player cuts prices, others follow suit immediately. So the cutting prices formula does not work in the domestic market.

Sanjeev Goswami — Fractal Capital Investments LLP — Analyst

Right, sir. So today, the pricing discipline is there because market is dominated by the larger organized player, but you also mentioned there are lots of unorganized players coming up over the next one or two years. So how do we expect the pricing discipline to stay, especially with these unorganized players coming up?

Vishwanathan Venkatramani — Chief Financial Officer

Okay. There are about eight to 10 unorganized players in the MDF segment currently. And we do not expect to see too many unorganized players coming into this segment over the next couple of years.

Sanjeev Goswami — Fractal Capital Investments LLP — Analyst

Sir, just a follow-up on this unorganized player market. Can you give us some idea in terms of what is the current capex per CBM for putting up a new MDF capacity? And what is the minimum economic size? Just to understand how much is capital the barrier to get into this industry?

Shobhan Mittal — Managing Director & Chief Executive Officer

Project cost per cubic meter capacity about INR22,000 cubic meter and what’s an economical side?

Vishwanathan Venkatramani — Chief Financial Officer

Well, you see the project cost per unit of capacity installed definitely has increased in the recent years, especially given the Russia-Ukraine war, which has resulted in cost of most raw materials in Europe going up. So it’s hard to say what is the, let’s say, economical number because the current margin number is where it stands as of today. Most of the plant suppliers are full with orders, backlog of order book is close to two to three years now. And as a company, we either had to choose to wait for the cost of machinery to come down or let go of growth — and let go of growth or take a decision. And hence, we’ve decided to go ahead with the decision. It could have — the decision can result in an additional investment cost of about 10% to 15% as opposed to had this been done maybe two to three years ago.

Sanjeev Goswami — Fractal Capital Investments LLP — Analyst

Right. Sir, my question was more from the perspective like we are putting up 225,000 as a new capacity. Can somebody put up smaller capacity like 20,000, 25,000. Is it possible? And machines available for that?

Vishwanathan Venkatramani — Chief Financial Officer

No. That’s not — especially with the type of machinery that we use in MDF, 20,000, 25,000 plants will never be economical. I think even the smallest Chinese plants today, we are talking of capacities maybe of 70,000 to 80,000 cubic meters. But as a company, we are consciously deciding to go with the tried and tested European technology, which we have experienced from the very beginning of our business. And for that, this is a reasonable capacity, smaller for European plants are no longer economical.

Sanjeev Goswami — Fractal Capital Investments LLP — Analyst

Okay. Simply the — some unorganized may comes up and used to put up 70,000 to 80,000 cubic meter kind of capacity, you will still need approximately INR100 crores kind of capital investment, right?

Vishwanathan Venkatramani — Chief Financial Officer

Yes. Well, I mean, INR100 crores, I would still say a majority of these unorganized plants are not even new. They’re bringing in secondhand machinery.

Sanjeev Goswami — Fractal Capital Investments LLP — Analyst

Okay. Thanks a lot, sir. That’s it from my side.

Vishwanathan Venkatramani — Chief Financial Officer

Thank you.

Operator

Thank you. A request to all the participants, please restrict to two questions per participant. The next question is from the line of Ashish Kumar from Infinity Alternatives. Please go ahead.

Ashish Kumar — Infinity Alternatives — Analyst

Thank you, sir. I think for providing a good clarity. From whatever I could make or it seems that the market seems to have bottomed out, and we are looking at a volume growth back again, even the export realizations are going higher. Sir, do you — but we also have a cash balance of INR185 crores. How much do you think the cash balance will be put in the new project in the next 12 months from internal accruals?

Vishwanathan Venkatramani — Chief Financial Officer

Okay. So the INR185 crores you mentioned is the net cash balance. So our gross cash balance was INR335 crores. So — and yes, we expect to put approximately INR300-odd crores in the expansion project. So while we will be taking some debt for the expansion, we expect to be net debt-free in FY ’25 when the project is completed.

Ashish Kumar — Infinity Alternatives — Analyst

Sure, sir. No sir, my question was that given the fact that we have such a strong cash flow and even in the — probably near the bottom of the cycle, we are still making a healthy cash flow of INR45 crores, INR50 crores a quarter. Does it make sense to increase either the dividend payout or do a buyback? Or are we planning some other expansion outside of MDF in our business?

Vishwanathan Venkatramani — Chief Financial Officer

See, we are looking at some projects, but we are very early in the initial stages. So I don’t think we are looking at any major spends over the next two years. But we’ll have a real look at our cash flows once the project is completed and then decide on what alternatives it can be deployed profitably.

Ashish Kumar — Infinity Alternatives — Analyst

Sure. But sir, from whatever it seems, it seems that we will have substantial additional cash flow. So I would request you if you can have a deeper look in terms of, not waiting for the project to get done, because the project — most of the orders of the project, I would presume would have been given already, right?

Vishwanathan Venkatramani — Chief Financial Officer

Yes, that’s true. But we don’t want to take any risk on the project that we run out of internal accruals and have to go for additional debt for the project. So that’s the reason why I mentioned that we’ll be taking a look at the cash balance once the project is completed.

Operator

Thank you. Ashish, sorry interrupt you. I’ll request you to join the queue again. A request to all the participants, please restrict to two questions per participant. Next question is from the line of Arun Baid from ICICI Securities. Please go ahead.

Arun Baid — ICICI Securities Limited — Analyst

Just one question, Shobhan ji to you. We mentioned that the margins would be between 23% to 25% incrementally from next year. And in this quarter, because the mix was adverse, as mentioned, export was higher. Adjusting for that, our margins would be well over 24%, 24.4% to be precise. And now export prices are going up from Q2, as you mentioned. So is this margin guidance a bit conservative? Or are we — am I missing some piece?

Shobhan Mittal — Managing Director & Chief Executive Officer

No, given the current market conditions, we are quite confident of the existing margins. Of course, what we have not factored in certain elements, obviously, like if any protective measures against imports come in or if the export prices move up drastically when those would contribute positively towards the margins even more so.

Vishwanathan Venkatramani — Chief Financial Officer

Plus, we have also factored in the additional brand spend that we’ll be doing in the current year.

Arun Baid — ICICI Securities Limited — Analyst

Okay. Okay. So it looks a bit conservative, sir. So I just want to clarify. Thanks.

Operator

Thank you. Next question is from the line of Ritesh Shah from Investec India. Please go ahead.

Ritesh Shah — Investec — Analyst

Yeah. Hi, sir. Just two questions. Sir, first is on exports. I think one of the earlier questions indicated that we are hardly making any money on export volumes. Just wanted to understand the thought process, to what threshold you will say no to exports? And rather than that, why not push material into the local markets? I’m looking at some numbers, sir. Any threshold that we will say no for exports, if it’s not making money? Or is it more of a volume game? Or how should one understand that?

Shobhan Mittal — Managing Director & Chief Executive Officer

So it’s not just a volume game. Please understand, as Mr. Venkat has mentioned earlier, that we have experienced in the past where we have said that let’s take price cuts because margins are comfortable and let’s gain market share. But what we have noticed is that, basically all organized players have concurrently taken price cuts, I mean, not even with a gap of more than two days. Everyone reacted instantly. And all it does is basically reduce the overall realizations of all the companies, but the volumes of all companies remain similar. So it doesn’t — we’ve experienced this and have consciously decided not to take such actions.

Exports are not making us lose money. And one of the, let’s say, the tangible benefits of doing the exports is, it allows us to run our plants at a much higher efficiency, both in terms of operational costs and in terms of capacities. So that also results in higher operating margins for the domestic production because the overall cost of production comes down drastically when the volumes are being produced at higher capacities.

Ritesh Shah — Investec — Analyst

Okay. Sir, I have another question. Sir, Venkat ji earlier in one of the questions did answer that the differential in pricing for imported goods has come down to 10% to 12%. Sir, can you give us some absolute numbers over here if I had to look at, say, Vietnam MDF prices, would it be at $220, $250 plus freight plus import duty? If you could just quantify those numbers just to get a sense on that 10% to 12% differential?

Shobhan Mittal — Managing Director & Chief Executive Officer

Current scenario prices are somewhere depending on the country, somewhere between $200 to $210 per cubic meter.

Ritesh Shah — Investec — Analyst

Okay. So there has been no increase over the last three months?

Shobhan Mittal — Managing Director & Chief Executive Officer

There has been a 5 to — no, there has been a $5 to $10 increase. I mean, these have gone down to about $185.

Ritesh Shah — Investec — Analyst

We went past the regulatory filings as well as the annual report. Sir, can you please comment on the sourcing of wood? Do we have any plans to get the sourcing FSC certified anytime in the future?

Shobhan Mittal — Managing Director & Chief Executive Officer

So we are — as a company, we are FSC certified. But India, there are two types of FSC certification. There’s a control wood and there is a chain of custody. Because we are — our — majority of our raw material is agroforestry and not natural forest, majority as in all of our raw material is agroforestry. Hence, we can only fall under the control wood specifications. There is very few sources of timber, which are actually FSC certified, which are from the government. So as for the requirement of FSC certified products when we are selling is when we source FSC certified raw material. But that is primarily a function of the demand of FSC certified finished product. But as a company, we are completely compliant with FSC cycle.

Operator

Thank you. Ritesh Shah, I’ll request you to join the queue again for a follow-up question. The next follow-up question is from the line of Udit Gajiwala from Yes Securities. Please go ahead.

Udit Gajiwala — Yes Securities — Analyst

Sir, just one clarification. On the import side that we are looking at, without anti-dumping duty with the coming year, what kind of total domestic demand could be catered by imports for the next fiscal, if there is no anti-dumping duty?

Shobhan Mittal — Managing Director & Chief Executive Officer

Well, we’ve been seeing a drastic increase in imports. But I think at the current levels with the domestic production capacity is also going up, please do keep in mind that imports are only primarily effective in the coastal areas. North India imports are not such a big threat. And North India is one of the major markets for MDF in [Indecipherable]. So I don’t foresee imports from the current levels going up in a very drastic manner. If there is no protection coming in, do also keep in mind that international prices are on the rising trend. India is always at the bottom of the ladder when it comes to the preference markets for the foreign producers. So when prices in the international markets are increasing, that would also result in their focus shifting away from India. So I don’t foresee a major jump in the import volumes coming into India.

Udit Gajiwala — Yes Securities — Analyst

Thank you so much for answering that.

Operator

Thank you. Next follow-up question is from the from the line of Achal Lohade from JM Financial. Please go ahead.

Achal Lohade — JM Financial — Analyst

Sorry. Just wanted to check, given now Greenply has also started supplies — MDF supplies in the market, how do you address the — if there is any potential confusion in the market or channel partners?

Shobhan Mittal — Managing Director & Chief Executive Officer

I don’t think there is anything to address. I think both companies have very clear identities. And we treat them just like any other competitor. Most of the MDF networks are not single brand dealers or distributors. They have multiple brands in that forum [Phonetic]. And Greenply will operate in the same network, I’m quite sure. But I don’t think that will result in any confusion per se. I think both — at least in the MDF industry, both brands are fairly established and most people are well aware that Greenpanel and Greenply are two separate entities. I mean, even today in the MDF — in the plywood business, although we are a small player, but we are competing in the same segment. And, I mean, there is no confusion per se.

Achal Lohade — JM Financial — Analyst

Got it. And in terms of the flooring, if you could quantify what is the mix of flooring in our — in terms of volume and the value for FY ’23?

Vishwanathan Venkatramani — Chief Financial Officer

Okay. For Q4, flooring volume was 1,054 cubic meter, value was INR7.88 crores, and realization was INR74,789 per cubic meter. And if you look at all four quarters, volume was 3,929 cubic meters and value was INR27.93 crores.

Achal Lohade — JM Financial — Analyst

This is for flooring, right, sir?

Vishwanathan Venkatramani — Chief Financial Officer

Correct.

Achal Lohade — JM Financial — Analyst

Got it. And just one question in terms of the imports, have you seen in the last month or two, March, April, any reduction in terms of the import of value on a month-on-month basis?

Shobhan Mittal — Managing Director & Chief Executive Officer

Reduction in the import value. No, I’m not aware of — you mean — are you talking about volume or value?

Achal Lohade — JM Financial — Analyst

Value, imports value, value of total MDF imports in India for the month of March and April. Are they seeing a decline?

Shobhan Mittal — Managing Director & Chief Executive Officer

No. What I have heard is that, there has been some increase in the price of imports. I haven’t heard of any decline in pricing.

Achal Lohade — JM Financial — Analyst

Not pricing, sir, value in terms of — if there is a volume reduction compared to the previous month of January, February.

Shobhan Mittal — Managing Director & Chief Executive Officer

No, I’ve not heard of a volume decline also.

Achal Lohade — JM Financial — Analyst

Got it, sir. Thank you so much.

Operator

Thank you. Next follow-up question is from the line of Shrenik from LIC Mutual Fund. Please go ahead.

Shrenik Surendra Bachhawat — LIC Mutual Fund — Analyst

Hi, sir. Thanks for the follow-up question. Sir, basically, I just want to understand on raw material inflation. As we are seeing that the number of plants and capacities in the wood panel space is increasing for plywood and MDF [Technical Issues]. For the plantation of timber, at least there is one year more for the supply to come in a big way. So…

Shobhan Mittal — Managing Director & Chief Executive Officer

I’m sorry, Shrenik, you’re not audible.

Shrenik Surendra Bachhawat — LIC Mutual Fund — Analyst

Hello. Is it better now?

Shobhan Mittal — Managing Director & Chief Executive Officer

Yes. Please go ahead.

Shrenik Surendra Bachhawat — LIC Mutual Fund — Analyst

Sir, basically, I’m trying to understand the raw material inflation bit. As the capacities in the wood panel space are continuously increasing in plywood and MDF space and the supply of timber is expected to increase at least one year from now as the plantations will grow. So normal expectation of market is that, the timber inflation will continue. But as we highlighted it at, we expect it to stay at stable at current levels. So I couldn’t understand what gives us the confidence that the timber gestation will stable or soften from here?

Vishwanathan Venkatramani — Chief Financial Officer

So it’s been relatively stable over Q4 and the month of April. So I think that’s what gives us the confidence to say that, yes, there may be a small movement in prices, but we are not expecting any major movement in prices.

Shrenik Surendra Bachhawat — LIC Mutual Fund — Analyst

No. Sir, I’m talking in terms of next one to two years, not like for the next quarter, but slightly over the medium term.

Vishwanathan Venkatramani — Chief Financial Officer

Okay. Plantation activities have started, both in Northern and Southern India as all the organized players are aware that raw material is critical for their current and future business plans. So I think, yes, and since these trees are fast-growing species, especially in the MDF segment, they are harvested after a period of three years. So we don’t expect any major shortfall in the coming years.

Shrenik Surendra Bachhawat — LIC Mutual Fund — Analyst

Thank you.

Vishwanathan Venkatramani — Chief Financial Officer

Thank you.

Operator

Thank you. Next question is from the line of Ashish Kumar from Infinity Alternatives. Please go ahead.

Ashish Kumar — Infinity Alternatives — Analyst

Thank you for taking my second question. I just wanted to understand what is the current gross margin that we are working on in MDF?

Vishwanathan Venkatramani — Chief Financial Officer

So if you look at FY ’23, our gross margin in MDF was 60.9%. And for Q4, it was 56% like already mentioned earlier in the call. Q4, the increase in export volumes had an impact on the gross margins and also the EBITDA margins.

Ashish Kumar — Infinity Alternatives — Analyst

Sure. And this gross margin includes the cost of labor that we use at the factory or does…

Vishwanathan Venkatramani — Chief Financial Officer

No. It’s just — it’s only raw material cost.

Ashish Kumar — Infinity Alternatives — Analyst

Sir, if you look at the contribution, what would it be, let’s say, in Q4 contribution margin post…

Vishwanathan Venkatramani — Chief Financial Officer

If you can give me a call tomorrow, I’ll share the data with you.

Ashish Kumar — Infinity Alternatives — Analyst

Sure. Maybe we’ll connect offline, sir.

Vishwanathan Venkatramani — Chief Financial Officer

Okay.

Ashish Kumar — Infinity Alternatives — Analyst

Thank you.

Operator

Thank you. Next follow-up question is from Harsh Shah from Dalal & Broacha. Please go ahead.

Harsh Shah — Dalal & Broacha — Analyst

Yeah. Thanks for the follow-up. I just wanted to understand, is there any scope of selling value-added products in the export market? As you said that the Middle East is a big market for export, and we are seeing a huge real estate boom also. So is there any scope of selling value-added? And if you could highlight any reason why more of plain MDF is being sold there?

Shobhan Mittal — Managing Director & Chief Executive Officer

See, the reason for this is — we are selling some value-added products in the export market, but that is limited to the, let’s say, the moisture-resistant grade of plain MDF. The reason why our value-added products like prelaminated MDF does not go to the Middle East is because the business model there is that there are a lot of short-cycle producers who are based in the Middle East, and who are bringing in the raw boards and laminating themselves. And the cost model there is basically, again, like in a very unorganized way. So it does not work out for us to be able to sell prelaminated MDF. We’ve done certain percentage, small quantities of [Technical Issues] sales historically, but it’s not a volume business.

Harsh Shah — Dalal & Broacha — Analyst

Okay. Okay. Yes. Thank you.

Operator

Thank you. Next follow-up question is from the line of Kushagra from Old Bridge Capital. Please go ahead.

Kushagra Bhattar — Old Bridge Capital — Analyst

Yeah, hi. Thanks for the opportunity again. Just one question on the earlier clarification, which I asked. Just curious on your high-growth expectations from the exports in FY ’24. So at one side, just want some perspective because at one side, you are seeing increase in imports, and at the same time, you’re preparing for growth in exports. So if we look at Southeast Asian market as a cohort, can you give some perspective on — as to how trade is going and the difference in the regional focus areas for different players?

And also, given that you’re building in for higher exports in FY ’24 and not expecting significant price increases in the exports as well. What are the driving factors for the margin sustenance or even that higher range of INR6,500 to INR7,500 EBITDA per CBM for FY ’24?

Shobhan Mittal — Managing Director & Chief Executive Officer

Sorry, I did not fully understand. What I understand is that, what you’re saying is that, why are we planning on doing for a large growth in exports when imports are increasing. Is that your question?

Kushagra Bhattar — Old Bridge Capital — Analyst

Yes, because if we look at Southeast Asian market as a cohort, there seems to be some sort of a contradiction because India is seeing increase in imports. And at the same time, Greenpanel, which is the largest player in MDF is preparing for growth in exports from India. So just wanting to seek your perspective as to how you think the trade is flowing in the Southeast Asian market as a cohort and the difference in the regional focus — regional areas for the different players in Southeast Asian market.

Shobhan Mittal — Managing Director & Chief Executive Officer

Well, I think the reason why we are looking at a growth in exports is because, obviously, domestic capacities are on the increase. Our own capacities are also increasing. And as mentioned earlier, we would like to utilize our full capacity export. Like I said, this may not directly be contributing with its own pricing, the margin may not be sort of visible, but it does help us in improving overall operating margins of the company. And also given the fact that the new plant capacities are coming in, the new investment of our plant is happening, we would have some EPCG obligations from that point. And again, there would be a lull period where which would take time for us to absorb our entire capacity for the domestic market, as we have seen for the Andhra plant. Hence, we would like to keep the export model always ongoing.

With regards to the pricing in the exports, as I said, we are always making sure that we are selling at price points where margins — it is contributing to and giving us a decent enough margin. And at the same time, we refuse orders which are not suitable to us where we are not getting any contribution towards margins on the export orders.

Kushagra Bhattar — Old Bridge Capital — Analyst

Sure, sure. Thanks and all the best.

Operator

Thank you. I now hand the conference over to the management for closing comments.

Vishwanathan Venkatramani — Chief Financial Officer

Thank you, everyone, for participating in this conference call, and we look forward to your presence in future quarters. Thank you very much.

Operator

Thank you very much.

Shobhan Mittal — Managing Director & Chief Executive Officer

Thank you.

Operator

[Operator Closing Remarks]