Greenlam Industries Limited (NSE: GREENLAM) Q2 2025 Earnings Call dated Oct. 29, 2024
Corporate Participants:
Saurabh Mittal — Greenlam Industries Limited
Ashok Sharma — Chief Financial Officer
Samarth Agarwal — Vice President, Finance
Analysts:
Sneha Talreja — Analyst
Keshav Lahoti — Analyst
Udit Gajiwala — Analyst
Bhavin Rupani — Analyst
Utkarsh Nopany — Analyst
Divyanshu Mahawar — Analyst
Nitin Shakdher — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Greenlam Industries Limited Q2 and H1 FY’25 Earnings Conference Call. This call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Saurabh Mittal, Managing Director and Chief Executive Officer of Greenlam Industries Limited. Thank you, and over to you, Mr. Mittal.
Saurabh Mittal — Greenlam Industries Limited
Thank you. Good evening, friends, and welcome to the Greenlam Industries call once again. I’m joined by Ashok, our CFO; Samarth from the finance team; and SGA, our Investor Relations Advisor. I’m sure you all have had a look at the results, which was uploaded onto the website and to the exchanges early in the day. So I’ll just give a quick brief about how business has gone and then Ashok will take you through the numbers, post which we’ll be happy to respond to queries to the best extent we can.
So on the business side, in Q2, you’ve seen we’ve done about INR680 crores of revenue. I think considering the on-ground situation in both domestic market and international markets, we’ve done reasonably well in both quantity and value. And if you go category-wise, if you look at laminates business, this quarter, we’ve done our highest production and highest sales in quantity. The new plant in Andhra Pradesh in Naidupeta is also well stabilized. We have grown in both domestic and international markets in quantity and value and we believe with the information we have from ground, we have won more market share in both domestic and the international markets. Clearly, certain geographies in international markets have done better than the others. And likewise in domestic, some markets we’ve done better than the others. But by and large, our focus on domestic markets across the country, several international markets — several international markets we’ve opened, we are seeding in markets to build business in a more meaningful way. So across categories of products and geographies where we are pushing and we are looking at winning more business and more market share.
On the margin front too, if you look at the Q2, we have additional cost versus what we had last year in Q2 because the new plant was operationalized in end of September of 2023. So there is a bit of a higher cost at both the post-EBITDA in the interest and depreciation and in the cost in terms of people, resources, etc, right. On the realization front also, we’ve been — we’ve been able to improve the realization by few percent and we’ve been focused on both driving more volumes and consistently working towards driving a better value mix in both domestic and the export markets. In the domestic market, we took a small price increase towards the middle of September and we have raised domestic prices by about 2.5% to 3%. Exports, we’ve not had any price increases as yet.
Then coming to Veneer and Allied segment, there too, the performance has improved. We’ve become EBITDA-positive in the Veneer and Allied category. The Flooring and Door segment, we see decent traction now. And with several real-estate projects coming for closure or for fit-outs, we think the Door and Floor business will continue to do better as we move ahead. On the Plywood business, the factory side is quite well settled. The feedback from the markets we are operating in in terms of quality, delivery is also quite strong. We have expanded, as we said earlier, into Maharashtra in the month of April. So we are now in the markets, all the five Southern states and Maharashtra. So certain channel network is yet to be completed in Maharashtra, which we think should be done over the next three to six months. We did a price increase in plywood towards — in July actually and that comes about 3.5% to 4%. We’ve also improved — that also helped us improve our realization in the plywood business. We’re still away from achieving the desired results in plywood, but I think at the run rate we are going now, we think we’ll keep improving as we proceed in the ply business.
On the particle board side, as we’ve been communicating, so within this quarter, we will be able to commence commercial production at the Andhra Pradesh plant. And the readiness in terms of teams at the factory, teams in sales, marketing, dialogues with channel partners, OEMs is also going at a pretty good pace. So the teams are by and large well prepared to start the plant and also start selling and start marketing the products. So the preparedness to launch looks to be under control. And so that’s on the particle board side.
So that’s broadly from our side, we’re not going too much macro data of housing and commercial leases and construction is happening. We believe all that by and large looks quite positive and I think most of the construction activities will need interior fit-outs and spur demand for our categories and products in India. Globally, despite the challenges of slowdown, recession, etc, which we hear, we think we’re still in a good position to take more market share considering our strength in terms of production capacities, capabilities, quicker turnaround time, slightly more cost competitive than the international players, backed-up with a local team which work with customers at OEM market. So I think from a strategic point, not much has changed. I think we continue to move in a certain direction. So I think only that’s it from my side. I will have Ashok take you through the numbers and growth and percentage, etc. Ashokji, over to you.
Ashok Sharma — Chief Financial Officer
Thank you, sir. Good evening, friends. I’ll take you through the financial performance for the quarter and for the half year. Consolidated net revenue for the quarter grew by 12.8% on a year-on-year basis and grew by 12.6% on a sequential basis to INR680 crores in this quarter as compared to INR603 crores in quarter two last year. Gross margin grew by 20 basis points to 51.6% in this quarter from 51.4% in quarter two last year. However, on a sequential basis, gross margin degrew by 40 basis points. Gross margin in absolute terms grew by 13% to INR351.5 crores in this quarter as compared to INR310 crores in quarter two last year.
EBITDA margin was down by 50 basis points and stood at 12% in this quarter as compared to 12.5% in Q2 last year. On a sequential basis, EBITDA margin grew by 140 basis points. EBITDA margin was impacted in this quarter on account of new operational cost of new plant which was not there in Q2 of last year.
EBITDA in absolute terms grew by 7.7% to INR81.4 crores in this quarter as compared to INR75.6 crores in Q2 last year. Net profit for the quarter stood at INR34.4 crores as against INR39 crores in quarter two of last year. This is on account of increased depreciation and interest costs on the Naidupeta laminate unit and plywood unit.
Now I’ll move on to half yearly. Consolidated net revenue in the H1 grew by 14.9% from INR1,285 crores last year, sorry, it grew to INR1,285 crores as compared to INR1,119 crores in last year. Gross margin was flat at 51.8%. Gross margin in absolute terms grew by 14.9% to INR666 crores in this H1 as compared to INR580 crores in last year.
EBITDA margin was down by 120 basis points and stood at 11.3% in this H1 as compared to 12.5% in last year. This was on account of operational cost of new plants. EBITDA in absolute terms grew by 3.9% to INR145 crores as compared to INR140 crores last year. Net profit degrew by 24.5% and stood at INR54.3 crores in this H1 as compared to INR72 crores in last year. This was, again, on account of increased depreciation and interest cost on the new plant.
I will now move on to the segmental performance. In the laminates, in this quarter, we had the highest production and highest sales in terms of volume and value. So laminate revenue grew by 12.4% on a year-on-year basis and grew by 11.7% sequentially to INR597 crores in this quarter from INR531 crores in quarter two last year. Volume growth stood at 9.4% on a year-on-year basis. Domestic laminate revenue grew by 15.5% on year-on-year and grew by 17.3% on a sequential basis in value terms. Volume growth stood at 13.8% on a year-on-year basis. International laminate revenue grew by 9.6% on year-on-year and grew by 6.9% on a sequential basis in value terms. Volume grew by 3.9% on year-on-year basis.
EBITDA margin of laminate stood at 14.7%, a degrowth of 170 basis points on year-on-year and a growth of 110 basis points on a quarter-on-quarter basis. Production volume were at 5.61 million sheets at a utilization level of 92%. Sales volume for the quarter stood at 5.39 million sheets with an average realization of — in this quarter at INR1,070 per sheet.
Moving on to half yearly basis, laminate revenue grew by 12.8% in comparison to INR1,131 crores in H1 last year. Domestic laminate revenue grew by 10.5% in value terms on a year-on-year basis, and volume growth stood at 12.3%. International laminate revenue grew by 15% in value terms. Volume grew by 8.2%. EBITDA margin stood at 14.2%, a degrowth of 150 basis points in comparison to last year. Production volume were at 10.7 million sheets at a utilization level of 87%. Sales volume in this H1 stood at 10.06 million sheets and average realization in this half year was at INR1,086 per sheet.
I’ll move on to another segment, Decorative, Veneer, and Allied, which includes decorative veneer and engineered floors and engineered doors. Revenue of decorative veneer business degrew by 10.1% on a year-on-year basis but grew by 65% on a sequential basis to INR32.4 crores in this quarter from INR36 crores in quarter two last year. Volume degrew by 11.7% on a year-on-year basis. Revenue of decorative veneer business degrew by 15% to INR52 crores in this half year in comparison to INR61 crores last year. Volume degrew by 16% in this half year in comparison to last year. Sales volume in this quarter stood at 0.35 million square meters and in this half year at 0.56 million square meter. Capacity utilization in this quarter is 39% and for the half year stood at 29%. Average realization for the quarter was INR929 per square meter and for the half year stood at INR927.
I’ll move on to now Engineered Wood Flooring. Revenue for the engineered wood flooring business grew by 6.2% on a year-on-year basis and grew by 5.7% on sequential basis to INR14.1 crores as against INR13.3 crores in quarter two last year. For the half year, revenue of engineered wood flooring business grew by 16.7% from INR27.5 crores last year. So INR27.5 crores in this half year in comparison to INR23.6 crores in last year. Capacity utilization stood at 15% in this quarter and 14% for the half year.
Moving on to engineered doors. Revenue of doors business grew by 39% on a year-on-year basis and grew by 15.8% on sequential basis and stood at INR11.4 crores in this quarter as against INR8.2 crores in quarter two last year. For the half year, revenue of doors business grew by 39.8% and stood at INR21.2 crores in comparison to INR15.2 crores in last year. Capacity utilization for the quarter stood at 23% and for the half year stood at 22%.
Now I will move on to another segment, Plywood segment. Revenue of plywood business stood at INR26 crores in this quarter and INR53.6 crores in this half year. Sales volume for the quarter two stood at 1.02 million square meters on notional basis and 2.16 million square meters for the half year. Capacity utilization for the quarter and for the half year stood at 23% and average realization for the quarter is INR250 per square meter, and for the half year is INR244 per square meter.
In the current quarter, our working capital cycle improved by one day to 59 days as compared to 60 days in the quarter two last year. Net debt stood at INR992 crores, which includes a debt of approximately INR477 crores on account of particle board project which is under progress. That’s all from my side.
Now I’ll open the house for the question and answer.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. [Operator Instructions]. The first question is from the line of Sneha Talreja from Nuvama. Please go ahead.
Sneha Talreja
Good evening, sir, and thanks a lot for the opportunity and congratulations on great market share in the domestic market especially. Just wanted to understand what are the trends that you’re seeing in domestic market and reason for sharp increase in market share, especially what we are seeing in FY’25.
Saurabh Mittal
So the question was about domestic market share, Sneha?
Sneha Talreja
Yes, sir.
Saurabh Mittal
So what do you wish now, can you just again say?
Sneha Talreja
Sir, what are the reasons for increase in market share, especially in domestic market?
Saurabh Mittal
There’s no one particular reason. I think it’s just consistent working across the market, improved supply chain, better turnaround time, you know, multi locations plants, one in South, one in West, two in North with the warehousing strategy put across the teams on-ground and the product portfolio. I think it’s a combination of multiple factors. I can’t say just one particular thing —
Sneha Talreja
What I basically just wanted to see is we’ve been seeing strong market share in the domestic market in the laminate side, but we haven’t seen some kind of a good performance, I would say in case of plywood or be it veneers where we used to do much, much better numbers in the earlier time or be it flooring or doors, is it because in those segments you are focusing a lot on the premium end and, laminates, you have launched a lot of medium end products or I would say compared to your earlier premium end products you’ve gone into the lower-end?
Saurabh Mittal
In laminates too, our price realization, our value mix improvement is constantly going up. And it may not be completely appropriate to say that other segments we’re not doing completely well yet, we could do better. So ply, if you see, we just like what six months old in the business and our realization level plywood will be comparable to the market leaders. We already are at a nearly INR100 crore run-rate and the number of dealers we’ve set up, infra in South India has more recent place. Maharashtra we just launched. So I think we are winning business in plywood also in the segment we are present and in the states we are present. Floor and doors clearly are growing well and we think this will only improve. Veneers, there’s a little bit of struggle versus H1 to H1, but versus Q1 numbers have come up. So I think every segment represents different — slightly different challenges, while all go into interior application or certain exterior application. And every segment has different set of competition or different challenges.
Samarth Agarwal
And Sneha, just to add what sir has said in the flooring and doors, even though the — even though the business is a small, but if you see on a half yearly basis, floors has grown by 16.7%, nearly 17% and doors has grown by nearly 40% and we hope that we will continue to do well in the segment.
Sneha Talreja
No, that’s just commendable, but the fact that — I mean after long, long years we are yet to meet those kind of EBITDA numbers which we had visualized in terms of laminates is coming through. So that was the comparison I was trying to make.
Saurabh Mittal
So I think it’s a fair comparison to an extent, but clearly, I think the other segments in flooring, door, plywood, you know, veneers, so we think will also do well and scale-up, especially we think floor and doors will also become meaningful segment. Ply also will keep growing. So we don’t like doubt that those segments will not do well. Sometimes it just takes a bit more time with certain interruptions and challenges because we are also expanding the category in both flooring and doors we are also creating a market expanding the category. So there are certain challenges, but it’s all moving up, that’s our guess. Veneer, you can say there is a bit of a blip in H1. Otherwise, last year too, there was a growth in business versus in — versus FY ’23. So I’m not sure what the number is front of me. I guess where you coming from?
Sneha Talreja
Understood, sir. Sir, secondly, on the particle board side, are we on track for Q3 FY’25 commissioning? And more importantly, we have been hearing that in MDF, there is very lack of imports coming in, thanks to the container availability and freight rate increases. How is that faring up in the particle board side, given there used to be a lot of demand, which used to be earlier met through imports?
Saurabh Mittal
I’m so sorry, Sneha, your voice is not coming through clearly. I think first question was, are we on track for Q3 commissioning? The answer is yes. So we are on track for Q3 commissioning and commercial production in Q3. And what was the —
Sneha Talreja
— scenario in particle boards at this point of time?
Saurabh Mittal
So the sense we have that import is not so much right now as board, but maybe imports are coming in as furniture, maybe commercial furniture or other forms of furniture but not so much — there is certain imports coming in, but it’s not like an oversupply of chipboard as boards coming in. But as furniture, maybe it’s coming in because, as you know, particle board is a large consumption market in the OEMs and so maybe at times, boards don’t come in, but it comes in form of a finished good or a semi-finished good.
Sneha Talreja
Understood. And in terms of realizations, would we have any sense that what are the imported prices currently? And where are we looking at our target segment?
Saurabh Mittal
So import prices may not be again because imports which come in are either just plain boards coming in or they are premium pre-laminated boards coming in. So plain boards are pricing will be similar to imports. But you must keep in mind, if you’re trying to draw a comparison with MDF particleboards will be a largely prelaminated particleboards market and not a plain boards market, where you’ll have probably over 80% of laminated boards and maybe about 20% lower of plain board eventually. Now this could change for some time. While in MDF, maybe it’s a bit different. So particleboards are sold largely as laminated boards for the OEM segments. So I think just we need to keep that in mind.
Sneha Talreja
Understood, sir —
Ashok Sharma
May I add to what sir has said in the particleboard, there are a lot more sizes, which are in use in comparison to MDF. So there’s not an apple-to-apple comparison or there is an advantage over the guy who’s procuring it domestically in comparison to imports.
Sneha Talreja
Understood. That’s it from me. Thanks and all the very best. I now wish you all the very Happy Diwali.
Saurabh Mittal
Thank you, Sneha. Wish you a happy Diwali too.
Operator
Thank you very much. Our next question is from the line of Keshav Lahoti from HDFC Securities. Please go ahead.
Keshav Lahoti
Hi, thank you for the opportunity. Sir, firstly, congratulations on great set of number on laminates business side. Just want to know as laminate plant is already operating at high utilization, don’t you feel now the time is right, the company should plan for expansion because if the demand comes up strongly the company might face capacity constraint?
Ashok Sharma
Keshav, so if you see on a half yearly basis, we are at around 87%. And this plant — and in the past also, we have run that plant more than 100%. It can go 110%, 115%. So we believe right now, we have enough capacity in terms of that from 87%, still we have enough capacity as of now we have. And for the expansion, as we have told in the past also, we have mentioned in the past also that two of our plants, which is Gujarat plant and the Naidupeta plant have the space for the brownfield expansion, so which can happen in a much shorter time in comparison to greenfield expansion. So we are keeping a watch on the situation. And as and when requirement comes, so we can very quickly within a span of, let’s say, most — at most three quarters, we can increase the capacity on a brownfield basis.
Keshav Lahoti
Understood. But what is stopping the company to have a capacity two quarters in advance? Is it the balance sheet or what? Because I understand you can operate at 110% utilization, but possibly you might face capacity constraints for a few of the product segment.
Ashok Sharma
That’s not the case as of now. So if you see the 87% utilization which means around 20%, 22% is still there, 25% more than what we are operating as of now. So we don’t want a situation unnecessary put the capital and then probably wait for one year, two years for the utilization. We are keeping a watch, as I mentioned that on a regular basis, in terms of that, and we’ll take the decision at an appropriate time.
Keshav Lahoti
Understood. Got it. Now coming on the ply segment. Normally ply is a new segment. So ideally, there is expectation that volume should at least rise sequentially. And this is the first quarter where ply volume have declined sequentially. So the ramp-up is possibly not as expected. So how should we see an earlier some sort of 40% kind of utilization you’re looking for FY’25. So how is that number looking like? And when will it breakeven?
Ashok Sharma
It breakevens at 35%, 40%, that’s what we said, still we stick to that. Yes, in this year, this is not going on as per the plan in terms of that. So due to N number of reasons in terms of that, first quarter was excessive heat and all the issue was there. So we have opened — we have entered into Maharashtra in the quarter one. And it’s only a quarter since we have entered into Maharashtra. And we are hopeful that, that should bring the good results in the third and fourth quarter in terms of that. Our overall, on an annual basis, 40% utilization looks to be difficult, and we hope that we will be able to breakeven in next year.
Keshav Lahoti
You said breakeven in FY’25 or next year, sorry.
Ashok Sharma
Yeah. Next year.
Keshav Lahoti
Understood. Got it. That’s helpful. I’ll come back in the queue. Thank you.
Operator
Thank you very much. [Operator Instructions] The next question is from the line of Udit Gajiwala from Yes Securities. Please go ahead.
Udit Gajiwala
Yeah, thank you for taking my questions, sir, and cngratulations on great set of numbers. Sir, firstly, on the particle boards, I mean in next year FY’26, what kind of utilization rate are we aiming for?
Ashok Sharma
Hi, Udit. So this — so in this quarter, we are planning to have the commercial production. And the next quarter four will be first quarter and next year will be the first full financial year. We hope to have the near about around 40% to 50% of capacity utilization in next year.
Udit Gajiwala
And so 45, 50 is what you had earlier mentioned that we’ll breakeven at that point. Is that understanding right?
Ashok Sharma
Yes, depending upon what kind of a product mix, but we hope so that we should breakeven.
Udit Gajiwala
Understood. Understood. And sir, given the export demand, etc, we have grown fairly, we have also gained market share but this kind of 15% to 17% volume CAGR is something that we should expect that it will continue for coming two years?
Ashok Sharma
The volume CAGR is not 15%. In the value it is, yes, it has grown, but it’s difficult to comment in terms of that, whether this CAGR, we will stick to our overall guidance, which we see in terms of that. But intention is the same, which is to take that business in that direction.
Udit Gajiwala
Got it. And so 20% or 22% or something annual overall growth guidance that you were expecting for ’25, is that right?
Ashok Sharma
18% to 20% we have told in the past, and we will stick to that.
Udit Gajiwala
Got it. sir. And sir, lastly, just on the debt part. I mean, I understand that the major debt is pertaining to the particle boards but do you have any debt repayment schedule, which would commence? And if so, then by when is it scheduled?
Ashok Sharma
It has started in this year, and it is being serviced as per the maturity. And as per the plan, it is getting matured. Major portion of it will start from next year on.
Udit Gajiwala
Got it, sir. Thank you. I’ll come back in queue.
Operator
Thank you very much. The next question is from the line of Bhavin Rupani from Investec. Please go ahead.
Bhavin Rupani
Yeah, hi sir, thank you so much for the opportunity. My first question is related to particle boards. Sir, we understand that Merino, which commissioned plant one year back is running at almost 30% utilization. Recently, you mentioned that we expect 40% to 50% utilization in next year itself. Now with new capacities from us as well as CenturyPly coming up, what gives us confidence to reach 50% in FY’26?
Saurabh Mittal
I’ll take the question. Yeah. So I think CFO mentioned 40% to 50% utilization you should expect in FY’26 for particle boards and I’m not sure what numbers is Merino currently running at. But I think with the alignment of the team, the ability to build a channel, the alignment with the Greenlam brand of laminates, the access to OEMs, architects, IDs and the price point at which this product is positioned. We think we can ramp up to that extent in the first year operation, which is after the Q4, that’s FY’26 financial year as we start commercial production in this quarter and next quarter becomes the first one.
Bhavin Rupani
Got it. And sir, second question is related to debt. When do you think we will have a peak debt in FY’25 and what amount?
Ashok Sharma
So this quarter, our debt was around INR990-odd crores. We had some additional, I think working capital block it on account of GST something, which is getting — we’re hopeful that in the next six months, it should get resolved. So we believe that our net debt should be in the range of around INR1,025 — between INR1,000 crores to INR1,050 crores. And which is in the FY’25, and we hope to reduce our debt to come down from next year.
Bhavin Rupani
Got it, sir. Thank you so much.
Ashok Sharma
Thank you.
Operator
Thank you very much. The next question is from the line of Utkarsh Nopany from BOBCAPS. Please go ahead.
Utkarsh Nopany
Hi, good evening, sir. Sir, my first question is for the plywood segment. Sir, like we are operating the plywood segment at a pretty low utilization as we are just catering to the premium segment, whereas our major peers are seeing major growth in the economy range category. So as we are operating at suboptimal rate, then why we are not planning to tap the economy range to quickly ramp up our plant?
Saurabh Mittal
I’ll take that question first. So on the plywood, while what you’re saying is logical, and we also kind of understand the story. I think we just are trying to have some patience on and keeping the focus on building the premium end of the plywood, the branded plywood, self-manufactured plywood model. We think it’s too early for us to shift gears on that. And as you probably know that we just covered South India at the moment, the five states, which we started last year and Maharashtra has just started. We haven’t even like gone out of five states, and we will gradually keep expanding and adding certain markets. So we think we still need to wait some more time and build that segment. The feedback on ground, while numbers may not show the picture at the moment of what’s happening on ground. The feedback on ground with the kind of focus our teams have on that category, with the quality of product we are getting out to the market and the effort in the market of building secondary sales, doing secondary demand activity is quite good. So if you shift gears right now, I think while the volume objectives might be met in the short term, but I think the medium-term objectives of building a solid brand because in that space, we think there is no focused company or brand at this point. People are a bit distracted into multiple things. And if you go lower, you also lower the quality, price points also come down. The kind of equipments, product quality we are throwing at. We think we just need to hold on and have some more patience and settle that part of the market. That’s our line of thinking right now. But I don’t know, but that clearly is the line of thinking. And we’ve just gone out to certain states at the moment, we have the opportunity to go out to more parts of the market before we really come down to the mid-category pricing product.
Utkarsh Nopany
Okay. And sir, with this strategy, like when can we expect a plant to get ramped up to around, say, 60%, 70% utilization rate in your viewpoint, any time frame?
Saurabh Mittal
Yes. So from a plant side, like I said earlier in my comments that plant side is quite well prepared in terms of the product quality, production, operating parameters. With what we’re doing, it’s going pretty good. I think we’ve been — we’ve turned it on quite quickly. So coming to the breakeven point comes at about 40%, approximately plus/minus utilization. So our sense is, hopefully, maybe in about 12-odd months, maybe next year, we should get there. But, obviously, our efforts are to drive this at the earliest possible. Maybe another year or so is where we can kind of expect the plant to come to 40% or 50% level.
Utkarsh Nopany
Okay. Sir, my second question is on the laminates segment. Sir, I was just comparing your margin profile versus our major peers. So we see that our major peer’s margin has contracted sharply over the past say, three years period, where our margin profile has remained relatively stable. So just wanted to know what we have done so different that our margin profile has got impacted vis-a-vis the sharp contraction in the margin profile of most of our peers.
Saurabh Mittal
So I guess you’re talking to our nearest competitor. So I can’t say exactly what we’ve done different. So maybe we’ve not done too many different things. I think we just kept the focus. And we’ve always said we’ve had pricing discipline. We focused on the value mix as well as the volume mix. I think the two new plants, we started, I said that earlier to Sneha, now we have plants in South India, Western India and North India, two plants have already been there from the past. As in the mix of locations, multiple warehouses and the push — if you talk to our nearest competitor, about the nearest competitor, maybe they have not grown so much in exports.
I think international business for us also has grown, domestic pieces also has grown. So I think I’m not sure what have they done different or what we have done different but — so clearly, I think just, we’ve focused on — and we’ve been on a certain journey for a long time. I think new which started in terms of branding and pricing discipline and products, et cetera. So I think it’s a combination factors. But I’m not sure exactly what’s happened but I can say about ourselves.
Utkarsh Nopany
Okay. Sir, lastly, like on the balance sheet part, like our net debt-to-EBITDA ratio has now gone into a vulnerable range of more than 3 times. So do we have any plan to raise equity to improve our balance sheet position in near future?
Ashok Sharma
So as of now, we don’t have any plan of doing so. We believe that FY’25 will be the peak debt in terms of that. And as the new project also start commercial production, which will add into EBITDA, and that will help us in terms of bring down this one. We believe the situation will be better in next financial year.
Utkarsh Nopany
Okay. Thanks a lot sir.
Operator
Thank you very much. [Operator Instructions] The next question is from the line of Divyanshu Mahawar from Dalal & Broacha Stock Broking Private Limited. Please go ahead.
Divyanshu Mahawar
Thank you for the opportunity. I have just one question that if you look at the particle boards capex cost per unit. Previously, we were at a quite a high around, I think, INR30,000 per cubic meter. And if we see other MDF projects, which have been recently completed this year around — it is around INR21,000 or — range between INR21,000 to INR25,000. So given that particle board which significantly have a lower realization compared to MDF products, so can we think of that we can clock a low double digit ROCE on this project, if we’re able to utilize the plant at a full capacity utilization?
Ashok Sharma
Divyansh, so this in terms of capex per unit of particle board versus MDF, so this will depend upon the apple-to-apple comparison, which means the equipment should be from the same origin or same source. So if you are comparing European origin equipment with other than European, which can be Chinese or anything else, so then there can be a huge difference between the cost of per unit capex. If you compare on the similar line, then the situation will be different than what you are suggesting. We believe our equipment are from the Germany and Europe. So which has a high capex cost at the initial stage, but that the higher — the life of these equipments are very high in comparison to other — other source of equipment and this brings in lot of operational efficiency at the plant level. We believe initial level, so we have taken that call and invested a bit higher in comparison to, let’s say, Chinese or any other equipment, which will help us in a longer term.
Divyanshu Mahawar
Okay. So can we assume the ROCE it will be ranged between 15% to 18%. And what kind of realization and EBITDA you are looking, you are assuming to have from that plant?
Saurabh Mittal
So I just want to add here, when you do capex comparison, it also depends on what are you comparing with what. So ours is a greenfield. And we have space after this plant to put one more line in the same plant, and when you do a brownfield, a lot of your incremental costs come down. So I’m not sure what the comparison base is. And I would also like to add, like I said earlier, the conversation with Sneha or somebody, that particle boards is largely a laminated program. It’s laminated boards which gets sold more than the plain boards. So there is a little additional investment in terms of the [indecipherable] presser, plates the kind of machines you run. So I think an apple-to-apple comparison may not be completely fair.
We have seen — I must also comment here. We have seen in Europe and certain other markets also where margins of particle board on a steady state, if the right prelamination mix is done is equal or at times even higher than the MDF business. Obviously, this depends on the RM cost and the mix etc, that you might just keep this in mind. I think you had another follow-up question.
Divyanshu Mahawar
Follow-up question is that, can we assume to have 15% to 18% ROCE at the end. And what kind of realization EBITDA you are assuming for that plant? What’s your assumption for the asset — what EBITDA realization we can do?
Ashok Sharma
Yes. So Divyansh, the — if you see right now — right now, the timber cost is at elevated level. So in terms of realization costs, this will vary from the plain to prelam and the prelam also, what kind of a product which you are selling, this can range from INR25,000 to INR28,000 and even INR30,000 also depending upon what product premium product you are selling. And in terms of EBITDA level, it can — at optimum level, it can range between 20% to 24%. And your next question was in terms of ROCE. At this moment, it — because of the timber prices are on the higher side, so this looks lower, but on a stable timber prices, so then the ROCE can be in between 16% to 18% to 20%.
Divyanshu Mahawar
Okay sir. Thank you, sir. I’m wishing a very Happy Diwali to all the management team.
Saurabh Mittal
Thank you, and wish you the same.
Operator
Thank you very much. The next question is from the line of Nitin Shakdher from Green Capital Single Family Office. Please go ahead.
Nitin Shakdher
Hi, good afternoon. This is Nitin Shakdher from the Green Capital Single Family Office. My one question to the management is in my conversations as an investor with some of the companies. We’ve seen that there is some increase in raw material costs like paper and other raw material, which is using the production of boards —
Saurabh Mittal
Your voice is not so clear.
Ashok Sharma
Sir, your voice is not so clear, please. Once again.
Nitin Shakdher
Hello?
Saurabh Mittal
Yeah, please go ahead.
Nitin Shakdher
Right. So in my conversations with some of the companies as an investor, there has been increase in raw material costs for let’s say paper and other materials that go into the production —
Operator
Your voice is still not audible. Please, can you use your handset and be clearer when you ask the question.
Nitin Shakdher
Okay. Hello, am I clear now?
Operator
Yes, sir.
Nitin Shakdher
Yeah. Hi, good afternoon. In some of my conversations as an investor with a couple of companies, there has been an indication that there’s been an increase in raw material costs like paper. And obviously, we’re aware of international export high freight costs. So if that were to be correct, is there anything that the company is doing to offset the higher raw material costs? And when do you expect the situation to sort of normalize towards more lesser costs? Thanks.
Saurabh Mittal
So we are assuming this question is related to the laminates business where we buy and consume a lot of paper. So we said that earlier that in September, so firstly, yes, certain grade of kraft paper, certain costs have gone up. There has been a small increase in certain deco paper costs, some chemicals. But by and large, there’s been some increase, some decrease in the costs, nothing of very major significance as can be seen in our gross margins. While having said that, we have taken a small increase in the domestic market in September, about 2.5% to 3%. We mentioned that.
On the freight part, on the export trade, I think we said that earlier in the conversation. We have a minimum cost on the — of the sea freight which we bear, beyond which the surcharge is passed on to the customers for the incremental trade. That incremental trade surcharge has softened a bit, which was also mentioned earlier from September onwards. So this is a sense we have. If Ashok wants to add something tho this.
Nitin Shakdher
Okay. So just as a follow-up. So what I’ve given to understand is that then on the laminates business, you’re saying that the cost increase is not that high to have a significant impact on the margins. Would that be correct?
Ashok Sharma
Well, you could say that, like we said domestic, we already did the increase of the costs. Yes, there is some increase, but with increased production, better value mix, you can kind of offset that to certain extent. You could say that, yes.
Nitin Shakdher
Okay. Thank you and Happy Diwali to the Greenlam family.
Operator
Thank you very much. [Operator Instructions] As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Ashok Sharma
Thank you, everyone, for taking out the time and joining the call today. For any — in case you have any further query, you can get in touch with us or the SGA, our Investor Relations Advisor. Thank you, and wish you a happy Diwali to all of you.
Saurabh Mittal
Thank you, everyone, wishing everyone a very happy Diwali.
Samarth Agarwal
Thank you, everyone. Wish you all a very happy Diwali.
Operator
[Operator Closing Remarks]