Century Plyboards (India) Ltd (CENTURYPLY) Q4 FY22 Earnings Concall Transcript

Century Plyboards (India) Ltd (NSE: CENTURYPLY) Q4 FY22 Earnings Concall dated May. 17, 2022

Corporate Participants:

Sanjay Agarwal — Managing Director

Arun Julasaria — Chief Financial Officer

Nikita Bansal — Executive Director

Keshav Bhajanka — Executive Director

Analysts:

Arun Baid — Analyst

Rajesh Kothari — AlfAccurate Advisors — Analyst

Unidentified Participant — — Analyst

Hrishikesh Bhagat — Kotak Asset Management — Analyst

Jignesh Kamani — GMO & Co. — Analyst

Abhishek Ghosh — DSP Mutual Fund — Analyst

Sneha Talreja — Edelweiss — Analyst

Priyam Khimawat — ASK Investment Managers — Analyst

Udit Gajiwala — YES Securities — Analyst

Rajesh Ravi — HDFC Securities — Analyst

Gaurav — Bowhead India — Analyst

Kanishka Sarkar — Individual Investor — Analyst

Nikhil Agarwal — VT Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Q4 FY ’22 Earnings Conference Call of Century Plyboards hosted by ICICI Securities Limited. [Operator Instructions]

I now hand the conference over to Mr. Arun Baid from ICICI Securities Limited. Thank you, and over to you, sir.

Arun Baid — Analyst

Good evening all. On behalf of ICICI Securities, I welcome you to the Q4 FY ’22 results con call of Century Plywood. We have the top management of the Company with us who will give their opening remarks, post which the floor is open for question and answers. Before that, I’d just like to highlight the safe harbor, which was given by the company in the PPT, which is administered exchanges.

Over to you, Sanjay sir.

Sanjay Agarwal — Managing Director

Hi, everyone. Thank you. Thank you everyone for taking your valuable time for attending the Q4 FY ’22 Century Plyboards investor conference call. I am Sanjay Agarwal, Managing Director of Century Plyboards (India) Limited. I have alongside me Mr. Keshav Bhajanka; Ms. Nikita Bansal, both Directors, Executive Directors; Mr. Sajjan Bhajanka, Chairman; our CFO, Mr. Arun Julasaria; Mr. Nehal Shah, the Chief Strategic Officer and Head of Investor Relations are with me.

I presume that every one of you would have gone through our numbers in detail. Let me still brief you on the key highlights of Q4. After delivering good record sale in Q2 and Q3 this year, it gives me real pleasure to share that we achieved a new record once again of exceeding INR895 crores revenue in a single quarter and INR3,000 crore topline in a financial year, which is the highest till date.

While January sales got impacted due to COVID March ’22 bounced back strongly to register the highest-ever revenue in Q4. Our plywood and particleboard segment recorded a double-digit year-on-year volume growth, while laminate and MDF segments delivered single-digit year-on-year growth for the quarter. Our MDF and particleboard segments delivered highest ever EBITDA margin till date, with MDF and particleboard reporting margins of 32% and 29% respectively for the quarter. This was largely driven by robust demand across both the categories. Despite the sustained input cost pressure in core segment of plywood and laminate, we have been able to mitigate a large part of our gross margin pressure by taking corresponding price increases, though with some time lag and also to our operating leverage.

Our overall gross margins recovered 40 bps quarter-on-quarter to 35.5% in Q4 FY ’22 and the overall EBITDA margin for the quarter stood firm at 18.2% quarter-on-quarter. Despite rising input prices and our sustained aggression in brand spend, 6% in Q4 versus 4.7% and 3.4% year-on-year. Our plywood margins is stood at 15%, largely driven by operating leverages and ability to perform well. The laminate EBITDA margins were also at 15% for the quarter.

Price increases we have taken during the quarter and financial year, plywood 3% to 3.5% in Q4 and 7% to 8% in FY ’22 and 2.5% to 3% post Q4. [Technical Issues] in Q4, but 13% to 14% in FY ’22 and 3% after post Q4. MDF in Q4 about 20% in FY ’22, particleboard [Indecipherable] in Q4, about 15% in FY ’22 and 5% post Q4. Our MDF brownfield expansion at Hoshiarpur is as per schedule, and is expected to come on stream by end of Q2 or beginning of Q3 FY ’23. Our South MDF capex has received all requisite approvals, and the machinery has been higher. We expect the facility to come to stream in Q2 FY ’24[Phonetic].

Our greenfield manufacturing unit in Andhra would come up in two phases. The first phase is expected to become operational in Q2 FY ’24. Our working capital stands comfortable at 63 days in FY ’22, an improvement of six days compared to the last financial year. We remain a net cash positive company with net cash position of INR175 crores as on March 31, 2022. Our Q4 FY ’22 ROCE is stood at a healthy 35.2%.

Now, I hand over to our CFO, Sri Arun Julasaria, for his comments, and then it will be open for question answers.

Arun Julasaria — Chief Financial Officer

[Technical Issues]

Operator

Sir, sorry to interrupt, but we are unable to hear you, sir. If you can speak closer to the device, please.

Arun Julasaria — Chief Financial Officer

Can you hear me?

Operator

Yes, sir. Please proceed.

Arun Julasaria — Chief Financial Officer

So, good evening, ladies and gentlemen. I’m Arun Julasaria, CFO of the Company. First of all, I would like to speak the customary disclaimer that this call is to discuss Company’s historical numbers and future perspectives. In no way this should be construed as an invitation to invest in the Company. Our MD, Mr. Agarwal, has taken you through all of the macro and micro figures. So I would not like to add much to it, but I’d like to say that from this call only, sometime our MD said that we had a dream of at least INR1 crore per day. That dream we’ve already surpassed with speed of INR365 crores. This year, we have earned INR476 crores [Phonetic]. So that dream’s already surpassed. Now, new dream will be set. And we have grown our topline to INR3,000 crore. Our blended EBITDA margins have drastically improved from 15.8% to 18.6%. And if you see, the overall figure of EBITDA margins up from INR334 crore to INR557 crore. So, looking [Indecipherable] 66.7%.

This year, we have made change in our taxation system. Year-on-year following the old tax regime where the tax rate applicable of 30% [Indecipherable]. But now, we have migrated to the new tax system, where that applicable tax rates will be 25% and we will help overall applicable reductions. So, after making all the comparisons, we found that our tax outflow is almost same. So, we have migrated to new tax system. So, now onwards, we will dealing with the new tax system of 25%. And we’ll of only one unit in Assam. This year, we’ve also written off the credit card net credit of INR30 crores. After taking the result of writing off, net tax effect is around INR6 crore more, this would have been — if we would have followed the old taxation. There are [Indecipherable] crucial for any unjustified decisions made by department till last financial year. Almost all segments of the Company have done well, and we have done exceptionally well. And EBITDA margins have climbed, surprisingly improved from 10.8% to 14.1%. So, that is significant effect.

With these words, I’d make this forum open for our discussions. Finally, go ahead with your questions.

Questions and Answers:

Operator

Thank you very much sir. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Rajesh Kothari from AlfAccurate Advisors. Please go ahead.

Rajesh Kothari — AlfAccurate Advisors — Analyst

Good evening, sir. Congratulations for great set of numbers. Sir, just two questions from my side. One is on the raw material front. Any significant cost increase have you seen currently on the raw material side? And second on MDF, I missed your two lines. By whenever MDF capacity is coming on stream and some update on that.

Sanjay Agarwal — Managing Director

So as far as raw material is concerned, yes, there is some increases in North India, not in South India, so much in our Kandla unit also or not so much in even Guwahati unit also. But yes, there is an increase in North India. But then overall, whatever increases of costs had happened, we have been able to pass it on by the price increases. And yes, there is always a lag, so that much of burden the Company bears, but ultimately it gains. So that is as far as the price increase is concerned.

And as far as MDF capacity is concerned, the Hoshiarpur plant will be up by end of Q2 or beginning of Q3, and Andhra Pradesh plants should be owned by FY ’24 H2 end, Q3 beginning. All the machineries have been now ordered. The land is in our control. All the approvals have come from the government. So now things are in our control.

Rajesh Kothari — AlfAccurate Advisors — Analyst

So you say by when it will start, sir, AP?

Sanjay Agarwal — Managing Director

AP will be start by Q2 end or Q3 beginning FY ’24.

Rajesh Kothari — AlfAccurate Advisors — Analyst

Oh, I see Q3 beginning FY ’24, okay. And on the plywood side, since you are seeing very strong demand traction, can you give some details on that, that what is resulting into such a strong growth because I think it has been almost like four quarters where we are seeing such kind of a growth? So isn’t that the import has decreased [Phonetic] significantly that is helping? And how do you see the different steps what you might have taken in last two, three, four quarters like last time we were talking about go-to-market approach and many more such strategic decision? So if you can give some color on that, that would be useful.

Nikita Bansal — Executive Director

Hi. So actually, plywood demand for us and payment improving is because Number 1, real estate has again started booming. So, plywood is increasing for everyone for the industry overall, but we have been doing consistent branding now for two years straight. And we are going to continue that for the third year. Our branding is really helping in reaping us benefits. Last year, we did branding on Sainik as well as Century. And both brands have benefited from this advertisement. Every year we try and come up with new attributes and features like we come up with ViroKill, then we came up with Firewall, and both enhancing the product has helped us. Other than this, I also think that like we mentioned in the past that we’ve been working continuously on improving the JBM. Definitely, the minutes you focus the energy of the field on to channel expansion, on to getting better lead conversion, things improve. And that is what is reaping us benefit, and we hope that we continue to grow this way. We expect next year that we will have a 20% growth.

Rajesh Kothari — AlfAccurate Advisors — Analyst

Oh, is it? Okay. And what kind of margins would you like to see in plywood segment? How do you see the margins in that?

Nikita Bansal — Executive Director

Between 13% to 15% EBITDA.

Rajesh Kothari — AlfAccurate Advisors — Analyst

Okay. Between 13% to 15% EBITDA, okay. And what about the laminate segment. How do you see the growth in margins in laminate?

Keshav Bhajanka — Executive Director

Hi, Rajesh. Keshav, here. Our objective has always been a 20% topline growth. And I think we’d be missed if we have taken, particularly with BCG coming into play. We can look at a long-term growth of 20% ViroKill. Margins, as you already know, we have given a guidance of 14% to 16%. And we will be looking to maintain this guidance.

Rajesh Kothari — AlfAccurate Advisors — Analyst

You’re talking about the laminate segment. Am I right, Keshav?

Keshav Bhajanka — Executive Director

Yes.

Rajesh Kothari — AlfAccurate Advisors — Analyst

Okay. So basically, current margins at 12.8%. So from 12.8%, you’re saying that margins will inch upwards to 18% to 20%?

Keshav Bhajanka — Executive Director

Current margins aren’t actually 12.8%. If you look at it, there is a 2.5% plus inside from the BCG project. So, that is more of the nature for long-term investments, but it has been debited as an expense right now. If you consider that, we’re well within the 14% to 16% range.

Rajesh Kothari — AlfAccurate Advisors — Analyst

Okay. So basically, I think, next three to four quarters, we will continue to see this BCG expense. Am I right?

Keshav Bhajanka — Executive Director

Yes.

Rajesh Kothari — AlfAccurate Advisors — Analyst

Understood. Sir, and revenue — and the volume growth, which has been right now flattish. Am I right? In the fourth quarter also, I think the volume growth is about 1%. So you’re saying that will also improve? And what are the reasons for that?

Keshav Bhajanka — Executive Director

In Q4, after mid-January, we had limited growth in Feb and March, first. I think this has been common to most laminate manufacturers. Going forward, I’m sure that from Q1 onwards, we will see much better targets.

Rajesh Kothari — AlfAccurate Advisors — Analyst

Oh, I see. Super. Wish you all the best. I’ll come back in queue.

Keshav Bhajanka — Executive Director

Thank you.

Operator

Thank you. The next question is from the line of [Indecipherable]. Please go ahead.

Unidentified Participant — — Analyst

Yes, sir. Thanks for the opportunity. My question is looking for MDF. Let’s just say MDF realization per CBM has increased 30% to 40%.

Operator

Sorry to interrupt. Your audio is bit muffled. If you can keep some distance between the phone.

Unidentified Participant — — Analyst

Is it better now?

Operator

Yes, sir. Please proceed.

Unidentified Participant — — Analyst

Yes, my question is related to MDF. MDF realization per CBM has increased for 30% to 40% YonY. Moving forward for the upcoming quarters, can we expect that jump in realization?

Sanjay Agarwal — Managing Director

I think there is no further jump is expected, actually. There maybe whether once all production capacities come up, we can look at a little bit of softening. But still I think we will be within our projections, which we have been always projecting that — yes, the 25% margin is our actually long-term target. So sometimes when the markets are going well, it may go up and now maybe in a year or maybe a little later, it may little bit come down, but still we can only think that, yes, it will be still maintained to be more than that 25% actually. I don’t see a jump. I think this is good enough. Anymore jump will be greedy, isn’t it?

Unidentified Participant — — Analyst

Sir, what is the current realization? [Indecipherable].

Sanjay Agarwal — Managing Director

Yes, the current realization 32,000, sorry 36,500 [Phonetic].

Unidentified Participant — — Analyst

Okay. And the margins are sustainable for MDF?

Sanjay Agarwal — Managing Director

No, that’s how this is. So, the margins which are currently at around 32%, 33% could sustain for probably next one, two quarters. And when the capacity gets added, we — particularly in the North of India, there is increase in timber prices, which if we don’t — if we’re not able to increase prices, we might see some softening in margins through the year. So, if you look at the overall FY ’23 margins, you could estimate margins to be anywhere in the range of 25% to 28% or 25% to 30%. And that’s largely driven by timber prices increasing in North of India. Our timber price in South of India remain very well, but still.

Unidentified Participant — — Analyst

And what are the raw materials used in MDF? And what are their costs versus year ago?

Sanjay Agarwal — Managing Director

To tell you the cost is very difficult of every item. But I can share resin and timber.

Unidentified Participant — — Analyst

What is your cost connect in resin?

Sanjay Agarwal — Managing Director

Cost of?

Unidentified Participant — — Analyst

Resin and timber?

Sanjay Agarwal — Managing Director

No, that’s very difficult, you see, different places, different times, there are different types of timber. How can I give you the timber prices and resin prices and all that? I think we will need to appoint a consultant to understand all that.

Keshav Bhajanka — Executive Director

Sanjay, I’ll just try to explain what is the present status. In North India, presently, we’re buying timber at the rate of INR5. And we consume around 1.6 ton of timber in making one CBM of MDF. And so, timber cost is around INR8. And similarly, glue cost is depending on various type of glue because price is a mix of higher grades and lower grades. So, the average price of glue would be around INR25. And it consumes around 15% glue. So, it would be to the tune of INR3, INR3.5 or INR4, so INR4,000 per one cubic meter of this, so INR8,000 plus INR4,000. So, this timber and glue cost would be INR12,000 around. And then, costs are there electricity — electricity also in the cost, that is again say more than INR2,000 per ton.

Unidentified Participant — — Analyst

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

Operator

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

Hrishikesh Bhagat — Kotak Asset Management — Analyst

Hi. Thank you for the opportunity. Two questions. Firstly, on particleboard, if I look at the volume last two quarters, it has been in regions of 19,000 to 20,000 CBM, which obviously includes the prelam also. So just wanted your perspective whether further volume growth is possible, or do you think there is a capacity constraint and debottlenecking necessary?

Sanjay Agarwal — Managing Director

Actually, we are trying — plants we have shortage of 180 [Phonetic] cubic meter per day only. So, we can — actually, the plant capacity is 5,400. But I think we’re manufacturing about 7,200 cubic meter per month. We are engaging BCG now to work on it, and maybe we will get some more production out of it. We’re already contemplating our growing complexity of concern, but till now, we have not taken a decision. So, yes, still then, we can say that yes there is a capacity constraint.

Keshav Bhajanka — Executive Director

Yeah. Hrishikesh I’d like to add further — last year, we did around 72,000 CBM in particleboard. This year, we are likely to do anywhere between 77,000 to 80,000 kind of a number.

Hrishikesh Bhagat — Kotak Asset Management — Analyst

Okay. That’s helpful. The second question is on the A&P spend. Obviously, [Technical Issues] of campaign. So what was the absolute amount on A&P in FY ’23.

Sanjay Agarwal — Managing Director

Yeah. So…

Keshav Bhajanka — Executive Director

We will be able to provide you with exact details because there is a little bit of variance. A&P includes a lot of things. So, it includes TV, radio, etc. As of cumulative, I’m sure he will be able to provide you the details.

Sanjay Agarwal — Managing Director

Yes, Hrishikesh. As to give you a percentage — in terms of percentage, our A&P spends, at least in plywood, which is the largest part of the turnover, was 6% compared to 4.7% Q-o-Q and 3.4% Y-o-Y.

Hrishikesh Bhagat — Kotak Asset Management — Analyst

Okay. That’s helpful. Thank you.

Operator

Thank you. The next question is from the line of Jignesh Kamani from GMO & Co. Please go ahead.

Jignesh Kamani — GMO & Co. — Analyst

Hi. So if you talk about MDF, our volume has declined Q-o-Q, so it’s partly because of the Omicron in the January or demand has been slightly softer in the initial part of the year?

Sanjay Agarwal — Managing Director

So if you look at our capacity, last year, we got the benefit of opening inventory, and as a resultant, our volume was pretty much higher. Now let’s come to our normalized volumes for the quarter. So that means we actually have run out of capacity, so as to say, but otherwise, we’ll continue to have this kind of volumes — quarterly volumes until we come up with the brownfield expansion. So demand continues to remain strong.

Keshav Bhajanka — Executive Director

Yes, demand continues to remain strong. Yeah.

Jignesh Kamani — GMO & Co. — Analyst

On the laminate side, our gross margin has declined Q-o-Q. So is there any pressure on the gross margin? what is the issue there?

Sanjay Agarwal — Managing Director

So in laminate [Speech Overlap] we are able to hold on the EBITDA margin. So in laminate, a number of key raw material has seen a substantial increase in costs, including phenol, melamine and craft paper. We have been able to pass on a bulk of that price increase, but there is a time lag. And it takes some time for the prices to be passed on. So because of that, gross margins — the margins have been under pressure. Having said that, now we are seeing some easing of the raw material cost as well. And going forward, I think we’ll be able to maintain margins within 14% to 15%, as I had guided earlier.

Jignesh Kamani — GMO & Co. — Analyst

Q-o-Q, the gross margins have been under pressure, but we were able to maintain our EBITDA margin in the laminate segment. So as they cut down the point or any other part in M&A?

Sanjay Agarwal — Managing Director

No, I think operating leverage has helped because we have grown, so that has helped us in negate the cost to a certain extent.

Jignesh Kamani — GMO & Co. — Analyst

Okay. Thanks a lot.

Operator

Thank you. The next question is from the line of Abhishek Ghosh from DSP Mutual Fund. Please go ahead.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Yes. Hi, sir. Thanks for the opportunity. Sir, just if you look at the balance sheet, there’s increase in the amount of inventory built up. So if you can just broadly help us understand, is it because of supply shortages you want to build up higher amount of raw material inventory or what is that related to, if you can just help us with that?

Sanjay Agarwal — Managing Director

Keshav?

Keshav Bhajanka — Executive Director

I don’t think there is a very substantial buildup in inventory. I think we are preparing for growth [Indecipherable] demand in Q1 of next year and going forward. Pricing this is all to be the same. We basically taken a higher EOP [Phonetic] for this year. And in line with the same, we are provisioning for that growth by virtue of having some additional finished goods.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Okay. And just in terms of the broad, if you look at your broad operating cash flow now, so you’re generating broadly about cash flow in excess of about INR110 crores, INR120 odd crores on a quarterly basis. So broadly that INR500 crores of operating cash flow. So, given the kind of capex plans that you have, you will not have to pick up any data or anything of that sort. Is that a fair estimate to make?

Sanjay Agarwal — Managing Director

I think that — it depends on — on the timing of the various capex that we have. But even if we do take some debt on the books, we want it substantial. It would be in the form of [Indecipherable] or a bridge financing for say a year or so. Depending on the timing of that flow based on all our current capex plans, in case, we go into a more capex projects, then we’ll have to look and reevaluate it. But as of now, you’re correct. We do not see much debt needed to be taken on, maybe some slight debt for a quarter or two, something of that sort.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Okay. Broadly since you operate out of multiple segments, if you can just broadly talk about how is the competitive scenario, because we are not seeing similar kind of growth for rest of the building material products? Is it coming out of market share gains, or is wood panel category which is seeing much higher growth in the rest of the building material category? If you can throw some color on that will be helpful. Thanks.

Sanjay Agarwal — Managing Director

I think definitely we have had some market share gains in the [Technical Issues] segments. Particleboard and MDF, there is a limitation in terms of the total amount of manufacturing capability in India. And because imports have reduced, the entire industry has down. So MDF and particleboard, it has been very good sailing for all the players, not just us. But in plywood, laminate, I think our operational excellence has shown through. I think particularly in plywood, the combination of characteristics such as ViroKill, Firewall and new GTM have led to sustained market share improvements. And I think going forward, our objective will be to gain market share in all four segments of the…

Abhishek Ghosh — DSP Mutual Fund — Analyst

Keshav, just on the plywood part of it, and in terms of the competition from the unorganized, there we are seeing lot of stress. So, you think is that also kind of benefiting you guys in kind of growing much faster than the rest of the product at the sailing part of it?

Keshav Bhajanka — Executive Director

You’re putting me in a bit of a spotter because I was trying to avoid this answer. But you’re right unorganized is under severe pressure and definitely, we being market leaders are benefiting. Going forward, I think we’ll be able to gain further due to the shift, but we’ll have to be played by the — we’ll have to wait and watch.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Sure. Just one last question. Sanjay ji, if you can answer this one because you have seen much more cycles. The growth for Century has been much better in the last three to four years with market share gains, very strong balance sheet. Where do you see risks to these going forward, given that your capex commitment will be far higher than what you’ve done in the past? What are one or two risks that you are kind of seeing and you would just want to kind of be vary of that?

Sanjay Agarwal — Managing Director

Risks. The only risk is actually that if we try to really do not see within very short period, if MDF and particleboard restarts in a big way, they start importing into India. So that is one area I see. And that is — that will also will be for South India because North India even earlier and even tomorrow because of the distance from the board will be still very much protected. So whatever new capacities are coming, even they will be protected. South India may see some problems in future. In plywood, I don’t see much of a risk because plywood is low capex plans, and we are actually slowly and very steadily I must say we are trying to make inroads into small towns and dealers and sub-dealers and everybody’s being watched than directed by — [Indecipherable] has become so good and these apps and call centers, all these have become so good. And advertisement, we are able to take that risks in our mind and in our efforts also. So I really don’t see much problem with plywood division.

Laminate, we have hired BCG. So again, if there was certain risk of, you can say a flat or not much of a growth but with BCG involvement, I’m very sure that new strategies are coming out in maybe next year or two, things will be really looking better only. So I don’t know, if anybody else on the call right now may have — I’d love to come out with risks, so that we are always ready for it. Yes.

Abhishek Ghosh — DSP Mutual Fund — Analyst

Thank you so much, sir, for answering my questions, and wish you all the best.

Operator

Thank you. The next question is from the line of Sneha Talreja from Edelweiss. Please go ahead.

Sneha Talreja — Edelweiss — Analyst

Sir, congratulations on great set of numbers and — thanks. And just two questions from my end. Firstly, could you give us some breakup in terms of what has been the domestic and exports-related growth in laminates division and FY ’22 breakup between the domestic and exports division?

Keshav Bhajanka — Executive Director

Hi, Sneha. So export traditionally has been a much lower value contribution for us. But last year, exports did predominantly well. The growth was substantial. It was 30% plus. Orders far higher than our domestic growth.

Sneha Talreja — Edelweiss — Analyst

So currently what’s the accounting for an FY ’22 proportion would be?

Keshav Bhajanka — Executive Director

Sorry, could you repeat that?

Sneha Talreja — Edelweiss — Analyst

FY ’22 share for exports would be?

Keshav Bhajanka — Executive Director

FY ’22 share for exports would be sub-25%.

Sneha Talreja — Edelweiss — Analyst

Got that. And similar question with respect to Sainik and non-Sainik business. What would be the percentage share in each, and what is the kind of growth that we’ve seen in FY ’22 for Sainik as well as the premium segment?

Keshav Bhajanka — Executive Director

We normally don’t share those figures. I call that the team to provide you with a guesstimate later on.

Sneha Talreja — Edelweiss — Analyst

Okay. Anything specific related to laminate segment this quarter that we saw that only 1% volume growth versus — I know you alluded to the fact that Jan was weak and Feb and March didn’t pickup that well, but any particular reason of not picking well in laminate versus we saw very strong growth for plywood, MDF as well as even particleboard? So just wanted to try and take some sense on the laminates division, what’s happening there?

Keshav Bhajanka — Executive Director

I think the recovery in laminate last year, I’m talking about FY 2021 was a little different. Laminate Q4 FY ’21 did phenomenally and the base as such was very high. If you look at the figures, I think the total product growth between Q3 and Q4 was substantial last year. So I think we already operating at a higher base. And with that together with very slow January, we weren’t — we weren’t able to saw the growth. But going forward, I think, now the base is some, we should be growing well across this year.

Sneha Talreja — Edelweiss — Analyst

Understood. And lastly, your expectation on the MDF division. You have, of course, given the timeline of commissioning of both Hoshiarpur sharper as well as the AP [Phonetic] plant, but what are your expectation in terms of realization, I mean realization as well as what is the capacity addition that you’re looking at both considering the fact that we are seeing number of capacity additions happening at the industry level?

Sanjay Agarwal — Managing Director

As far as MDF is concerned, you can see that whatever capacities till now has come has been absorbed very well by the Indian consumer and everyday a new OEM is coming off lot of export possibilities, lot of furniture parks are company up in India. So, we see actually conjunction of MDF is really going up in India, and the growth of MDS is much faster, much better than any other build inventory in India right now.

As far as the prices are concerned and EBITDA are concerned, we have already spoken that EBITDA may soften a little bit, once the new capacities come up, but then still we do not expect it to go below our [Indecipherable] that we will not go below 25%. So I still think that it will not go below 28%, 29% or 30%. Right now, it is much higher than that. So that much of softening may come — may come after some time.

Sneha Talreja — Edelweiss — Analyst

Understood, sir.

Keshav Bhajanka — Executive Director

Yes, just to add on to the MDF point, just to add on one small point, we have always been a little better capacity utilization than most others. So I think you will give us the benefit of the doubt that we’ll be able to exhaust our capacity faster than the industry will otherwise.

Sneha Talreja — Edelweiss — Analyst

That sounds great. Thanks, Keshav and all the best.

Sanjay Agarwal — Managing Director

Keshav, you can give some idea about our [Technical Issues].

Keshav Bhajanka — Executive Director

So, I think MD already addressed in the call that are impacted well on track. We are looking at operations commencing in the Hoshiarpur expansion from Q3 this year. And we shall have the another plant up and running by year two, next year.

Sneha Talreja — Edelweiss — Analyst

Understood. Thanks a lot, and all the very best.

Operator

Thank you. The next question is from the line of Jignesh Kamani from GMO & Co. Please go ahead.

Jignesh Kamani — GMO & Co. — Analyst

Hi, just on the demand on MDF front, generally it is a replacement to cheap plywood. And if you take about MDF, realization is up around 25% plus Y-o-Y, while plywood realization has increased by around — price hike has been around 7% to 8% or at max 10%. So, are you seeing some of the low segment where plywood used to — MDF used to replace plywood now? People are — you can say using more of plywood because price gap is no more commensurate.

Sanjay Agarwal — Managing Director

See, MDF is actually much, much cheaper than plywood, given the local plywood, much cheaper than local plywood. So, it’s still — even after all these increases, it’s still the cheaper plywood will be replaced. That’s the Number 1. Number 2, there is a problem with cheaper plywood. The cheaper plywood will actually trying to cheating a customer in a way by actually giving wrong brands or by giving wrong declarations. We have come out with Firewall, and now I see that everybody else is claiming Firewall. So, they are — these things cannot really stand in the test of time. This is a Number 2 item. And so, I don’t see that the price increase or whatever 25% 30% has happened will have any problems. Yeah, the other one thing you have seen that our highest grade of MDF, which is the premium plus we are saying, so there, yes, we can say that going ahead, if further prices increase or something happened, then that may take some beating, but the percentage of that is not too high. So if that keeps on increasing, yes, that segment may take a little bit of beating. And one more thing we see, we have to realize that MDF has a wonderful stability of dimensions. So if somebody say 18 mm, so it is mostly 18 mm throughout the seats. So it is much easier to work on MDF, if you are using machines. And to use, plywood is a little difficult as far as machines is concerned. So whoever is using a will find difficult to replace and of the topline.

Jignesh Kamani — GMO & Co. — Analyst

Second thing, all the new capacity which used to come in MDF has already come in, I think fully absorbed, including the last capacity. Now incrementally, only your capacity is coming up after end of second quarter. Considering buying demand as you highlighted, do you think that it will — margin might remain elevated at least for next one year because no additional supply is coming and demand continue to remain healthy?

Sanjay Agarwal — Managing Director

I don’t see that in one year, any capacity coming up, but yes, then there are — I think there is a plant by [Indecipherable] and our plant is coming up. And certainly, some more clues, small plants will come up. We must take it for granted. But just think of it, the total capacity increase will be hardly maybe 2,000 cubic meter or so in a year or maybe 2,500 cubic meter per day. So, this is not going to really make much of a difference. So — but, yes, I still believe that some softening may happen. That is as a investor to you, I should give you a warning. So that is the point, but it’s still I don’t see much — I don’t see a big out there that I don’t see it.

Jignesh Kamani — GMO & Co. — Analyst

Understood.

Keshav Bhajanka — Executive Director

For a country of our size, the total production and consumption of MDF in the country is very, very meager. It is only 2 million cubic meters. So, it is nothing considering our population, the same is more than 15 million meter in China. And again, if you take all the panel products, then also ratio in India is comparatively much lower, so there is a lot of scope for MDF to grow and it will grow on itself. It will grow at the cost of cheaper plywood. And it will find room for conjunction the organized furniture, and not only plywood, it has a potentiality to replace many other products like gypsum board, other thing for the false ceiling for the partition for many things, it can replace. So it will not only replace plywood. So that way, it has a better scope. And our projected capacity very, very small. So it has to go maybe in another 10 years to maybe four, five folds.

Jignesh Kamani — GMO & Co. — Analyst

Thanks, sir.

Operator

Thank you. The next question is from the line of Priyam Khimawat from ASK Investment Managers. Please go ahead.

Priyam Khimawat — ASK Investment Managers — Analyst

Yeah. Hi, sir. A couple of quick questions from my end. Now that we have already ordered machinery for our Andhra site, can you share some broad direction about what kind of capacity we are looking at? Will it entirely be an MDF plant, or are we still contemplating a fungible MDF at particleboard capacity?

Sanjay Agarwal — Managing Director

Hi. No, we are not considering a fungible capacity there. It is a dedicated MDF unit, and it will have a capacity of 950 cubic meters, which of course we will try to give [Indecipherable] it up beyond, surpassing the 950 cubic meter per unit.

Priyam Khimawat — ASK Investment Managers — Analyst

Okay. Will it be in two lines, or initially from the beginning it will be 950 CBM project?

Sanjay Agarwal — Managing Director

950 CBM from Day 1.

Priyam Khimawat — ASK Investment Managers — Analyst

Okay. And sir, due to inflationary pressure witnessed in metals and logistics, are we seeing any substantial increase in overall cost of capex here on budgetary estimates?

Sanjay Agarwal — Managing Director

Definitely, there has been a substantial increase in the cost of steel and other structural work. And there has also been a lot of pressure from European suppliers due to the various inflationary pressures that they are facing. But I think we have been able to navigate through them quite well. As of this point in time, I don’t see any substantial increase in the overall capex in the quarter.

Priyam Khimawat — ASK Investment Managers — Analyst

Okay. And have you ordered the plant from the similar person in Germany for which we used it in Hoshiarpur plant?

Sanjay Agarwal — Managing Director

Hoshiarpur, we haven’t ordered from a German manufacturer. For Hoshiarpur, we had ordered from one of China’s manufacturers. This time, we have gone for [Indecipherable], which is one of the turbine manufacturer. And yes, it is the plant for only MDF from [Indecipherable].

Hoshiarpur second plant is from a German company that — 400 capacity, that is from German company. And original was from Chinese company. And this is again from German company, simple game. And that — another thing was another company. There are two permanent companies in German, different, so 400 is from different vendor and 950 is from simple game and earlier was from — but we are highly satisfied with the plant that was very active, that was very good, giving us very, very steady production, very quality products, but due to this China, India, so the time India Government was not allowing Chinese to come to India. So, seeing all these problems, we had to divert. Otherwise, we are happy with them. Maybe in future, if everything is normal, our more plants will come, so most of them maybe from [Indecipherable].

Priyam Khimawat — ASK Investment Managers — Analyst

Okay, understood. That’s what I was wondering because our plant is doing so well and we’re doing industry leading margins at 35%, why would we change our vendor. Understood. Sir, one last question, you alluded that action is coming with the new capacity. Can you help me with what per day CBM are they looking at and when is it coming online on stream?

Sanjay Agarwal — Managing Director

To my knowledge, that will be again 800 cubic meters to 900 cubic meters per day.

Priyam Khimawat — ASK Investment Managers — Analyst

Okay. And by when are they looking at commissioning that?

Sanjay Agarwal — Managing Director

Maybe a year from now.

Keshav Bhajanka — Executive Director

Just one correction here. This action line as Sajjan suggested would be between 600 cubic meter to 800 cubic meter line. And the line would be commenced from mid next year.

Priyam Khimawat — ASK Investment Managers — Analyst

Okay, understood. Thank you and all the best going forward.

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. Hi, sir. Thank you for the opportunity. Just one clarification about the laminate and the plywood growth that we mentioned. How much will be driven volume growth and what will be the value growth?

Sanjay Agarwal — Managing Director

So, Udit, can you repeat the question? You’re talking about the guidance for value growth and volume growth. Okay. So I’ll give you guidance for each of the segments. So, plywood, we expect 15% volume growth and 20% value growth. So laminates, we expect 15% volume and value growth. For MDF, we expect 25% plus volume and value growth. And for particleboards, we expect 10% volume growth and 20% value growth for the next fiscal — for the current fiscal, sorry.

Udit Gajiwala — YES Securities — Analyst

Got it.

Sanjay Agarwal — Managing Director

And overall, we expect 20% plus volume growth or essentially flat for this year.

Udit Gajiwala — YES Securities — Analyst

Understood. Yeah, that was helpful. Thanks again.

Operator

Thank you. The next question is from the line of Rajesh Ravi from HDFC Securities. Please go ahead.

Rajesh Ravi — HDFC Securities — Analyst

Yeah, hi, sir. My question pertains to first on the plywood business. What is the capacity expansion that is happening, and by when that is expected?

Nikita Bansal — Executive Director

So this year, we expect another 10% capacity expansion, but that will happen in our existing plants itself. We’ve been doing this for the last 1.5 years and the Hoshiarpur plant that we have spoken about, we are yet to secure the land. Once we procured the land, we’ll be able to speak about it in definite terms in terms of assignment.

Rajesh Ravi — HDFC Securities — Analyst

Okay. So this INR50 crore is for the existing 10%. So that is around…

Nikita Bansal — Executive Director

No, the INR50 crore is for the Hoshiarpur plant.

Rajesh Ravi — HDFC Securities — Analyst

Okay. And this — what you mentioning is normal debottlenecking-driven capacity expansion?

Nikita Bansal — Executive Director

Yeah.

Rajesh Ravi — HDFC Securities — Analyst

Okay, so what would be the total capacity post this expansion?

Nikita Bansal — Executive Director

Currently, it is 3 lakh CBM. We expect it to be 3 lakh per CBM as the end of the year. And this year, we had about 78% utilization.

Rajesh Ravi — HDFC Securities — Analyst

Right. And follow-up on this plywood, how much would be your outsourced volume in the plywood segment of total volume or revenue?

Nikita Bansal — Executive Director

It’s a data we don’t like to share.

Rajesh Ravi — HDFC Securities — Analyst

Okay.

Nikita Bansal — Executive Director

But majority — I would say, majority for us is in house.

Rajesh Ravi — HDFC Securities — Analyst

Okay. So fair to say that at least 85% [Phonetic].

Nikita Bansal — Executive Director

85%.

Rajesh Ravi — HDFC Securities — Analyst

Yes that makes sense.

Sanjay Agarwal — Managing Director

All the Century brands manufacture in our factory only.

Nikita Bansal — Executive Director

Even this any…

Sanjay Agarwal — Managing Director

So the waterproof grid we manufacture, 100% in our factories. Only the commercial grade of non-Century, a part of that we outsource.

Rajesh Kothari — AlfAccurate Advisors — Analyst

And any other business segments where you have outsourced volume other than the ply?

Nikita Bansal — Executive Director

Yeah. So we outsource PVC doors. So that [Indecipherable] stock.

Rajesh Ravi — HDFC Securities — Analyst

Okay. No, in terms of the major segments like MDF or particleboard. Okay. Second, coming to the particleboard, two products we are not manufacturing at all, we’re outsourcing only.

Sanjay Agarwal — Managing Director

Yeah.

Rajesh Ravi — HDFC Securities — Analyst

Okay, understand. And coming to the particleboard, you said that around the current capacity, the volume numbers are much higher ahead of your capacity. So what sort of capacity expansions are there in pipeline in the particleboard? You are targeting 10% volume growth, if I heard correct for this…

Sanjay Agarwal — Managing Director

10% is only from again debottlenecking and picking up new measures and all that. We are working on thinking about the new capacity, but still we have — we’re yet to take a final decision. We’re contemplating many ideas and locations and what kind of machinery, what kind of capacity and all that. Discussions are on, but decision is yet to be taken. When we get the final decision and we get it through the Board, we will be certainly inform you.

Rajesh Ravi — HDFC Securities — Analyst

Sure. Yes. And…

Sanjay Agarwal — Managing Director

Holding us from immediate decision that we foresee a very big market in future for — but at one particular place to put up a big capacity, sometimes it becomes challenging. So our — all the research says, you should go for [Indecipherable] with a capacity of 800 cubic meter to 900 cubic meter per day for particleboard. But last what associate decor or what we have seen, we would never utilize that capacity. And if you put a big plant at one location, then sometimes resourcing raw material, it also becomes difficult. So — like all businesses are going on and we are doing the market with the availability of raw material and the market. So, we are trying to take decision in several of the bigger capacity, but we don’t want to take risk. So…

Keshav Bhajanka — Executive Director

Taking little bit tight.

Rajesh Ravi — HDFC Securities — Analyst

And on this plywood — sorry, particleboard and MDF, are the business the sales market similar, and in terms of the customer segments similar or how different are they?

Sanjay Agarwal — Managing Director

They are different like particleboard, it solely consumed in the mechanical furniture manufacturing capacities like OEMs and furniture manufactures, even IKEA, they mostly use particularboard. And MDF, we used in the furniture like costly furniture or people they want better product, they sufficiently order for that. And then, mostly it’s used along with the plywood in tailor-made furnitures.

Rajesh Ravi — HDFC Securities — Analyst

Okay. So retail sales should be much lower for both these products. Is that understanding, correct?

Sanjay Agarwal — Managing Director

Retail sale for particle…

Rajesh Ravi — HDFC Securities — Analyst

Like plywood — particleboard and MDF.

Sanjay Agarwal — Managing Director

Particleboard is not likely to pick up very soon. It would be primarily of manufacturers for furniture. And for MDF, yes, it is replacing many existing products not only plywood, like other boards also, it is replacing. So, the MDF I think hedge more tax.

Rajesh Ravi — HDFC Securities — Analyst

Okay. And last question on the laminates, the two [Phonetic] faces the capacity expansion, 2 million sheets. When would the second line expected to be commissioned? And will the capex be spread out between INR200 crores, INR100 crores each.

Sanjay Agarwal — Managing Director

Yes. They’re actually be spread set out a little more towards the first phase and the second phase. It will be looking at about INR130 crores, INR135 crores and around [Indecipherable] in the second phase. And the remaining capacity will only come in from FY ’25onwards.

Rajesh Ravi — HDFC Securities — Analyst

FY ’25 onwards. Hello.

Sanjay Agarwal — Managing Director

Yes.

Rajesh Ravi — HDFC Securities — Analyst

FY ’25 you mentioned, right?

Sanjay Agarwal — Managing Director

Yes.

Keshav Bhajanka — Executive Director

By the end of FY ’25.

Rajesh Kothari — AlfAccurate Advisors — Analyst

End of FY ’25.

Sanjay Agarwal — Managing Director

Yeah. Cool.

Rajesh Ravi — HDFC Securities — Analyst

That’s great, sir, and thank you and all the best.

Sanjay Agarwal — Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Gaurav from Bowhead India. Please go ahead.

Gaurav — Bowhead India — Analyst

Thank you for the opportunity, sir. Very wonderful set of numbers, again. So, congratulations on that. Just two [Phonetic] questions. One is you shared your revenue guidance. So what will be the EBITDA guidance and cash guidance for FY ’23, if you can share anything?

Sanjay Agarwal — Managing Director

Yeah, hi. So margin guidance as we — so I would again reiterate, margin guidance for each segment. Plywood segment, we expect anywhere between 13% to 15%. Laminates, we expect 14% to 16%. MDF, we expect 25%-plus, and also for particleboard, similar 25%-plus.

Gaurav — Bowhead India — Analyst

And sir, overall, what does it translate to?

Sanjay Agarwal — Managing Director

So, this probably translates to 10%-plus margin. And you can do your own homework by calculating these margins.

Gaurav — Bowhead India — Analyst

Sure. And sir, for the laminates, how much guide for FY ’23, I just forgot the number.

Sanjay Agarwal — Managing Director

Yeah, laminates, we guided for 15%-plus volume and value.

Gaurav — Bowhead India — Analyst

Okay, thank you so much.

Operator

Thank you. The next question is from the line of Kanishka Sarkar, an Individual Investor. Please go ahead.

Kanishka Sarkar — Individual Investor — Analyst

Hi, good evening. First of all, congratulations for a fantastic performance, and I’m a happy shareholder.

Sanjay Agarwal — Managing Director

Thank you.

Kanishka Sarkar — Individual Investor — Analyst

So, I have got couple of questions. So first one, I think you guys have done a tremendous job in terms of putting the brand in the minds of people, fantastic advertisements. And so, I want to know one thing. First thing first is that, if I want to understand your dealership network pan India, pre-COVID, just before the COVID struck, how much was that? And how much does it stand today?

Nikita Bansal — Executive Director

So I think exact details we will be able to provide after the call. But when we talk about channel expansion, we have to do channel expansion, especially in plywood in both segments. So in Sainik, pre-COVID, we were pretty much at a number of [Indecipherable]. We are at a number of 900. But when it comes to Century, we are being able to extract from even the Sainik channel as well as our existing channels. So the channel expansion must have been from a range 1,500 to maybe 2,000 [Phonetic]. Not substantial increase there. And we’ve been working aggressively on the sub-dealer expansion. So those numbers are very high.

Kanishka Sarkar — Individual Investor — Analyst

Right. So, you don’t have to give me a number. You can give me a percentage. So, what is the plan for this expansion in this financial year?

Nikita Bansal — Executive Director

In this financial year, we want to double our channel presence whether it be through sub-dealers, whether it be through dealer, we want to double it.

Kanishka Sarkar — Individual Investor — Analyst

Okay. So I’ll tell you why…

Sanjay Agarwal — Managing Director

[Technical Issues]

Kanishka Sarkar — Individual Investor — Analyst

So, the reason of me asking you is that what I understand is that the demand that is expected in the real estate because [Indecipherable] start sometime last year onwards. Now I just wanted to understand through you generally when the real estate starts moving up in terms of the buying behavior, what is the lag period? So when do you actually see the market getting into the zone up very high demand for building materials, particularly the products which you deal?

Keshav Bhajanka — Executive Director

For us, there’s a bit of a difference. We are not like other building material companies where we’re going to project. It’s not that the builders purchasing and giving it to customer. Our journey begins when it goes from being a house to a home, when the individual home buyer buys his house or office and starts the work of making it into a room with furniture — with furnishing and so on.

Kanishka Sarkar — Individual Investor — Analyst

Exactly, understand.

Keshav Bhajanka — Executive Director

I’d come a little bit later. I would come once the inventory starts selling and once people starting into that.

Kanishka Sarkar — Individual Investor — Analyst

Yeah, so I wanted to have projections of exactly that part. So when you — when people move into their — start building their homes. When do you see that? So sitting in May today and the cycle — real estate cycle moving from last one year, do you expect that the bulk of the demand and the upside that is basically the flight will start somewhere around December, or it could be little later than that

Keshav Bhajanka — Executive Director

Okay. I think we already started to see the benefits. If you look at the home registrations, they have been very high for the past year or so. And I think this is already benefiting us. So going forward, I think it is only going to spending.

Kanishka Sarkar — Individual Investor — Analyst

Right. So Keshav big point here. You guys, look — so why is it that your capacity is so constrained today? And even though you’re putting those plants in, I don’t see that will have too much of capacity because you were already working at 78%. So what is your plan to kind of mitigate that constraint and actually capture this growth? Because I — from my point of view, I see your brand doing very well and it can only go up from here. So what is the plan of getting into the pole position over the next three years? So could you put some thought on it?

Sanjay Agarwal — Managing Director

[Speech Overlap]

Keshav Bhajanka — Executive Director

I think we’re already in the pole position as far as this is concerned because we’re market leaders. And when it comes to execution, the quality of execution that CenturyPly has is far better than the rest of the industry. The first MDF plant the company established within 16 months, whereas it took others nearly 2.5 years. So I think that advantage we have on our side.

Kanishka Sarkar — Individual Investor — Analyst

Okay. And the last question.

Keshav Bhajanka — Executive Director

Yeah. Let me also take this point. Actually, now any capacity which we are bringing, we are not bringing for a year or two. So you should be sustainable. So say, any capacity we create now, we are creating it for next 25 years. So these things, buying land or getting license and getting a plant, and after two years or three years because we have to hire a lot of workers also. So, we do not see that we can do it like switch on and switch off. So, we have to take a lot of precautions. So once we are sure this trajectory will continue, because when we compare it to China, we are nowhere. China plywood consumption is 200 million cubic meters and whereas our population is more or less same. And so, with that 10 million to 200 million, India is 2 million MDF to 50 million of China, 1.5 million of particleboard to 35 million of China particleboard. So, we are nowhere in this. So simply thinking, our middle-income group is expanding our — like the market is expanding. So with that, I don’t see any reason that we will not expand at a very, very faster pace, but the ground realities are not so. I always tell Sanjay — to Sanjay this will [Indecipherable] for 10 years, it will become four times. Then Sanjay give me data for last 20 years. So we have whatever said or done, it is expanding at the rate of that same 10%. So you can calculate now also for next year — any year, it will expand 10%. So expanding our capacity overnight or very fast, I think may become counterproductive sometimes. So we’re a little cautious. And the moment we are fully confident, then we will expand capacity very rapidly. Because putting up the capacity in plywood doesn’t take much time. Within a year, we can set any capacity. MDF, it takes almost two years. Particleboard, again, 1.5 years or so.

Kanishka Sarkar — Individual Investor — Analyst

Right. I appreciate, sir, what you said. Completely appreciate. The last question that I have is that this raw material, which you have which completely fluctuates because the availability of wood, is there any plans of — I don’t know much actually that’s why I’m asking you. Is there any plans of structurally or to move into plantations, so that you can actually have vast plantations which can actually be used for your captive purposes? Any plans on that?

Sanjay Agarwal — Managing Director

There are many limitations in India like land holdings ceiling. So you cannot — in most of the states, you can add more than 15 acres, 20 acres like restrictions are there. And government lands are there where they can do plantations, but government is very, very conservative because it may be politically counterproductive for them. The people will say they have distributed the land of the country or government land to the industrialist or the whole thing. So government is wary of that. So, these things are there holding us, and then again these larger like agriculture this reform bill, again our [Indecipherable]. So the low the land needs to be changed a bit, and this plantation, government even for plantation, for cutting the trees, there are lot of questions. So we are very, very strongly pleading with the central government and we are pleading with them that it should be restricted to agriculture from the forest. For all the practical reason, planation is done by a farmer, is done on the farm land only. And so — and the replacement of the case group by a farmer, so there is no reason that forest department should take the ownership of the grown-up tree. And after that, they regulate putting of the industry and other things, assuming the license. And then the registered interest group will go to court and block it. So, these games are going on. But I’m very sure that things will change very soon. And when that trajectory is very clear, that time definitely we shall enter the plantation, but it would be very, very stable and long lasting business.

Kanishka Sarkar — Individual Investor — Analyst

Right. Thank you so much, sir. Thank you.

Operator

Thank you. Ladies and gentlemen, due to time constraint, we take one last question from the line of Nikhil Agarwal from VT Capital. Please go ahead.

Nikhil Agarwal — VT Capital — Analyst

Yeah. Good evening, sir. Thank you for the opportunity. Sir, my question is regarding the laminate segment like in Q4 FY ’22 and in Q4 FY ’21 and quarter two of ’22, your laminates margins were very — like they were — gross margin was around 42%. So like was it because of inventory gains or was it because of some price hikes that you had taken? Like what was the reason behind that, if you can highlight?

Sanjay Agarwal — Managing Director

So in quarter four of last year, it was due to the fact that brownfield prices were substantially subdued and [what’s happened was that during the second phase of COVID, sold us that demand is going to be pent up, we are going to continue production to a maximum amount. And at that point in time, brownfield prices were further subdued. So due to this bold decision, we are able to enjoy I think the highest drop in lumber segment in Q2 of this year. After that, raw material prices suddenly shot up, and to the extent I think I’ve mentioned in my previous call that certain raw materials went up by 400 bps [Phonetic]. So we are keeping our margins.

Nikhil Agarwal — VT Capital — Analyst

Okay. Yes, sir. And sir, just one last question. I’m sorry if I’m asking this again like could you just highlight on the margin — on the margin guidance for each segment? I don’t know, if you…

Sanjay Agarwal — Managing Director

Segment-wise, margin guidance is: plywood, we are looking at 13% to 15% EBITDA long-term sustainable; laminates, 14% to 15% EBITDA long-term sustainable; MDF and particleboard, both 25%-plus.

Nikhil Agarwal — VT Capital — Analyst

Okay, great. Thank you so much, sir. That’s it from me.

Sanjay Agarwal — Managing Director

Thank you.

Operator

Thank you. And I’ll hand the conference over to Mr. Arun Baid for closing comments. Over to you, sir.

Arun Baid — Analyst

Yeah, on behalf of ICICI securities, I want to thank the management for giving us a chance to host this call and all the participants for being there. Any closing comments you want to give, Sanjay?

Sanjay Agarwal — Managing Director

Yeah, certainly. I would really like to thank everybody for attending the call and all the questions around. Hope we’ll see you next quarter with good numbers and good economy all around India. Thank you.

Operator

[Operator Closing Remarks]