Century Plyboards (India) Ltd (NSE: CENTURYPLY) Q2 2025 Earnings Call dated Nov. 15, 2024
Corporate Participants:
Navin B. Agrawal — Moderator
Sanjay Agarwal — Managing Director and Chief Executive Officer
Keshav Bhajanka — Executive Director
Sumant Wattas — Chief Executive Officer, MDF Business
Arun Julasaria — Chief Financial Officer
Unidentified Speaker
Analysts:
Utkarsh Nopany — Analyst
Bhavin Rupani — Analyst
Amit Purohit — Analyst
Sneha Talreja — Analyst
Abhishek Ghosh — Analsyt
Unidentified Participant
Tushar Raghatate — Analyst
Rishab Bothra — Analyst
Udit Gajiwala — Analyst
Arun Baid — Analyst
Amit Kumar — Analyst
Karan Bhatelia — Analyst
Bhavesh Jain — Analyst
Pranav Mehta — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Century Plyboards Limited Q2 FY 2025 Results Conference Call. [Operator Instructions]
I now hand the conference over to Mr. Navin Agrawal, Head, Institutional Equities. Thank you and over to you, sir.
Navin B. Agrawal — Moderator
Good afternoon, ladies and gentlemen. I’m pleased to welcome you to this financial results conference call on behalf of Century Plyboards and SKP Security. We have with us Mr. Sanjay Agarwal, MD and CEO along with Mr. Keshav Bhajanka, Executive Director; Mr. Arun Julasaria, Chief Financial Officer and Mr. Sumant Wattas, CEO, MDF Business. We’ll have the opening remarks from Mr. Sanjay Agarwal, followed by a Q&A session.
Thank you and over to you, Sanjay ji.
Sanjay Agarwal — Managing Director and Chief Executive Officer
Thank you. Thank you. [Technical Issues] Navin. Good afternoon, ladies and gentlemen. Welcome to the FY 2025 Q2 earning call for Century Ply. Before we begin, I would like to provide the standard disclaimer. This discussion will focus on the Company’s historical performance and future prospects and is not intended as an invitation to invest in the Company. The results and analytical presentations have been shared with you and are available on the stock exchange website. I assume you have reviewed this, so I won’t go over the figures in detail.
Despite ongoing challenges in the industry, especially building material industry, with respect to raw material availability in timber segment and prices, our results are largely aligned with the guidance provided in our last call. The Company has delivered ever highest quarterly top line, both in standard and consolidated level. On a year-on-year stand-alone basis, our total revenue rose from INR962 crore to INR1,063 crore, while consolidated revenue grew from INR997 crore to INR1,183 crores, reflecting a growth of 10.6% and 18.7% respectively.
The Plywood division reported an impressive year-on-year growth of 21.1% with EBITDA margins of 15% despite experiencing cost pressures from rising raw material prices, the EBITDA margin in the Plywood segment has improved due to a favorable product mix and increased volumes. While we have revised our guidelines for H2 at 12% plus sales growth and EBITDA margins between 12% and 14%. Though, on year-on-year, there is a de-growth in the Laminate division, but on quarter-on-quarter, we grew from INR151 crore to INR161 crore in Q2.
EBITDA margin reduced to 7%, mainly due to higher marketing spend in Q2. Our Andhra Pradesh facility is scaling up and will contribute to Laminate segment sales supporting our growth outlook in the upcoming quarters. Our newly established MDF facility in Andhra Pradesh has shown remarkable progress, resulting in 75% year-on-year volume growth to the MDF segment in this quarter. The facility is ramping up swiftly and we anticipate it to become EBITDA positive by Q3. While we foresee substantial growth, supply pressures in the MDF market will limit average realization, but we expect over 40% value growth with some margin improvement in EBITDA.
In the Particle Board segment, intense competition continues to pressure, both average realization and raw material costs, with many smaller players in the industry. We are establishing a continuous process facility to enhance quality and reduce costs slated to start operations by the end of this fiscal year. We anticipate growth and profitability improvements once the facility is operational, though growth may remain flat until then and pressure on the margin side. Our PVC Board facility in Andhra Pradesh is ramping up quickly, expected to contribute nearly INR100 crores in revenue over time.
With that, I conclude my opening remarks and we welcome any questions you all may have. Thank you.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Utkarsh Nopany from BOB Capital. Please go ahead.
Utkarsh Nopany
Yeah, hi. Good morning, sir. Sir, my first question is…
Operator
Utkarsh, sorry to interrupt you, but your audio is not coming clear.
Utkarsh Nopany
Now is it better?
Operator
Sorry, it’s still breaking a little bit.
Utkarsh Nopany
Hello?
Operator
Yes, go ahead.
Utkarsh Nopany
Yeah. Sir, my first question is on MDF segment. Sir, if we see like our MDF sales realization for — from the new AP unit, it was down by around 20% compared to our stand-alone operation.
Operator
Utkarsh, sorry to interrupt you once again, the audio is still not clear.
Utkarsh Nopany
Hello?
Sanjay Agarwal
Yeah, yeah.
Utkarsh Nopany
Yeah. So, sir, what I was — what I wanted to know that our AP unit realization was down 20% compared to our stand-alone operation. So wanted to know from you what would be the normal difference in our realization on a sustainable basis in your viewpoint? And second is, on sequential basis, our AP unit capacity has been ramped up with increase in our volume and the realization has also improved for our AP unit by 8% on a Q-on-Q basis. But still our operating loss has gone up from around INR11 crore in June quarter to around INR16.5 crore in September quarter. So what is the reason for the same, sir?
Keshav Bhajanka
You see, the Andhra unit right now does not have or within it was the second quarter where we have just started our pre-lam unit, where we have just started ramping up value-added product. So because of this, the average realization is looking lower, the difference between the South and the North unit realization is unlikely to be very high. Sumant is on the call. Immediately after this, he will take that point up and he can tell you that what is likely to be the difference in realization. Secondly, with regards to the quarter, you see in this, there is a forex loss that has gone within the operating metrics, even though the forex loss normally would be in capital, but because of historical treatment, we have put in operating. If you remove the forex loss, the loss has reduced and within this quarter, we will be EBITDA positive.
Sumant Wattas
Yes, this is Sumant here. On the differential between CPIL and the South unit, for domestic sales, the differential will be actually quite minimal, maybe even less than 2% to 3% on a ongoing sustainable basis on realization. You will see some differential on account of exports because we also export from our South unit and that impacts the weighted average realization. So net-net, I think between 5% to 10% differential largely on account of exports with almost parity in domestics, that’s the kind of differential you can look at.
Utkarsh Nopany
Okay. Got it, sir. And sir, my second question is on the Laminate segment. Like our stand-alone sales volume was down by 10% on a Y-o-Y basis, which was not the case for the major peer, which has posted a growth in this quarter. And we are not able to ramp up our new unit for the past three consecutive quarters. Can you please explain the reason for that? And our yield realization was also down by 4.5% on a quarter-on-quarter basis in September quarter. What is the reason for that? And what is our realization outlook for the second half of FY 2025 for Laminate segment?
Keshav Bhajanka
So I think you put three, four questions, I’ll try to address all of them. The first was that, yes, in the current quarter, we have missed out on our volume guidance. The reason behind this is that we have seen weakness both in domestic, as well as in export sales, but we have taken a number of steps such as new introductions such as increasing our sales and marketing footprint in terms of the team, increasing our supply-chain and distribution network. So I am confident that in the second half of the year, we will be able to recover and grow at close to 10%.
With regards to the realization, the realization drop is due to an adverse product mix. If you look at standalone basis, we have taken price increases in one of them in 0.8 MM. So this is just due to a changeover between the mix, higher-end products are sold less, low-end products are sold higher. With regards to the Andhra unit, we are ramping it up. This is an export-based unit. So in this, it does take some time because first we’ll have to sample, customers will have to approve, then we’ll have to make containers, then we have to get certification. So I am sure that in the second half of the year, you will see a much better realization from the Andhra unit, but it did take longer than we had expected to scale up. However, second half of the year, we will be EBITDA positive at Andhra with healthier capacity utilization.
Utkarsh Nopany
Okay, sir. And sir, my third question is on the Particle board segment. So we have seen a sharp decline in the Particle board segment margin on a Q-on-Q basis in the September quarter and this three large capacity is likely to come into production in by this March quarter. So do you expect the margin pressure to increase further going forward and how long it is expected to continue in your viewpoint?
Keshav Bhajanka
Again, if you look at EBITDA without Forex, we would be at 11%. The reason that a gross profit is seeming lower is on account of the same Forex loss component that has been taken here and this is something that we will correct going forward. However, in Particle board, there is definitely pressure. Once the new capacities come up, the advantage that we face is that the operating costs will be far lower. We will have saving in terms of resin saving in terms of raw-material consumption, savings in terms of lower wastage. So all of those are going to aid us. But today, in terms of Particle board margins, considering the higher-costs of timber, yes, margins will be subdued till the new plant comes in. Hopefully post the new plant, you’ll see a revival in margins.
Utkarsh Nopany
And sir, lastly, just wanted to have a clarification on the guidance part, the EBITDA margin guidance which you have given in the presentation for MDF and Laminate for second half of FY 2025, whether that is for standalone basis or for a consolidated basis?
Keshav Bhajanka
No, that is for standalone basis. In MDF, we would say that margin for consol basis would be 10% plus. The sales growth numbers are on console, but the EBITDA margins are on stand-alone because it is difficult for us to put EBITDA margins till those realizations and that operating leverage comes in. So the EBITDA guidance is for stand-alone, but the volume guidance is for consol.
Utkarsh Nopany
Okay. Thanks a lot, sir.
Arun Julasaria
Thank you. Thank you. [Operator Instructions] The next question is from the line of Bhavin Rupani from Investec. Please go ahead.
Bhavin Rupani
Hi, sir, good afternoon. Thank you for the opportunity. Sir, my first question is related to Particle board. Earlier you had mentioned about reaching 50% to 55% utilization at the end of year-one post commissioning. Now given that market conditions, elevated input prices and incremental domestic supplies, do we still believe we can reach 50%, 55% utilizations at the end of year one?
Keshav Bhajanka
Are you asking about Particle board or MDF?
Bhavin Rupani
Yes, sir. Yes, sir, Particle board.
Keshav Bhajanka
So the new plant that is going to be commissioned?
Bhavin Rupani
Yes, sir.
Keshav Bhajanka
So in terms of the new plant, one thing that we have to keep in mind is that this is a superior technology compared to the existing unit. So the second — does the new plant comes on board, we will actually have to take a shutdown on the existing unit. So in that sense, reaching 50% plus of the new capacity will be much easier because we have already had a starting point of 30% plus.
Bhavin Rupani
So you are saying is that — sorry sir, continue.
Keshav Bhajanka
Once the new capacity comes in, the existing capacity will be taken under shutdown. But yes, we are confident that we will be able to ramp-up to 50% plus of the total rated capacity by the end of the first year of operation.
Bhavin Rupani
Okay. And sir, what about the new facility stand-alone — on a stand-alone basis, if we consider new capacity by when do we expect it to reach 50%, 55% utilization?
Keshav Bhajanka
So that is what I was trying to say, it will actually be earlier because we will have a head-start. Once the new capacity comes in, because the operating metrics are going to be far better, the cost is going to be far lower, we will be taking a shutdown of the existing capacity. So we will only be running the new capacity and the plant is likely to start production within Q4.
Bhavin Rupani
Okay. Got it, sir. Sir, second question is related to MDF. Can you help us understand what is the landed price of MDF right now and what is the breakup of FOB prices, freight cost and custom duties?
Keshav Bhajanka
Sumant, would you like to take this?
Sumant Wattas
You’re talking about the — about imports?
Bhavin Rupani
Yes, sir. Yes.
Sumant Wattas
Yeah. So look, imports landed net to customer right now are at about $205 to $208 for CDM levels. And you can assume port handling, custom duty to be about 5%, 7% of that and freight could be another maybe 30% to 40% depending on what month we’re talking about. It was very tight in June, July. In October, it has eased out a bit. But the net-net landing right now will be in the $205 to $208 per CDM mark.
Bhavin Rupani
Which stands out to be approximately INR18,000, sir, is that correct?
Keshav Bhajanka
Correct.
Bhavin Rupani
And sir, the average domestic realization is INR25,600 crores. So the difference is quite huge. So do we expect any price reduction in the domestic market?
Keshav Bhajanka
You’ll be happy to know that we have just taken a price increase in the domestic market as recently as last week. So no, we don’t expect any price reductions. And you must take into account that there are different rates, different categories of MDF. What you are speaking about is the lowest end of imported MDF. So that as a product is not even comparable to our DR. Forget the rest of the category.
Bhavin Rupani
No, sir. And what would be the price increase?
Keshav Bhajanka
Blended 3%.
Bhavin Rupani
Got it, sir. And sir, last question is related to Laminates. You mentioned that there is increase in marketing spends during the quarter. Is it possible for you to quantify what will be the marketing spends in Q2 versus last year?
Sanjay Agarwal
Okay. Marketing spend for Q2 would be lower, sorry for H2 would be lower than H1. But the exact data I don’t have it ready on me, I think when I or the CFO can get back to you with all details.
Bhavin Rupani
Got it. And what would be the utilization for our new AP Laminates plant?
Sanjay Agarwal
We would be looking at clocking in 50% plus utilization towards the second half of the year.
Bhavin Rupani
Got it, sir. Thank you so much.
Sanjay Agarwal
Thank you.
Operator
Thank you. [Operator Instructions] Next question is from the line of Amit Purohit from Elara Capital PLC. Please go ahead.
Amit Purohit
Yeah. Thank you for the opportunity, sir. Sir, just on the…
Sanjay Agarwal
Hi, Amit.
Amit Purohit
Hi, sir. Sir, on the plywood business, our volume growth has been very strong and even if I look at the first half number has been upwards of 15%, closer to 16%. So — and we are looking at in second half close to about 12%. Any reason — I mean, we’ve been seeing that first half most of the building material companies and in consumption has been a slower growth. In fact, second half is when the growth is expected to be very strong. So just two parts to this question. One, what is driving this growth? Any — and second, for us and second, why a conservative guidance in the second half?
Keshav Bhajanka
Yeah, yeah. See, the industry has been passing through a bad phase, the whole of building material industry. And what we decided in the beginning of the year that we have taken total growth of 14%. So we could motivate the whole force that we should now do our best in the first half. So they have tried their best and actually we have achieved more than what we can actually expect usually. So usually, whenever all these things happen and the industry growth will catch up somewhere. So we are being little conservative and tactical I should say and that’s why we are saying that in the next part of the year, it will not be exactly what we could achieve in the first part of the year. But yes, average what we have predicted, we will be able to achieve a growth we predicted for the year. And the EBITDA call, so right now the EBITDA is also little higher at 15%, but we still believe that by the end of the year, because again the prices of raw material may rise, they have stabilized now and they are not rising for some time, but still you never know because when the industry is passing through such stage of raw material rise and fall, these are absolutely out of our control. So that’s why we still say that it will be somewhere between 12 to 14 for EBITDA also.
Amit Purohit
Okay. And sorry, I might have missed out on if you’ve answered this, but the Laminate performance if I look at the standalone business also reported a decline. Any specific reason? Because I mean, I would presume that if Plywood is doing well, then Laminate should also do well. Any competitive intensity increasing or any we could…
Keshav Bhajanka
Yes, competitive intensity in the industry has increased and we have lost market share in domestic as far as Laminate is concerned. Even export, the traction that we expected, we have not gotten the same. So I think this is a transition period. But going forward, we are confident second half we will deliver on 10% plus growth and our margins would also be on guidance.
Amit Purohit
And so then what would — what are the steps? I mean just to try to understand to understand better what — because I mean, in first half, if I look at our volumes on a stand-alone basis are also down high single-digit and then we are talking about double-digit growth. I understand the new facilities will help us in achieving that. But what changes we would have taken in terms of whether it is on the trade schemes or better incentives or branding side or what all…
Keshav Bhajanka
Changes that we have done. Firstly, we have increased our fleet on street substantially. We have added a much larger team and that enables us to reach out to more customers, to more influencers, to more dealers. So I think that for the past couple of years, we had limited our fleet on street. This is the first time that we have taken such an aggressive expansion in the man path. So I think that is the first step. Secondly, we have launched our new catalog. The last catalog did not get us the traction that we had wanted to. So we have refurbished and launched a new catalog within last quarter. Due to the catalog launch expenses, you’re seeing a much higher marketing expense, but this is going to aid us in terms of volumes and already the response from the market has been very good. Alongside this, we have increased our supply chain network. We have opened three new RDCs and this is going to help us gain a lot of market share in those three locations.
So I think all of these steps are going to help us in gaining market share back and hitting our good target.
Amit Purohit
Okay. And last on the MDF, when I look at the stand-alone business, our gross margin sequentially declined, even gross profit for CVM also declined. I mean, I understand there has been increase in cost, but now we are talking about a price increase. So would you presume that — I mean, you have guided for a better margin in the second half, but that — that would be largely on the stand-alone thing, right, the 15% margin that…
Keshav Bhajanka
We are going to be looking at a higher margin in both like stand-alone, yes, we’ll be working to get back to 15% plus margin. Even for our new unit, I think that from this quarter, we will turn EBITDA positive and towards the second half of the year — sorry, second half of the quarter, that means in Q4, we will be looking to hit double digit EBITDA number. But on a conservative side, 15% plus should be EBITDA figure for standalone. And INR10 crore will be that we will deliver 10% plus consol for H2.
Amit Purohit
Okay, okay. Thank you so much. Thanks.
Keshav Bhajanka
Thank you.
Operator
Thank you. [Operator Instructions] Next question is from the line of Sneha Talreja from Nuvama. Please go ahead.
Sneha Talreja
Hi, sir, good afternoon. Couple of questions from my end.
Sanjay Agarwal
Hi, Sneha. Good afternoon.
Sneha Talreja
Thank you. Sir, just wanted to check with you on BIS timeline. You know, is there any revised guidelines which are coming up or are players actually getting BIS licenses? So some status there would be helpful.
Keshav Bhajanka
Hi, Sneha. So as of now, the latest update is that it is all status quo debree, BIS is likely to be implemented. And we as an industry are taking all the necessary steps to ensure that BIS implementation does not get deferred again. In all likelihood, February is when you will see BIS come into effect for all our products.
Sneha Talreja
Understood. Understood. Secondly, on extension to one of the previous asking question on the Laminate front, I wanted to check that what has really changed, like even this quarter was slightly on the muted side, which you mentioned. But even if I see your presentation, the revised guidance stands much lower than what you were early — earlier expectation was. Also why there is a significant change in terms of Laminates revision and guidance?
Keshav Bhajanka
We failed in the first two quarters and we need to post correct and we need to make sure that the reason that we have identified, we have taken steps towards it, but the traction that we are expecting on the ground, it is taking longer. We are confident that we have taken the right steps, but this recovery is not as quick as we had thought. So for that, the numbers are conserved, but I’m sure that we will at least deliver upon the and then build-on it from next year.
Sneha Talreja
Understood. And thirdly, on the Laminate side, sorry, on the MDF side, this quarter we have seen Plywood growing on a Q-o-Q basis, your other Particle board growing on a Q-o-Q basis, but your MDF has actually seen a drop on a Q-o-Q basis. This is despite your new plant commissioning and ramping up…
Keshav Bhajanka
Sorry, sorry. Sorry, sorry. No, no. There is some mistake. MDF, there is no talk. MDF, the volume growth has been substantial.
Sneha Talreja
Okay.
Keshav Bhajanka
You’re looking at standard…
Sneha Talreja
On the volume side.
Keshav Bhajanka
If you look at consol, yes. If you look at the consol number, then the volume growth has been tremendous.
Sneha Talreja
Understood, understood.
Keshav Bhajanka
I think it is 50% plus volume — console volume PVC. Yes. So console, the volume growth for this quarter is showing at…
Sanjay Agarwal
75%.
Sneha Talreja
Okay. I’ll just relook at the number, sir. Thank you.
Sanjay Agarwal
Yeah, yeah. Thanks. Thanks a lot and all the very best.
Keshav Bhajanka
Thank you.
Operator
Thank you. Next question is from the line of Abhishek Ghosh from DSP Mutual Fund. Please go ahead.
Abhishek Ghosh
Yeah, hi, sir. Thanks for the opportunity. Hello. Am I audible?
Sanjay Agarwal
Yes, yes. Yes, Abhishek. Yes.
Abhishek Ghosh
Yeah, yeah. Thank you so much for the opportunity, sir. Sir, if you can just help us quantify the exact Forex loss which was there in the entire P&L because when we go through the segmental numbers, there is an element of Forex loss in every segment. So if you can help us give us a consolidated number?
Keshav Bhajanka
So just one second, forex consolidated number. Segment wise, you can see as a difference between the EBITDA and the EBITDA after other than Forex, but just ask me a minute, do we have that data?
Abhishek Ghosh
Broadly INR11 crores, INR13 crores would be the number? Would that be a fair estimate?
Keshav Bhajanka
It is INR10 crore plus for sure. I think it is in CPTL, yes, the order number. Abhishek, I think Vinay from our team or the CFO will get back to you on this immediately.
Abhishek Ghosh
So, [Indecipherable] because of the capital integration we have made and we have imported mystery [Phonetic] in our new plant in panel, Century panel. So, according to me, we should not think that this is actually revenue loss or is — but it is a long-term loss, of course.
Keshav Bhajanka
But just to correct again.
Abhishek Ghosh
Yeah.
Keshav Bhajanka
The Euro is actually corrected. So from last quarter, the loss — the nominal loss that was there actually we will show as a profit in this quarter. So I think that is what you want to understand, right, what is the extra profit that will come in the current quarter? So that…
Abhishek Ghosh
No, I was just…
Keshav Bhajanka
Be able to get.
Abhishek Ghosh
I was actually trying to see normalized margin, so that is what I was just trying to look at the Forex number, but…
Keshav Bhajanka
That’s EBITDA. I’ll probably take it. EBITDA without Forex, for instance, in the stand-alone is slightly higher and the console — where is the console? Abhishek, Vinay, will get back to you with this data. We don’t have it readily, but you will get it in next 15, 20 minutes.
Abhishek Ghosh
No, problem. I’ll take it offline. The other thing about I think lot has been talked about MDF and other things, but let me also take this opportunity to congratulate the way you all have executed on the Plywood part of it. I think given where the industry is, you think that this competitive edge of taking market-share both from Jana [Phonetic], which is an organized, given that you’ve invested into the business over the last four, five years, this is likely to continue from here on and at some point, the market demand also turns favorable. Just your thought on the plywood segment part of the business.
Sanjay Agarwal
Basically in plywood segment at some time we will be where at about 4%, 4.5% market share of the total market. With the launch of Sainik and with progress in our prime, today we are at about 8% of the market or 8% plus percentage. Our actual target is to reach much, much higher and become in — we must build our minds and hearts, we must feel that, yes, now we are a successful really good brand in the market. So anything below 13%, 14% is not digestible by us. So we are working towards it, but it is taking time and I think only thing I can say right now with the market conditions in building industry that, yes, we are trying our best and it will happen in time to come. And we will keep on progressing, whether slow, sometimes fast. You have seen even in the past, you see there has been times when we have been slow because of the market conditions. But whenever we got a chance, we have accelerated in a particular period and gone beyond actually.
Abhishek Ghosh
Sure, sir. Sure. And sir, any thoughts on the timber price? Does the cycle continue for another 12 to 18 months or are there any updates on timber prices? Can they soften before that any thoughts?
Keshav Bhajanka
Abhishek, currently, timber prices are still on an upward trend. In the north, while the pressure is not that high in the South, there is acute shortage of timber. Sumant will be able to guide on this further. But I think that the timber — the timber issue is not — is likely to continue for 12 to 18 months, as you said. The new plantations that are hitting also, the demand is growing at a faster pace. So this is not something that will go away in the short or the medium-term. It will take its time. In the meantime, however, we have been able to take price increases, which I think is a very positive step because that is the only way to deal with the higher raw material cost.
Sumant, would you like to elaborate?
Sumant Wattas
Keshav, I completely agree with your assessment. I think the timber pressure will continue. In North, hopefully, things will stabilize sooner. In South, I think the situation will continue for at least another nine months.
Abhishek Ghosh
Okay. And then the plywood — sorry. In the plywood segment, have we taken any price hike in the recent quarter?
Sanjay Agarwal
I was going to speak about the cloud segment. In Plywood segment, the timber prices are stable. They are not increasing because now a lot of import is happening, which has actually now stabilized the prices in the market as far as the raw material for plywood is concerned. And we had taken a price rise last time, Vinay, even though the price rise we have taken in plywood…
Unidentified Participant
[Technical Issues]
Sanjay Agarwal
From 1st of August. So, from 1st of August, we have taken 2% which we have implemented fully.
Unidentified Speaker
Yeah. And for the rupee rise is there in our mind, but we are yet to decide about it.
Abhishek Ghosh
Got it, got it.
Unidentified Speaker
We don’t want to hit the kind of growth we are making and the markets are not so well. So we are rethinking and thinking. So still the price rise further is not decided. But the raw material prices have now stabilized as far as Laminate is concerned.
Abhishek Ghosh
Okay. Okay, fine. Sir, in terms of MDF, six months back, 12 months back, we were hearing many players looking to announce MDF expansion. Given where the profitability curve today is, is there a change in stance as far as the industry is concerned? And how should one look at the supply of MDF over the next maybe 18 months? If you can just help us at the industry level, that would be helpful?
Keshav Bhajanka
Abhishek, I think one competition is coming up with a line for material other than that, I don’t think anybody at this point is contemplating any sort of MDF capacity. I think that like you correctly said, today, based on these ROCE, I don’t think anybody would be looking to enter the market and this will — where the EBITDA margins reach 30% 35% plus, everybody sees this as a gold mine, but now that it is corrected, suddenly the industry does not seem so cost for us. So currently, we are not expecting any capacity additions, any further capacity additions, I mean and now it is a question of demand catching up to supply, which will play out, say, over the course of next 12 months.
Abhishek Ghosh
And MDF demand do you think is growing at broadly 15% plus or has that also kind of moderated?
Keshav Bhajanka
Again, we don’t have any authenticated number, but I would say that MDF demand would be growing at anywhere between 15% to 20%.
Sanjay Agarwal
This is evident from what — our plant performance also we see.
Keshav Bhajanka
From the ramp-up we have done in the south, you can see that the market for MDF is growing.
Abhishek Ghosh
Sure, sure. And sir, what about the South plant? What is it — what is the utilization for a Southern unit for the MDF today?
Keshav Bhajanka
Utilization for the South plant, just one second.
Unidentified Speaker
It’s about 50% plus already. So our capacity is around 20,000 CBM per month and we’re already doing around 12,000 CBM of sales from that front. So it’s 55%, 60%.
Keshav Bhajanka
Okay. Abhishek, where to see that you are thinking of the capacity is going to increase once the extension comes into play. The extension will take another, say, two quarters. Post that the capacity will increase further. This is based on the current capacity without the extension.
Abhishek Ghosh
Okay. So is it fair to assume whatever the current quarter’s MDF volume you have done on that about 12,000 to 14,000 CBM per month of volume can be further enhanced whenever you ramp-up to the full utilization. Is that the right way to understand?
Keshav Bhajanka
Yes. I think we will be able to do at optimum capacity utilization, Sumant, please correct me, but 24,000 to 24,500 CBM per month.
Sumant Wattas
Absolutely, Keshav, correct.
Abhishek Ghosh
Okay. Okay. Got that.
Keshav Bhajanka
But the other thing is extension is put in place. That is by end of FY 2025. That will be by over the course of the next two quarters, let’s say.
Abhishek Ghosh
Okay. Okay. Got it. The other thing is, if you look at your employee expenses, that’s increased by almost 29% on a Y-o-Y basis because you are investing, logged into these newer facilities while they have not all ramped-up. So you think about 50 bps to 100 bps of margin improvement over the next 18 months can come in because of operating leverage and employee spend is not increasing at a similar proportion to that of revenue? How should one look at that fee?
Keshav Bhajanka
You have this habit of putting us in a difficult position, but yes, definitely with operating leverage, because we have invested and we have overinvested right now to ensure that we are ready when the capacity is coming. Over the course of the next two to three quarter, you will see operating leverage play out and that will definitely lead to higher margins.
Abhishek Ghosh
Okay, okay. And the one last thing, in terms of cash flows, how should one look at the deleveraging part of the business now that we have incurred major part of capex, your working capitals are also elevated in the current quarter, how should one look at deleveraging from here on given that lot of the capex has already been incurred?
Keshav Bhajanka
By Q4, once the Particle board plant comes on-stream, then our capex cycle is pretty much over. I mean, there will be a small addition in terms of plywood, but that is not going to be very capex intensive. So from there, every quarter you will see deleveraging taking place. And I think cash flow generation from next year onwards will be quite good. So we’ll be able to get rid also the debt within, say, a period of 12 to 18 months.
Abhishek Ghosh
Okay. And do you see imports of MDF likely to increase in anticipation of a VAS residue, is that something that you’re seeing in the marketplace?
Keshav Bhajanka
Could be, but, Sumant, I think you would be able to answer that.
Sumant Wattas
Look, if you just look at the last two quarters, Q1 was quite tight on account of the shipping prices. I mean, typically the MDF imports are 25,000 to 30,000 CBM per month, but Q1 was more like 15,000 to 20,000, Q2 was even lower. We saw a little bit of uplift in October, but it’s not yet back to the 30,000 CBM per month level. So I would say it will be still muted as compared to last year, but little bit of pressure has been released from Q3 onwards. There’ll be slight increase, but not back to earlier levels of last FY.
Abhishek Ghosh
Okay. Okay. Got that. Thank you so much for answering my questions. Wish you all the best.
Operator
Thank you. Next question is from the line of Tushar from KamayaKya Wealth Management. Please go ahead.
Tushar Raghatate
Yeah. Good afternoon, sir. Thank you for the opportunity. Sir, in terms of realization, if we compare our peers, I think your realizations are higher in terms of MDF. So just wanted to know like as there is a huge capacity coming on-stream in MDF in pan-India basis, so do you — will you maintain that dominant position going forward? And how are you seeing the market of MDF considering the imports and all your take on that, sir?
Keshav Bhajanka
Sumant, would you like to take it?
Sumant Wattas
Yes, yes, sure, sure, Keshav, I wasn’t sure you know which one answering, let me take that. I think, you know, we spoke of this before. Right now, of course, there’s little bit of oversupply. But in this cycle, demand is still quite robust, right? So we see MDF, we are very bullish on the MDF demand. I think it will be in the 15% plus range in the times to come because fundamentally, it’s a robust product and has a wide application base. So that’s from a demand perspective, I think things look good. Also from a supply perspective, like Keshav mentioned, new supplies or new capacities will now actually slow down. So therefore, demand catching-up to supply will also play out in the next 12 to 15 months. So I would say overall the segment is poised for good growth, both from a volume and a value perspective.
And in terms of realization, I think the third question that you asked, because of this scenario, we are pretty confident that realizations, you know, we hope to maintain full position and leadership on the realization front on account of the macro picture, as well as because we continuously invest into high value-add products, which also help us beat some of the imported materials and the unorganized players in the segment.
Tushar Raghatate
Got it, sir. And sir, in terms of — in terms of growth for next financial year, like post if I ask maybe from Q4, how are you seeing the Q4 vis-a-vis the last Q4?
Keshav Bhajanka
We have already given our guidance because in the investor presentation itself. So in H2, we believe that we will have 12% growth in plywood on a consol basis with a 40% growth in MDF, 10% in Laminate and particle board flat. So this is our guidance for H2.
Tushar Raghatate
Fair enough, sir. Fair enough, sir. That was helpful. Thank you, yeah.
Operator
Thank you. Next question is from the line of Rishab Bothra from Anand Rathi Shares and Stock Brokers. Please go ahead.
Rishab Bothra
Hello. Good afternoon, sir.
Sanjay Agarwal
Yeah, hi, Rishab.
Rishab Bothra
Thank you. Thank you, sir. Two, three things. One, what will be — what will be our capacity starting FY 2026 because you mentioned one of the facility, one of the segment will — old plant will shutdown and new capacity will come up. If you could segment wise capacity FY 2026?
Keshav Bhajanka
For capacity, would you like to? Yeah. So basically the new capacity will come on-board for particle board and that will be a 800 cubic meter per day production unit. Currently, we are at 250 cubic meter capacity. So that is going to be a ramp-up that takes place. We’ll be going from 250 to 1,050. But in all honestly, the existing unit will then be shut. So we’ll be looking at a effective capacity of 800 cubic meters per day for particle board.
Rishab Bothra
Got it. So 1,000 plus will be available for 2027?
Tushar Raghatate
Yes.
Rishab Bothra
Okay. Okay. And sir, in respect to raw materials, can you let help me, wood chips or wood waste is used in particle board as well as MDF and raw timber is used in plywood?
Keshav Bhajanka
And — so today in plywood, you will use a higher girth of timber, whereas in MDF and particle board, you will be using timber that is of a lower girth. So in plywood, the minimum plantation cycle used to be six to seven years for eucalyptus and is planted in a different way with only 500 plus supplings per-acre, whereas for MDF, particle board or for paper, the typical plantation cycle is 1,100 supplings per-acre and the tentative timeline is four years. It can be three to four years also.
Rishab Bothra
Okay. And with respect to cannibalization, which are the segments you see in furniture cannibalizing one another? Let’s say earlier it was made of plywood, now completely made of MDF or particle board. So demand for that segment for plywood will reduce. What’s your sense?
Keshav Bhajanka
India’s plywood capacity today would be close to 10 million cubic meter. China’s current capacity for plywood is close to 170 million cubic meters. So we are at a very, very early nascent stage as far as this industry is concerned. So while cannibalization will take place, I believe that all our segments are going to grow. Of course, MDF and particle board because of the extremely low-base are going to grow faster, but I am fully confident that we’ll see sustained growth in plywood as well. We are right now at close to 1/20th of China’s capacity. So they’re not at that stage yet.
Rishab Bothra
And last question, by when do we see tapering of debt? I mean, peak that will be FY 2026?
Keshav Bhajanka
So like I said again from the end of Q4, you will see debt reduction on the books quarter-on-quarter.
Rishab Bothra
Okay. Thank you. I’ll come back in queue if further questions are there.
Keshav Bhajanka
Thank you.
Operator
Thank you. Next question is from the line of Udit Zajiwala from YES Securities. Please go ahead.
Sanjay Agarwal
Hi, Udit.
Udit Gajiwala
Yeah. Hi, sir. Most of the questions have been answered. Sir, just one thing, the growth that we have seen in plywood, it’s very commendable and I’m sure that we have been gaining market share. So is this more to do with the timber issues that are there right now, which is trending the unorganized? And like you mentioned that your target for your own market share is way higher than like the current 7%, 8%. So incrementally, what will be the steps? I know it’s a very longer view question for you to answer maybe. But just if some light that you can throw like consistently how can we grow our market-share in such industry where it is dominated by unorganized?
Sanjay Agarwal
Yeah, yeah. So, see, we have been growing and we have been increasing our percentage and few years back, we were saying that we are about 4%, 4.5% of the market. Now we are 8.5% or about 8.4% of the market as far as plywood is concerned. So consistently, we have grown, but yes if I see, yes, there could be some support from the raw material availability. Some of the local manufacturers, small manufacturers may not be getting enough raw material and we because we are able to import in large quantities, we are having able to manage the quantity enough. But that may be to some extent. But otherwise, you see, we have seen that every two, three years we get a chance where we — all our whatever we have done, so we are able to focus on certain parameters or excellence we have taken in the market. And those parameters actually help us.
Right now also, we are working on certain parameters. So, earlier all experiments have been completed and we have found where and how to operate. We are now trying some new things in the market. So those things, again, even if one of them succeed, that will give us a push maybe in another one year or in another two years time, again that will give us a big push actually in the market. So it is a convenience and you can say that, yes, the raw material availability makes a difference to us. But otherwise, because of our push and our new, new things, we are really — I’m unable to speak about those efforts absolutely right now. But earlier, all the efforts we have done, some of them failed, some of them have really succeeded and given us the result we have right now.
Udit Gajiwala
Understood, sir. Got it. And sir, lastly, on the MDF front, like you mentioned that there are no major capacities now coming up post this fiscal. So do you see some tapering of in the kind of hanger that you put price war that is going on to grow market share and we may see some price sanity coming across by all the players?
Sanjay Agarwal
I think it has to.
Udit Gajiwala
Okay.
Sanjay Agarwal
So is it market share? We are already gaining, if you look at the quantity, the growth in the Q — H1 is about 75% compared year-on-year, but yes, price sanity in the market should come, but the raw material is heating up right now actually. Otherwise, even these prices would not have been really bad for us. So the future is good because the raw material prices have to go down maybe in one year, one and a half year, two years, it has to go down and the market has to improve because not much capacity is coming up. I think except greens one capacity to my notice at least there is no other capacity coming up.
Udit Gajiwala
Right, right. Got it, sir. Got it. Thank you, sir and all the best.
Sanjay Agarwal
Thank you.
Operator
Next question is from the line of Utkarsh Nopany from BOB Capital Markets. Please go ahead.
Utkarsh Nopany
Yeah, hi.
Sanjay Agarwal
Hi, Utkarsh. Hi
Utkarsh Nopany
Thanks for taking my question again, sir. Sir, my question is on the MDF sector. So like you have mentioned that we are towards the end of the new capacity addition in this space and the excess supply may likely to get absorbed over the next 12-month period. So just wanted to know whether the large capacity addition, which is going to come in particle board category is in — is likely to delay the recovery in the MDF industry demand supply fundamental as the low-end MDF demand could be catered by the high-end particle board product category?
Keshav Bhajanka
So, I think you need to look at it a little differently. See, each of these are individual segments. I mean, yes, it can be substituted, but each have their own market. So today, particle board capacity being added will not have a detrimental impact on MDF. Both markets are likely to grow. Again, I’ll take China’s example, which has maybe 160 million, 170 million cubic meter plywood capacity, 50 million to 60 million of MDF capacity and 45 million to 50 million of particular board capacity. So today, these segments are not really going to impact each other that much. But yes, there is growth and that is why these capacities are coming in. The market is growing that there is no doubt for all product categories, for all three of these product categories.
Utkarsh Nopany
No, sir, I understand your point from long-term point-of-view, because why I was asking because the other company which is also coming up with the particle board plant, they are saying that they would try to tap the low-end MDF category, which can easily be substituted by their high-end products — particle board. So maybe for the next few quarters, whether the large particle board capacity addition would result into pricing pressure for the MDF sector, sir?
Keshav Bhajanka
Again, the lowest category that you are talking about, practically most of the organized players are not in that category. The import substitution material, that is a much, much lower grade material and that in all likelihood is going to impact the imported — the import — the people who are importing MDF, because you see it is a lower density material, the material will not pass BIS standard. So in that particle board could substitute, but as a branded player, I cannot manufacture that material. So for me, it is not likely to impact.
Utkarsh Nopany
Okay. And sir, lastly, like if you can give me some sense, like what would be our estimated net debt at the end of March 2025 and what would be our average depreciation trade policy for our new capex?
Keshav Bhajanka
The depreciation policy will remain consistent. We are not going to change our depreciation policy. In terms of debt, I think we have already put it in the investor presentation, but for further details, the CFO can clarify to you offline.
Utkarsh Nopany
For depreciation, sir, like our depreciation rate has been consistently going down. So for that reason, just wanted to know, what is the kind of depreciation rate we assume for the new capex?
Keshav Bhajanka
Depreciation rate has been going down, okay, one second. I think depreciation rate going down could be because some machines are fully depreciated rather than the CFO is on call just one second.
Sanjay Agarwal
Arun ji?
Keshav Bhajanka
Just a minute, Ankit.
Sanjay Agarwal
So, your name is Utkarsh, na?
Utkarsh Nopany
Yes, sir.
Sanjay Agarwal
From?
Utkarsh Nopany
BOB Capital, sir.
Sanjay Agarwal
BOB Capital.
Keshav Bhajanka
So, our CFO will connect with you offline and clarify because [Speech Overlap] readily available.
Utkarsh Nopany
Okay. Thanks a lot, sir.
Keshav Bhajanka
Thank you.
Operator
Thank you very much. Next question is from the line of Arun Baid from ICICI Securities. Please go ahead.
Arun Baid
Yeah. Hi, sir. Next year…
Operator
Sorry to interrupt you. Can you speak little louder, please?
Arun Baid
Yeah. Can you hear me? Is it okay?
Sanjay Agarwal
Hi. Hi, yeah.
Arun Baid
Yeah. Hi, hi. So sir, the question was more for the MDF segment. One, we heard that there were some price cuts taken in Q2, specifically in South India. Is that correct? And if, yes, you know, is this price hike taken of 3%, does it compensate for whatever adjustment was done in Q2?
Keshav Bhajanka
I think you can read this as out and out price increase. I don’t think Q2 saw any meaningful cut. So this is a pure play price increase and this is not South India, this is pan India what we have taken right now, the blended 3% increase, some markets will be more, some markets will be less.
Arun Baid
So sir, from Q3 onwards, if let’s say in Q4, on a like-to-like basis, we should be seeing the blended prices going up at least by 3% to 4%, right, realizations?
Keshav Bhajanka
Q4, definitely. Yes.
Arun Baid
And second thing is one, [Speech Overlap]
Keshav Bhajanka
Needs to say timber price is coming up, that competitive pressure continues…
Arun Baid
And sir, next year, you know, this year you’ll have the plant extensions which you mentioned about in MDF. So what’s the kind of utilization we should look at from your MDF business, specifically for AP plant next year because North plant is already running at full utilization.
Keshav Bhajanka
For AP, we will — I would say, we will comfortably be at 80% plus utilization for the whole of next year.
Arun Baid
And assuming timber stays where it is because next year timber prices you are saying might come down, if not or at least stabilize, then what can be the margins or EBITDA per CBM we look at from this business next year, I’m talking FY 2026, sir, first assuming…
Keshav Bhajanka
It is difficult for us to predict that right now as the MD just said, but we have given you guidance for H2 and our endeavor will be to deliver on that without sale to exceed that. Going-forward, we have said that MDF is a cyclical business, but overall, if you see any five-year period normally gets you close to a 25% EBITDA.
Arun Baid
So next year we should be way better off than our North plant, which is at 15% guidance, we should be much better than that in the 80 business because 80% utilization, we should be more than 18% 20%?
Keshav Bhajanka
Right now, I am not giving any guidance for next year, but the statements have said that H2, we will meet and deliver on our guidance and next year should look better. That’s all I can say.
Arun Baid
And sir, the Laminate business, which you mentioned so next year steady state basis, how do you look at the AP plant ramp-up next year?
Keshav Bhajanka
I think next year AP plant will be at a very good capacity utilization. We have done the initial steps. We have seeded the market, we have approached new customers. We have expanded our base into Europe and a number of steps that have taken place, but it takes time to play-out. Next year, we will be at a good capacity utilization as far as the Andhra unit is concerned.
Arun Baid
Sir, I understand, yeah, sir when you said good sir, would be at 60%, 80%, how should we look at it?
Keshav Bhajanka
We will be at two-third plus. Yeah.
Arun Baid
Thanks for it. Thank you.
Keshav Bhajanka
Thank you.
Operator
Thank you very much. Next question is from the line of Amit Kumar from Data Mine Investments. Please go ahead.
Sanjay Agarwal
Hi, Amit.
Amit Kumar
Yeah, can you hear me?
Sanjay Agarwal
Yes, absolutely.
Amit Kumar
Yeah, thank you so much for the opportunity. Just one question. Sir, for first half or for second quarter whichever, you have data available, could you please help break-down the revenue growth in terms of domestic versus exports, especially given the ramp-up in the AP…
Keshav Bhajanka
We don’t share that data. Unfortunately, we don’t share that data.
Amit Kumar
Could you at least sort of just help us understand qualitatively, good exports, given the — given the fact that the ramp-up in the AP unit has been significantly higher now and that’s an export oriented unit.
Sanjay Agarwal
Regarding MDF and then…
Keshav Bhajanka
Regarding Laminates, going forward, we are going to see good traction in export. So the growth rate in exports is likely to be higher than growth rate in domestic. This is due to the fact that as you rightly mentioned, the under capacity is predominantly an export based unit.
Amit Kumar
And in terms of MDF as well?
Keshav Bhajanka
No, MDF, we have the ability to export from Andhra, but the unit has been designed for the Indian market only.
Amit Kumar
Okay. So again, quantitatively in the first half, you know at a broader sort of company level, at least quantitatively — sorry, qualitatively, at least, can you sort of say that your exports would have been higher than your domestic like significantly higher, maybe moderately higher.
Keshav Bhajanka
In the first half of the year, there would be status quo. There would not be much change.
Amit Kumar
Thank you, sir. Thank you so much.
Keshav Bhajanka
Thank you.
Operator
Thank you very much. [Operator Instructions]
Unidentified Participant
Hello? Hello?
Operator
Yes, sir, you’re audible.
Arun Julasaria
Hello, somebody asked the question about the total forex loss for the quarter. On a stand-alone basis, it was INR1 crore approx and on consol basis, it was INR13 crore approx.
Operator
Thank you sir. [Operator Instructions] Next question is from the line of Karan Bhatelia from Asian Market Securities. Please go ahead.
Karan Bhatelia
Hi, sir. Thank you for the opportunity. Sir, just wanted to understand capacity expansion plan for the plywood industry for us given the fact that the Punjab unit is already delayed.
Keshav Bhajanka
In plywood, you see we have the ability to go beyond rated capacity. So currently, there is no scarcity of material because as you know, the rated capacity is based on six days working and plywood is — we can go beyond the same. Having said that, the decision could differ is only because we are looking at which is the best potential location to set it up. I think we are making good progress on that front also. And before the end of this financial year, we will close the decision of where to set up the unit. Post that, I think we have the ability to execute, put up the unit within a short time span.
Karan Bhatelia
Right. Short-term span as could be less than a year?
Keshav Bhajanka
Yes, less than a year. Definitely.
Karan Bhatelia
And second question on Sainik laminates, how do you see that product category? How is the distribution? How is the pricing and the margins over here, qualitative comments will be good.
Keshav Bhajanka
Yes, we are at a very nascent stage. We have only launched in certain geographies and the traction we have seen has not been good. So we are working towards it. But again, it is a competitive market. However, considering we are only in the one category in Sainik laminates, when we scale-up, it will be a profitable product.
Karan Bhatelia
Right. And the presentation, Q2 estimates which you’ve shared that growth is on Y-o-Y basis, right?
Keshav Bhajanka
Which one? Sorry?
Karan Bhatelia
The presentation, the table that you mentioned for second half growth across categories, volumes that is on the Y-o-Y comparison, second half to second half.
Keshav Bhajanka
The growth numbers are Y-o-Y and for consolidated. The EBITDA for stand-alone because it is very difficult to predict the EBITDA for the nine units until we see operating leverage there.
Karan Bhatelia
Thank you. That’s it from my end.
Operator
Thank you. [Operator Instructions] Next question is from the line of Bhavesh Jain from DB Investments. Please go ahead.
Bhavesh Jain
Hello, sir. Thank you for the opportunity.
Sanjay Agarwal
Yeah, hi.
Bhavesh Jain
Help me understand regarding the raw material prices. So if I recall in the call, we’ve mentioned that RM prices for plywood have been stable, but for MDF, it has been increasing on the higher-end. So can you just explain why there is such difference?
Keshav Bhajanka
Should I?
Sanjay Agarwal
See, as far as plywood is concerned, we are able to — because it’s higher-priced material finished good also and we are able to afford a higher price of timber. From the very beginning, there was a big difference in the price of MDF’s and plywood because MDF timber takes about three to four years to grow and plywood timber takes about six to seven years to grow. The plantation — timber is the same, the quality of the plywood — the species is the same, but actually they are planted little differently. So this is the first reason. The second reason is, in plywood, we are able to import now our raw material from Vietnam, from African nations, even up to Brazil also we are able to import and the prices may go down a little bit if the sea freight comes down actually. Right now because of the very high sea freight, we are facing certain higher costs, but still it has stabilized that even the local people are unable to increase their prices for plywood.
But as far as MDF and particle board is concerned, that timber is the same timber which the paper units consume. So basically this timber plantation in India was — the movement came because of ITC and WIMCO. So they were the ones to bring the plantation thing to India. And now all the paper industry and MDF industry depends on the same kind of timber. That is why there is a higher competition out there.
And for few years because the raw material prices were low, the plantation did not happen, say, for two years or 2.5 years, the plantation did not happen. That’s why we have already seen about one and a half year or two year of higher prices of timber. I think the higher prices may last about a year more and then it has to start coming down. So that is the basic difference between the two kinds of timber and the reason for higher pricing.
Bhavesh Jain
Okay, sir. So if I got it right, the supply let is more on the second type of timber, which is used for MDF, the lower plantation cycle which had?
Sanjay Agarwal
The demand there is more, but the main difference is this timber quality, we are unable to import for MDF and for particle board, we are unable to import. That’s why the local timber is still lower than the import cost. But in plywood, the import cost in the local have come equal. So that’s why the local prices now cannot go up.
Bhavesh Jain
Okay, okay, sir. Thank you so much.
Operator
Bhavesh, do you have any follow-up question?
Bhavesh Jain
No, no. Thank you so much.
Operator
Thank you. Next question is from the line of Pranav Mehta from Equirus Securities. Please go ahead.
Pranav Mehta
Yes…
Sanjay Agarwal
Hi, Pranav. How are you?
Pranav Mehta
Yes, I’m good.
Sanjay Agarwal
Yeah, your informations keep helping us actually, yes.
Pranav Mehta
Yeah, thank you. Yeah. So just one question with regards to the upcoming proposed capacity addition of Formaldehyde resin for developing in-house resin. So just wanted to ask like how much of our resin requirement is expected to be fulfilled via this upcoming capacity and what is the potential for reduction in our resin costs, if any?
Keshav Bhajanka
So we are taking — the capex is planned for 100%, but we are still deciding how much we will start-off with and the resin savings, we will have to figure it out as it goes, but there should be a definite saving. The main issue is the reason quality now has become a challenge and I think it is a challenge for most players because the manufacturers are very small scale units. So there we have been seeing in the recent past, the quality standards are not being maintained. So that has pushed us to this step. There should definitely be savings, but more than that, the quality and consistency of product will improve through setting up this unit.
Pranav Mehta
Okay. Okay, understood. Yeah, that’s it from my side. Thank you.
Keshav Bhajanka
Thank you.
Operator
Thank you very much. Next follow-up question is from the line of Rishab Bothra from Anand Rathi. Please go ahead.
Rishab Bothra
Yeah. Sir, in the Board meeting, we approved resins and Formaldehyde plant at Hoshiarpur. So any other backward integration which we are planning and why we operate for this? Are there pricing increasing at a faster pace?
Keshav Bhajanka
Like I just said, the reason that we have opted for this is because of consistency of raw material. We are seeing this as a challenge going forward and hence, we are setting up the infra and we are ensuring that for us quality should not become an issue. It should not be that because these smaller unorganized resin manufacturer, we face an issue in the market. That is the main objective. However, I am pretty confident that there will be a saving in this. Currently, there is no other backward integration that we are looking at it.
Rishab Bothra
Okay. And this will be utilized — I mean, complete requirement will be sourced from in-house?
Keshav Bhajanka
Yes.
Rishab Bothra
Okay. Okay. Thank you.
Keshav Bhajanka
In a gradual phased manner.
Rishab Bothra
Yeah, yeah, that understood. Thank you, sir.
Operator
Thank you very much. [Operator Instructions] As there are no further questions, I will now hand the conference over to Mr. Agarwal for closing comments.
Sanjay Agarwal
Thank you. Thanks, everybody for their time and interest in Century Plywood — Plyboard India Limited and we look forward to a very good winter in front of us. We hope everybody will enjoy, be healthy and we look forward to the growth of India with Trump coming in USA, everybody says that, yes, India will have a more favorable time, so we look-forward to that also and looking-forward to see you all in Q3 FY 2025 call. Thank you.
Operator
[Operator Closing Remarks]